Prop 22: Rideshare and Delivery Drivers
Should app-based rideshare and delivery drivers be classified as independent contractors (not employees) and require rideshare and delivery companies to adopt labor and wage policies unique to these drivers?
Rideshare and delivery companies allow customers to hire rides or have food delivered using a phone app. Between 800,000 and 950,000 Californians provide rides or deliveries each year. Drivers choose when and where to work, but provide their own vehicle and cover vehicle expenses. Most drivers work part-time and make between $11 and $16 per hour.
Rideshare and delivery companies hire drivers as independent contractors: people who do work for a business but are not employees. Independent contractors are not entitled to legal protections and benefits required for employees—including minimum wage, overtime, unemployment insurance, and workers’ compensation.
In 2019 lawmakers passed AB 5, limiting the ability of companies to hire workers as independent contractors. Under AB 5, rideshare and delivery drivers are classified as employees rather than independent contractors. Rideshare and delivery companies must provide employee protections and benefits to drivers.
The state Attorney General sued two rideshare companies after the companies continued to hire drivers as independent contractors.
Prop 22 would reclassify app-based drivers as independent contractors, not employees, unless a company: sets a driver’s hours, requires drivers to accept certain rides or deliveries, or restricts working for other companies. Drivers would not receive employee benefits and protections—including minimum wage, overtime, unemployment insurance, and workers’ compensation.
Instead, this proposition would require companies to provide the following benefits to drivers:
- Minimum Compensation: Prop 22 would require app-based companies to pay at least 120 percent of the minimum wage for each hour spent driving.
- Healthcare Subsidy: The measure would require rideshare and delivery companies to provide a health insurance stipend to drivers.
- Medical Expenses: The measure would require rideshare and delivery companies to buy insurance to cover medical expenses when a driver is injured while driving.
- Rest Policy: The measure would restrict drivers from working more than 12 hours a day for a rideshare or delivery company.
- Other Requirements: This measure would prohibit workplace discrimination and require that companies develop sexual harassment policies, conduct criminal background checks, and mandate safety training for drivers.
Prop 22 would also prevent local jurisdictions from setting their own rules for rideshare and delivery companies, such as setting a higher minimum compensation.
- Lower Costs and Higher Profits for Rideshare and Delivery Companies: Companies would not have to pay the costs of providing employee protections and benefits that are currently required under AB 5 and could afford to charge lower fares and fees, increasing the company’s profit.
- Drivers and Stockholders Would Pay More Income Taxes: Because rides and orders would increase, drivers would earn more income. State income taxes paid by drivers would increase. Because companies would earn higher profits, Californians who own company stock may earn higher income and pay more in income tax.
- The amount of increased state personal income tax paid by drivers and stockholders is unknown, but likely minor.