Proposition 22 Passes in California, Requiring App-Based Gig Economy Drivers to Be Classified as Independent Contractors

In what was reportedly the most expensive ballot measure campaign in California history, California voters approved Proposition 22, which mandates that certain gig economy workers be classified as independent contractors rather than employees. Here are a few highlights for employers:

  • App-based transportation and delivery companies will receive a special exception to California’s stringent worker classification law, AB 5, allowing those companies to classify the majority of their drivers as independent contractors. The exemption means drivers will not be entitled to standard labor protections and benefits afforded to employees such as unemployment insurance, workers compensation benefits, or family and sick leave.
  • Drivers must be paid at least 120% of minimum wage during time spent driving (but not time spent waiting), plus payment per mile.
  • Covered employers must provide a stipend for health benefits to drivers who normally work more than 15 hours per week. They must also pay for medical expenses and replace some lost income if a driver is injured while driving or waiting.
  • Drivers are prohibited from working more than 12 hours in a 24-hour period for any one rideshare or delivery company.
  • Covered employers are prohibited from discriminating against drivers and must develop sexual harassment policies, conduct criminal background checks, and provide safety training to drivers.

While Proposition 22 only applies narrowly to transportation and delivery network companies in California, the law may have broader implications if these or other industries seek similar relief across the nation. IMA will be closely monitoring any further developments in this area and will continue to provide practical updates as soon as possible.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.