Over the last year, we have talked extensively about AB 5 and its effect on businesses and workers across California. To recap, AB 5 codified the Dynamex court decision and made the ABC Test for classifying workers as independent contractors the law in California. Many independent contractors were negatively affected by AB 5 and litigation from employers, employees, and business groups alike increased.
Recently, Prop 22 passed, enabling certain gig-economy companies to secure a complete exemption from AB 5. Under Prop 22, entities that engage workers covered by Prop. 22 will not have to comply with the ABC Test in order to classify certain workers as independent contractors.
Now, Prop. 22 only classifies such workers as independent contractors if the following requirements are also met:
· The network company does not unilaterally prescribe specific dates, times of day, or a minimum number of hours during which the drivers must be logged into the app or platform;
· The network company does not require the driver to accept any specific rideshare or delivery service request as a condition of maintaining access to the app or platform;
· The network company does not restrict the driver from performing rideshare or delivery services for other network companies, except when the driver is working for the network company; and
· The network company does not restrict the driver from working in any other lawful occupation or business.
Who Does Prop. 22 Cover?
Prop. 22 applies to California app-based drivers who either: (a) provide delivery services on an on-demand basis through a business’s online-enabled application or platform; or (b) use a personal vehicle to provide prearranged transportation services for compensation via a business’s online-enabled application or platform.
It could be that in practical terms, Prop. 22 may only apply to delivery and rideshare drivers for “network companies” such as DoorDash, Lyft, Uber, and Postmates. However, this is yet to be determined and if you believe your employer is improperly classifying you, you may have a legal claim.
What Benefits Does Prop. 22 Provide?
Workers covered under Prop 22 will receive a number of benefits, including:
· For drivers who work at least 15 hours a week, a health care subsidy consistent with the average contributions required under the Affordable Care Act;
· A new minimum earnings guarantee tied to 120% of minimum wage, with no maximum;
· Compensation for vehicle expenses;
· Occupational accident insurance to cover on-the-job injuries; and
· Protection against discrimination and sexual harassment.
Employee misclassification is a hot issue in the California workplace. To ensure that your company is not at risk for potential misclassification lawsuits, reach out to our experienced attorneys to discuss your policies today.
Webb Law Group is a reputable employment law firm with decades of experience. If you feel you need legal representation, we are happy to review your case and provide consultation. For questions, or to schedule a consultation, contact us today at 559.431.4888 (Fresno) or 619.399.7700 (San Diego).