Independent Contractor - California Proposition 22

October 04, 2020 |
Image taken by MJ at a Top Golf in Tempe, Arizona. My first time going to one.

I had a nice chat with an Uber driver this week on my way to the airport. What started off as a conversation about the crumbling infrastructure that we were seeing along the I-110 turned into one about the November election. We both wondered how California, which according to Business Insider is the fifth largest economy in the world, looks so sad--the roads we drove under covered in the tents of our homeless. 

 

Naturally, or at least naturally for me, our convo turned to the economic divide that seems all too visible by the number of people on the streets. From there, we spent the next thirty minutes talking about Proposition 22 (Prop 22)—the ballot initiative that if passed will classify ride-share and delivery drivers as independent contractors. 

 

According to the IRS, “the general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done… If you are an independent contractor, you are self-employed. 

 

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.”

A "yes" vote supports this ballot initiative to define app-based transportation (rideshare) and delivery drivers as independent contractors and adopt labor and wage policies specific to app-based drivers and companies.

 

A "no" vote opposes this ballot initiative, meaning California Assembly Bill 5 (2019) could be used to decide whether app-based drivers are employees or independent contractors.

 

Prop 22 contains policies that attempt to tackle driver health insurance, accident insurance, and work hours (limiting app-based drivers from working more than 12 hours during a 24-hour period, unless the driver has been logged off for an uninterrupted 6 hours). Check out my go-to source of information this election season, BALLOTPEDIA

 

According to BALLOTPEDIA, “California Proposition 22, the App-Based Drivers as Contractors and Labor Policies Initiative, is on the ballot in California as an initiated state statute on November 3, 2020.”

 

Now that you have a basic understanding of Proposition 22, I’ll share some of the concerns my driver, who I will call “Brian,” shared with me.

 

Why We Should Vote No

 

Remember, a “no” vote is in opposition to the proposition. Before meeting Brian, I was under the impression a “yes” was on the side of drivers. However, many unions oppose Proposition 22 because it is written entirely by the likes of Uber, Lyft, DoorDash and other ride-share companies. This is what bothers my friendly but clearly frustrated friend Brian. How can the aforementioned companies write this initiative without including the people it will impact into the negotiations?

 

Brian shared his struggle to take a vacation. In his words, “I’m not making money when I have days off.” At my job, I am able to stack up Paid Time Off (PTO)—accumulating based on my hours worked. Brian does not have that luxury. He shared that he didn’t have a day off for all of 2019.

 

According to Brian, he paid $10,000 in taxes last year. Coupled with paying the health insurance for him and his family, he felt that he was bleeding money.

 

I am not an expert in insurance and the tax code, but the struggles Brian described can be easily imagined. Listening to Brian, I could tell he was hurting. 

 

Should people like Brian continue to struggle without PTO? While Prop 22 includes insurance stipends and attempts to ensure a living wage, the opposition feel that this initiative does not go far enough. Should we have our men and women working crazy hours without a proper vacation? What happens to their lives when unable to work the hours needed to qualify? Something is not working and must be changed. 

 

Ride-sharing companies believe Prop 22 is a step in the right direction and want us to vote “yes.”


 

Why We Should Vote Yes

 

This week saw me in Tempe, Arizona where I was visiting a close friend, soon to be moving to India. On my way to dinner, I pulled up the Lyft app and saw a dialogue box about Proposition 22. “Arizona has the same thing on their ballot?” I thought to myself before reading and seeing a reference to California. Lyft is in its right to spread its belief on its own app no matter how far. However, ride-sharing companies have pooled together their resources to spend $184,344,108.14 in support—affording a wide reach of influence. What are they spending so much money in support of? 

 

Here are some of its main points.

 

Engaged Time

 

Using the hours that a driver is either picking up a passenger or in the process of dropping them off, Prop 22 would guarantee that independent contractors will be paid so they do not fall below 120% of the minimum wage. 

 

Insurance

 

For those with at least 25 hours of engaged time—a subsidy equal to 82% the average California Covered (CC) premium for each month. Engaged hours between $15 and $25 gives a subsidy of 41% the average CC premium for each month.

 

Occupational accident insurance of up to $1 million will also be included.  


 

On my ride in Tempe, I asked my driver about Prop 22. He told me that he is in support because he values independence. Without being beholden to one company, he has the ability to switch between apps. If Uber is slow, he can switch to Lyft. “People like their independence,” he said. 

 

Uber’s CEO, Dara Khosrowshahi, believes a “no” to Prop 22 will cause the demand for rides and drivers to go down due to the increased cost of rides. This will then destroy the demand for rides and as an effect, fewer drivers will be needed. He says, “Why not just treat drivers as employees? Some of our critics argue that doing so would make drivers’ problems vanish overnight. It may seem like a reasonable assumption, but it’s one that I think ignores a stark reality: Uber would only have full-time jobs for a small fraction of our current drivers and only be able to operate in many fewer cities than today. Rides would be more expensive, which would significantly reduce the number of rides people could take and, in turn, the number of drivers needed to provide those trips. Uber would not be as widely available to riders, and drivers would lose the flexibility they have today if they became employees."

 

It is at this point that I feel the heavy weight that is democracy—I feel torn. 

 

The future Uber’s CEO described can be easily visualized. At the same time, I don’t want members of our communities working all year without rest, while also dealing with the high cost of insurance. But, should this responsibility be up to these companies?

 

I posed this question to a friend, and he told me he will be voting “yes” because the jobs being discussed are “gigs.” In his opinion, gigs are not meant to have insurance or be full-time with benefits. I tend to agree with this argument as well. When I first began taking ride-shares, the people I met were driving to supplement their passion for acting, music, or some sort of side hustle. Now, most people I have met drive for a living. 

 

Paying over a $100,000,000 kind of makes sense when I consider that their business model was not designed for a full-time model. 

 

Summary 

 

Both arguments resonate with me deeply. Although I believe companies need to start operating with a greater sense of humanity—where they can make their money, and while doing so, treat their employees and the planet with care. When I think about people like Brian having to effectively slave to survive (making less than $200 dollars for 8 hours of work is not uncommon as a driver), I first get sad, and then I get angry. 

 

How can the fifth largest economy in the WORLD allow its people to struggle to pay for insurance? Where exactly does all the money this state circulates go to? 

 

The Downtown Los Angeles skyline gets more beautiful every month. New buildings have been popping up for years. But look down on the streets and you see an increasing homeless population. Not helped by the high cost of housing—San Francisco is suffering the same fate. Residents of this beautiful state deserve better. Our crumbling infrastructure provides opportunities for Californians in need of a job. With the levels of mental illness faced in our streets, our government must be at the forefront of mental health. Everyone that calls California home should have 100% free health care and affordable housing. Those are, in my opinion, big reasons I’ve gone from hearing “I do this on the side. I’m really trying to become an actor,” and now instead hear the struggles of people barely making enough money to survive. 

 

Right now my vote is a “yes,” but I am not hardened in my position and thus willing to read/hear your argument for “no.” I believe this proposition is a middle ground until our state legislature is able to come up with solutions.