November 6, 2020

California Voters Keep Rideshare Drivers as Independent Contractors

Over the past few years, there has been much debate over whether certain roles within the gig economy qualify as employment or independent contracting. This determination is of serious importance, as independent contractors are not entitled to benefits such as workers’ comp, disability, unemployment, and more.

In California, a combination of action from state Supreme Court and the state legislature created the ABC Rule, a series of criteria that must be met to qualify work as independent contracting, which essentially categorized a vast amount of gig work as employment. This meant that a large portion of the workforce would be entitled to various employee benefits.

Specific to rideshare services, Uber and Lyft drivers were scheduled to become categorized as employees, but during the election, California voters passed Proposition 22, which creates an exemption for app-based transportation and delivery companies from providing employee benefits to certain drivers.

According to the proposition’s language, “Yes” votes supported drivers’ wish to remain contractors so they could remain free to work when, where, and as often as they liked, at the cost of standard benefits and protections, saving hundreds of thousands of jobs. Meanwhile opposition language claims that “No” votes would prevent billion-dollar app companies from creating exemptions to California law which they could profit from by denying drivers benefits.

Regardless of political viewpoints on the subject, the passage of this measure means that an expected rehauling of employment status, and the corresponding benefits requirement, will not take place for a large portion of the workforce. However, other states have followed California’s lead on the ABC rule, and at this time it is unknown if other states will create similar exceptions for rideshare drivers, or go through with significant changes.

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