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Here’s what the passage of Prop 22 means for Uber and Lyft in California

Californians approved the new app-based driver initiative.

Michael Juliano
Written by
Michael Juliano

By a pretty clear margin, California voters have approved Proposition 22, which, according to its title, “exempts app-based transportation and delivery companies from providing employee benefits to certain drivers.” Alright, so… what does that actually mean now?

The short of it: Prop 22 essentially creates a new type of worker classification, app-based drivers, that entitles them to the flexibility of an independent contractor position and some—but not all—of the benefits that would come with being considered an employee. This specifically applies to drivers for apps like Uber, Lyft, DoorDash, Postmates and Instacart—who all financially backed the record-setting $202 million campaign to pass Prop 22 (you almost surely saw a “Yes on 22” ad if you used any of these apps recently).

Let’s rewind a little bit before we dive into the rest of the details: California Assembly Bill 5 (better known as AB 5, the 2019 gig worker bill), expanded the definition of employees, which are workers that are entitled to benefits like minimum wage, overtime, unemployment insurance and workers’ compensation. But Uber and Lyft insisted their workers were independent contractors and not employees, an argument that the courts disagreed with multiple times—which most notably led to a threat from the two companies in August to cease operations in California. But now Prop 22 has given a decisive answer to the issue.

For drivers…

Prop 22 will guarantee minimum earnings, healthcare subsidies and occupational accident and death insurance. Notably, it limits drivers from working more than 12 hours in a day, unless they’ve paused for six straight hours. If they log 25 hours per week, they’re entitled to healthcare subsidies equal to 82% of the average Covered California monthly premium; if they rack up only 15 to 25 hours, that number drops to 41%. The minimum earnings are a bit more difficult to parse: Drivers are entitled to a net earnings floor that’s 120% the minimum wage plus 30 cents per mile, but that only applies to “engaged time,” which is the time spent between accepting and completing a delivery or ride, but not any time spent just waiting for a request. (It should be noted that the UC Berkeley Labor Center estimates this only works out to about $5.64 an hour on average; Uber and Lyft insist it’s closer to $25 to $27, but UC Berkeley still disagrees.)

For customers…

We simply don’t know yet if or how this will impact service. Had Prop 22 been voted down, Uber estimated that wait times would’ve increased and prices might’ve gone up anywhere between 25 and 111%. But there’ve been no such estimates provided for Prop 22’s passage.

For the government…

We know this may seem like an odd inclusion, but we think it’s worth mentioning that the passage of Prop 22 has let corporations rewrite part of our labor laws. And we don’t say that to pass judgment or advance an agenda, it’s simply the truth: Three people associated with Uber, Lyft and DoorDash initially filed the ballot proposition, and it specifically contains a clause that requires a seven-eighths vote in each chamber of the California State Legislature to make any amendments. And even then, those amendments must be ones that are “consistent with, and furthers the purpose of” Prop 22, otherwise it’ll need to go up for voter approval.

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