California voters passed Proposition 22, which exempts tech platforms like Uber, Lyft, and DoorDash from state law AB 5, which forced them to reclassify gig workers as employees, according to a Wall Street Journal report on Wednesday (Nov. 4).
The three app-based tech companies were joined by Postmates and Instacart in the financial support of Proposition 22, which upholds the independent contractor status for gig economy workers. The delivery and rideshare companies spent $200 million to support the campaign, the most money ever spent on a ballot measure in California.
The outcome allows the ride-hailing and delivery companies to skirt a law that would have re-classified independent contractors as employees. The vote is a win for app-based tech platforms and could set a precedent for the rest of the country in how gig economy workers are classified.
The companies did have to make some concessions, like offering health insurance for drivers who work 15 hours or more a week and a car expense allowance of 30 cents per mile. Gig workers will also be entitled to occupational accident insurance.
The law passed in California last year re-classified rideshare and food delivery drivers as employees rather than independent contractors, with benefits like paid time off and unemployment assistance.
Instead of abiding by the law, companies banded together to support Proposition 22.
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If Proposition 22 didn’t pass, gig platforms would have been faced with reshaping their entire business model.
