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California’s Assembly Bill 5, which became law on January 1, 2020, mandates that a worker is considered an employee and not an independent contractor unless the hiring entity satisfies the three following conditions under the “ABC test”:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Under the ABC test, the prevailing view is that drivers for app-based transportation (rideshare) and delivery platforms should be treated as employees rather than independent contractors.
Based on the public’s perception that app-based drivers prefer to work as independent contractors, not employees, on November 3, 2020, California voters approved Initiative Measure Proposition 22. Proposition 22 exempts drivers for app-based transportation (rideshare) and delivery platforms from the mandates of Assembly Bill 5 and allows drivers to continue working as independent contractors, while also providing drivers new benefits and protections not available under current law.
Proposition 22 adds Sections 7448 through 7467 to the California Business and Professions Code, which will be known as the Protect App-Based Drivers and Services Act. Proposition 22 also amends Section 17037 of the Revenue and Taxation Code. Proposition 22 classifies drivers for app-based transportation (rideshare) and delivery companies that deliver food, groceries, and other goods as “independent contractors,” not “employees,” unless the company: (i) unilaterally sets drivers’ hours, (ii) requires drivers to be logged into the company’s online-enabled application or platform for a minimum number of hours; (iii) requires acceptance of specific ride or delivery requests, or (iv) restricts drivers working for other companies.
Independent contractors are not covered by various state employment laws—including minimum wage, overtime, unemployment insurance, and workers’ compensation.
However, under Proposition 22, App-Based independent-contractor drivers would be entitled to minimum compensation levels—a minimum earnings guarantee (tied to 120 percent of minimum wage with no maximum), healthcare subsidies (consistent with the average contributions required under the Affordable Care Act), per-mile compensation for vehicle expenses, accident automobile insurance of least one million dollars ($1,000,000) per occurrence to compensate third parties for injuries or losses proximately caused by the operation of an automobile by an app-based driver; occupational accident insurance to cover medical expenses and lost income resulting from on-the-job injuries; and broad protection against discrimination and sexual harassment.
Proposition 22 also restricts local regulation of app-based drivers (enabling drivers to travel across jurisdictional boundaries without complying with inconsistent and contradictory local regulations) and criminalizes impersonation of drivers. In addition, Proposition 22 requires drivers to undergo background checks and driver safety training and limits the hours a driver may be logged into the company’s online-enabled application or platform.Contact Us
If you are an app-based driver and believe the company is violating your rights by not complying with the requirements of Proposition 22, contact the renowned wage and hour lawyers at Kokozian Law Firm, APC. 323-857-5900. Ask about our free initial consultation.