February 1, 2023

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Prop 22 Grants New Protections for Ride Share Workers

Last November, California passed a major new ballot measure, Proposition 22, which exempted ridesharing companies like Uber and Lyft from classifying drivers as full-time workers in exchange for new benefits and protections for gig workers.

The measure, according to representatives from firms like DoorDash, Uber, Lyft and Postmates, was designed to give gig workers more flexibility while providing them with certain guarantees for pay and healthcare benefits.

Whether the law is actually helping workers is less clear, however. Now, controversy around the measure has grown into a debate over labor protections that could shape the future of labor protections in the U.S.

How Prop 22 Helps (or Hurts) Gig Workers

California Prop 22, in addition to classifying gig workers as independent contractors, rather than employees, also included new protections for gig workers. These protections were designed to provide, in the words of Uber CEO Dara Khosrowshahi, “the best of two worlds: you’ve got flexibility, you’re your own boss, you’re your own CEO, but you do have protections.”

Under the new law, which went into effect on January 1, 2021, California gig workers have a new pay floor — 120% of the Californian minimum wage (currently $14) for each hour worked, plus 30 cents for every mile driven.

This payment floor will only apply to a worker’s “engaged time,” which is time spent driving to or completing jobs — but not time spent waiting for jobs or preparing the car for work.

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The measure also requires that companies provide a healthcare subsidy to gig workers who work 25 hours or more a week, equal to 82% of the average California healthcare premium.

Under Prop 22, workers for firms like Uber and Lyft would join the list of those not eligible for workers’ compensation. They will have access to occupational accident insurance, which would cover up to $1 million in medical expenses and lost income resulting from injuries sustained on the job.

In theory, the measure should provide a combination of labor protections and flexibility for gig workers — allowing them to work the hours they want while getting paid fairly for the hours they do work.

Has California’s Prop 22 Worked So Far?

However, it’s not clear if these protections actually work well in reality.

Jeong Park, in an article for the Sacramento Bee, covered research from statisticians and economists who came to wildly different estimates on how much workers would make after Prop 22 passed.

One study, from researchers at the UC Berkeley Labor Center, found that workers may make as little as $5.64 under Prop 22.

Another, from Director of UC Riverside School of Business Center for Economic Forecasting and Development Christopher Thornberg, was much more optimistic. Thornberg’s study found that California workers were likely to be paid “anywhere from $25.61 to $27.58 an hour on average.”

According to Park, “Thornberg acknowledged his study was financed by Lyft, but he said the money has had no influence on his report.”

California gig workers have reported pay drops since Prop 22 came into effect — with some saying they’re making as little as $5 an hour after gas and other expenses.

At the same time, rideshare and gig economy firms may be paying out more to their workers. Both Uber Eats and Doordash recently raised prices in California to help cover the cost of Prop 22 protections and benefits.

How Prop 22 Is Likely to Affect Gig Workers Across the U.S.

While legal challenges against the measure are ongoing, Prop 22 is likely here to stay.

The law’s success could have serious implications for gig workers across the country.

In an interview shortly after the passage of Prop 22, Anthony Foxx, Lyft’s chief policy officer and a former secretary of transportation, said that Lyft was likely to speak with leaders in other states about enacting similar policies outside of California — and that “we think that Prop 22 has now created a model that can be replicated and can be scaled.

It’s possible that future legislation and ballot measures in states outside of California could see the Prop 22 model expanded to the rest of the country.

Over the next few months, we’re likely to develop a better idea of how Prop 22 is really impacting gig workers in California — and, as a result, how similar legislation may affect the gig economy in the U.S.

By Shannon Flynn

By Shannon Flynn

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