The Damaging Effects of California Proposition 22 On Workers’ Rights Begin to Unfold

On November 3, 2020, Californians passed a ballot initiative known as Proposition 22, or “the App-Based Drivers as Contractors and Labor Policies Initiative” (“Prop 22”), which asked voters to define app-based rideshare and delivery drivers as independent contractors, as opposed to employees.  This paved the way for the adoption of labor and wage-and-hour policies specific to those drivers and the companies that hire them.  

As a result, businesses in California are no longer legally required to pay these gig workers minimum wage or overtime.  Further, California gig workers are now entitled to be paid only for “engaged time,” defined as the time between receiving a request and dropping off the passenger or delivery item, rather than for all hours worked, as California and federal statutes require for all “employees” – a group to which California gig workers no longer belong.  To be sure, these are just two of myriad wage-and-hour protections California gig workers lost on November 4, 2020. 

As we previously outlined here, Prop 22 projects to have catastrophic effects on workers’ rights, and gig workers’ rights in particular—not only in California, but across the country.  Those effects have already begun to take shape.  

Following its passage, U.S. Labor Secretary Eugene Scalia called Prop 22 “a strong warning to progressives.”  Recently, in the final days of Scalia’s tenure as Secretary, the Department of Labor rolled out a new multifactor test for determining whether all workers (i.e., not just gig workers) are employees or independent contractors.  The proposed rule would simplify the legal standard, but make it more difficult for workers to establish that they are employees entitled to the protections of federal wage-and-hour laws, as workers’ rights advocates have pointed out.  Proponents of the new rule have commended it for doing just that, citing Prop 22 as evidence that Americans favor greater so-called “flexibility” in determining workers’ employment status.  While most suspect the proposed rule will die with the transition to a Democratic presidential administration, its dissemination and justification underscores the potential national impact of Prop 22.

Prop 22 has also started to wreak havoc on gig workers’ rights within California, providing another glimpse into the world gig economy giants bought for themselves by pouring more than $200 million into the “Yes on 22” campaign.  For example, Albertsons, the nation’s second-largest grocer, recently announced that it is laying off in-house grocery delivery drivers at Albertsons-owned Vons, Safeway, and Pavilions locations throughout Southern California.  Predictably, those drivers will be replaced by lower-paid independent contractors.  

Recently, the Service Employees International Union and a group of drivers for Uber, Lyft, DoorDash, and Instacart filed a petition with the California Supreme Court to overturn Prop 22. The drives argue that that Prop 22 – which can be overturned only by an exceedingly unlikely “seven-eighths” vote of the California State Legislature – unconstitutionally usurps the judiciary’s authority to dictate what constitutes an “amendment” to a ballot measure and violates the constitutional requirement that ballot measures be limited to a single subject.

The success of this petition remains to be seen.  If it fails, it appears gig workers are close to running out of options to reverse the damage done by Prop 22.

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Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour, personal injury and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Georgia and Pennsylvania.

Since its founding in 1995, Faruqi & Faruqi, LLP has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, direct purchasers, consumers and employees.

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About Alex Hartzband

Alex Hartzband's practice is focused on employment litigation. Alex is a senior associate in the firm's New York office.

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