California voters have decided gig economy workers should be classified as contractors, not employees.
Proposition 22 centered around whether app companies like Uber and Lyft could continue to classify their workers as independent contractors. It has become the most expensive ballot measure in history, with $224.3 million spent on campaigning on both sides of the debate per the Los Angeles Times. About $204 million came from companies supporting the “yes” vote, including Uber, DoorDash, Lyft, Postmates and Instacart, which utilized commercials and direct marketing campaigns including pop-up notifications on their apps.
The initiative was tied to California’s Assembly Bill 5 (AB5), which required companies to classify more workers as employees. As employees, companies would be required to provide additional benefits for their workers including unemployment insurance, paid time off, overtime pay and health insurance.
Gig economy apps argued hiring all their workers as employees would cut into their revenue, driving concerns that it may lead the apps to accept fewer workers after AB5 led to many media companies laying off freelancer writers in 2019 because they could not afford to bring them on as employees. About 20 percent of total employee costs come from providing standard benefits, according to California Legislative Analyst’s Office.
Uber and Lyft also argued AB5 might also prevent workers from choosing their own hours. Gig economy workers, however, did win certain benefits. Proposition 22 will require apps to pay an hourly wage equal to 120 percent of the area’s minimum wage, although they will not have to pay for time spent waiting for requests. The companies will also be required to pay for some of their workers’ health benefits as long as they work at least 15 hours for the app.
Updated November 4, 2020 at 12:45 pm ET to correct headline. Voters voted "yes'"on Prop. 22. They did not vote it "down" as previously stated.
