The way forward for Uber, Lyft, DoorDash and comparable gig firms was on the poll in California, the place voters permitted a proposition that retains app-based drivers labeled as impartial contractors.
That designation is essential for the enterprise fashions of firms that depend on a community of a whole bunch of 1000’s of independently contracted gig employees. However the measure, often called Prop 22, additionally offers rideshare and supply drivers with some new advantages, together with a minimal earnings assure.
Uber, Lyft and different comparable gig firms have been in favor of the measure and spent greater than $200 million on pro-Prop 22 efforts.
However Alexandrea Ravenelle, a gig economic system researcher and creator of “Hustle and Gig: Struggling and Surviving within the Sharing Economic system,” advised The Penny Hoarder that she was “disenchanted for the drivers and for the working public.”
“Uber and Lyft spent $200 million to keep away from having to deal with their employees as staff,“ she mentioned. “Employees in different states ought to count on that this alteration might also have implications for labor battles in different locales sooner or later.”
Prop 22 is little doubt contentious. However what precisely is it and the way will it have an effect on you as a driver?
A Primer on Proposition 22
On the coronary heart of the controversy round Prop 22 was whether or not app-based gig drivers in California ought to be thought-about W-2 staff or 1099 impartial contractors.
W-2 staff are eligible for employer-sponsored medical insurance in the event that they work a minimum of 30 hours per week; employees compensation for on-the-job accidents; contributions into Social Safety and Unemployment Insurance coverage; and the flexibility to take sick or caregiver go away. These are all bills borne by employers — which the Ubers of the world wish to keep away from.
The gig firms largely framed Prop 22 as: 1099 impartial contractor standing means flexibility, and W-2 worker work means rigidity.
Ravenelle mentioned that framing created a “false dichotomy,” and that shouldn’t need to be an either-or situation.
“Uber, Lyft and Doordash… marketed Prop 22 by claiming that being an impartial contractor is what all employees need and what’s finest for employees,” she mentioned.
Why have been Uber and Lyft ordered to reclassify their employees within the first place? A brand new California labor regulation known as AB 5, requiring firms that management when or how their impartial contractors work to reclassify them as W-2 staff. When Uber and Lyft didn’t adjust to the brand new regulation, the state sued the 2 rideshare firms.
The passage of Prop 22 suggests the top of the authorized battle in California. AB 5 continues to be in impact, nonetheless. It applies to way more than these handful of gig firms. Solely “app-based transportation and supply” firms at the moment are exempt from the labor regulation. It’s unclear how different gig firms that aren’t particularly transportation- or delivery-related will probably be affected.
Beside exempting ride-share and supply firms from reclassifying their employees, Prop 22 additionally offers drivers with some extra advantages — a “third manner” as the businesses typically name it, one that’s someplace in between 1099 and W-2 employment.
What Is Altering for Journey-Share and Supply Drivers Underneath Prop 22
Your impartial contractor standing is staying the identical, however you will note some new advantages.
The next advantages enshrined by Prop 22 are based mostly in your “engaged time,” which is the period of time you spend logged into the app and en route with a passenger or supply:
- An “earnings assure.” This provision ensures you 120% of your native minimal wage based mostly on “engaged time” on the app not actual time — plus 30 cents per “engaged” mile. Suggestions aren’t factored into this equation. They’re additional.
- A well being care subsidy. When you drive a mean 25 hours per week of “engaged time” per quarter, you’ll qualify for a quarterly subsidy towards your Lined California premium. Drive between 15 and 25 hours of engaged time per week, and also you’ll be eligible for a 50% or better health-care subsidy.
- Occupational accident insurance coverage. This insurance coverage program will cowl medical bills and misplaced revenue associated to accidents that occurred whilst you have been logged into the app. It covers “as much as a minimum of” $1 million for medical bills and 66% of your common weekly earnings.
Whereas these advantages weren’t beforehand accessible previous to Prop 22, critics say that they fall quick.
“The advantages contained within the initiative pale compared to what employees are entitled to underneath state regulation,” researchers from the Nationwide Employment Regulation Challenge and the Partnership for Working Households wrote in a report on Prop 22.
W-2 advantages would have ostensibly been prolonged to drivers had Prop 22 failed.
The gig firms haven’t but launched a timeline of when their new advantages will roll out. In an e mail to drivers, Uber mentioned they are going to be accessible “as quickly as doable.”
Adam Hardy is a workers author at The Penny Hoarder. He covers the gig economic system, entrepreneurship and distinctive methods to earn money. Learn his latest articles here, or say hello on Twitter @hardyjournalism.