What Is Proposition 22 (Prop 22)?

California Proposition 22 (Prop 22), officially known as the "App-Based Drivers as Contractors and Labor Policies Initiative," was approved by California voters in the Nov. 3, 2020, general election. Prop 22 defines app-based transportation and delivery drivers as independent contractors, and also adopts certain labor and wage policies that apply only to app-based drivers and to companies such as Uber, Lyft, and DoorDash.

Passage of the Prop 22 initiative reverses the impact of California Assembly Bill 5 (AB5), signed into law by Governor Gavin Newsom Sept. 18, 2019, and a subsequent court order Aug. 10, 2020, by California Superior Court Judge Ethan Schulman that required rideshare and delivery companies to reclassify drivers as employees.

Key Takeaways

  • California Proposition 22 (Prop 22) was an initiative designed to counter California Assembly Bill 5 (AB5) that mandated gig workers be classified as employees.
  • Major sponsors of the proposal were Uber, Lyft, and DoorDash.
  • Prop 22, which passed Nov. 3, 2020, lets companies classify rideshare and delivery drivers as independent contractors, but requires providing them with certain benefits if they meet work-hours criteria.
  • Proponents tout the flexibility provided drivers, along with benefits and protection.
  • Opponents say the benefits and protection are inadequate.

The Driving Forces Behind 'Yes on Prop 22'

Three companies—Uber, Lyft, and DoorDash—created an account on Aug. 30, 2019, to fund a ballot initiative to counter AB5 in the event it passed. That ballot initiative, "Yes on Proposition 22," was filed on Oct. 29, 2019. By Oct. 29, 2020, "Yes on Proposition 22" had received $202.97 million. Uber provided $57 million; DoorDash, $52 million; Lyft, $49 million; InstaCart, $32 million; and Postmates, $13 million.

The opposition, "No on Prop 22," received $19.75 million. Major contributors included: SEIU Local 721, the International Brotherhood of Teamsters, the California Labor Federation, SEIU Local 1021, SEIU-UHW West, UFCW International Union, and UFCW Local 770, each of which put in $1 million or more.

Understanding California Proposition 22 (Prop 22)

In addition to mandating that app-based drivers be considered independent contractors, Prop 22 includes labor and wage policies specific to these workers and the companies they work for, since independent contractors are not covered by state labor laws. These policies include the following requirements:

  • Payments to drivers for the difference between their net earnings, excluding tips, and a net earnings floor based on 120% of the state minimum wage for hours worked plus 30 cents per engaged mile, adjusted for inflation after 2021;
  • Twelve-hour work limit during a 24-hour period unless the driver has been logged off for an uninterrupted 6 hours;
  • Company-provided healthcare subsidies equal to 41% of the average California Covered (CC) premium each month for drivers who average between 15 and 25 work hours per week during a calendar quarter
  • Company-provided occupational accident insurance for at least $1 million in medical expenses and lost income resulting from injuries suffered while driver is online and available to receive service requests;
  • Disability payments equal to 66% of a driver’s average weekly earnings during the previous four weeks before covered injuries, for up to 104 weeks;
  • Company-provided accidental death insurance for the benefit of driver’s spouse, children, or other dependents when driver dies while using the app;
  • Company-developed anti-discrimination and sexual harassment policies; training programs for drivers related to driving, traffic, accident avoidance, and recognizing and reporting sexual assault and misconduct; zero-tolerance policies for driving under the influence of drugs or alcohol; and required criminal background checks for drivers.

When it becomes law, Prop 22 will also criminalize impersonation of an app-based driver as a misdemeanor.

Pros of Prop 22

During the campaign proponents of Prop 22 spelled out the advantages of the proposal for drivers, the companies they work for, and the community at large:

  • Protects driver choice to be an independent contractor and work their preferred schedule.
  • Lets companies offer rideshare and delivery services at a reasonable cost.
  • Saves thousands of jobs that would be lost if companies pulled out or reduced workforce.
  • Provides drivers with benefits and earnings guarantees not previously available to independent contractors.
  • Strengthens public safety through mandatory training programs.

Cons of Prop 22

Opponents pointed out the downsides associated with passage of the proposal: 

  • Denies drivers the right to be employees including all benefits and protections offered to employees under state labor law.
  • Offers lower benefits than those available to employees.
  • Does not provide drivers with an actual guaranteed minimum wage.
  • The cost of Prop 22 mandated benefits could still raise prices for the public.
  • Eliminates the possibility of union organization and protection for workers.