New Law Says Gig Workers Aren't Employees After All

The fight for gig workers’ rights could go national

Key Takeaways

  • California voters passed Proposition 22 on Election Day 2020, allowing app-based companies like Uber and Lyft to continue to classify their workers as contractors rather than employees. 
  • Many gig economy workers were against Prop 22 and are rallying for more workers’ rights. 
  • The discussion around Prop 22 highlights a nationwide need to reform outdated labor policies.
Transport Workers Union of America conduct a ‘caravan protest’ outside the California Labor Commissioner’s office amidst the coronavirus pandemic.
Mario Tama / Getty Images 

A California law passed on Election Day keeps workers of app-based companies as contractors rather than employees, but experts say its effects on the gig economy workforce will be felt nationwide.

Proposition 22 passed in California by a margin of 58 to 42, according to ABC News. This means that contractors who work for app-based companies like Lyft, Uber, and Doordash are exempt from being classified as employees. Prop 22’s decision shines a light on the reform needed for all gig economy workers throughout the country. 

"The Prop 22 debate really highlighted the fundamental problem with our outdated labor market policies," said Diane Mulcahy, author of The Gig Economy, in a phone interview. "It highlighted the problems with this outdated classification system that does not reflect how people work today." 

What is Prop 22? 

Prop 22 was introduced as the result of Assembly Bill 5, which passed in California last September. Assembly Bill 5 requires app-based companies to treat their contractors the same way they treat regular employees. Going into effect January 1, the new law said that contractors were eligible for basic protections like minimum-wage requirements, health benefits, and Social Security.

Close-up of vertical sign with logos for ridesharing companies Uber and Lyft, with wheels of a car in the background, indicating a location where rideshare pickups.
Smith Collection / Gado / Getty Images 

Tech companies like Uber and Lyft were against these requirements, citing independent contractors as a core value of their businesses and giving people the flexibility to work when and where they want. California pushed back against these tech companies with a lawsuit in May, resulting in a company-led Prop 22. 

Can’t Get No Satisfaction 

Many rideshare drivers and gig workers were against Prop 22 but were prepared for it to pass due to the $200 million "Yes on 22" campaign companies like Uber and Lyft advocated for throughout the state. Still, gig economy workers are disappointed in the outcome. 

"Nothing at all justifies paying people less than minimum wage and not giving them the basic protections such as health insurance and unemployment insurance," said Edan Alva in a phone interview, a California Lyft driver and member of Gig Workers Rising who has since stopped due to the pandemic. "As far as I’m concerned, workers' rights are human rights, and this is literally a regression in human rights." 

Alva said he and Gig Workers Rising would continue to fight and inform the public against the "growing risks from this exploitative business model" and said that a federal law could be the next step in moving forward. 

"It works very much against us, that on the federal level we are misclassified as contractors, and it needs to be fixed," he said. "We now probably will need to do federal and local fights."

Effects On the Larger Gig Economy 

For contracted gig economy workers outside of California, not much has changed, but experts say that the Prop 22 debate has opened the door for much-needed labor reform policies. 

"The growth of the independent contractor workforce will be meaningful going forward," Mulcahy said. "We need to take the lessons from Prop 22 and step back and fix our labor policies so that independent workers receive similar rights, benefits, and protections as employees."

The Gig Economy author Mulcahy said that the talk around Prop 22 highlights the country's outdated worker classification system and how it does not reflect how people work today. 

Food delivery worker using a smartphone on a city street.
Maskot / Getty Images 

"Our labor policies are only extended to one type of worker, and that makes little sense given the way that people work now," she said. 

However, Mulcahy said that she's mindful that no single proposition can reform labor policies to where they need to be and that ultimately, that is where Assembly Bill 5 and Prop 22 failed. 

"Part of the problem with [Assembly Bill 5] is it required a lawsuit to actually implement it," she said. "Any state that is looking for a way to force companies to classify their workers a certain way needs to pass something clear and objective to get that done."

Alva agrees with Mulcahy that there is much more to consider when it comes to Tuesday’s Prop 22 decision and the future of gig economy workers and their rights. 

"There is a bigger picture here, and that bigger picture is relevant not just for drivers and not just for California—it’s about how the future labor market would look like and what rights workers would have."