California’s Gig Economy Model Could Be Coming to Your State Next
Proposition 22 was the most expensive ballot measure in the history of the state of California, and it could stand as one of its most influential. Since passing with 58% support in Tuesday’s election, Uber and Lyft, who heavily backed the initiative in their home state, might see similar policies in other states. Legal experts and labor organizers have their eyes on other states, anticipating that they might embrace Prop 22-like ballot measures.
Prop 22 is a mega money-saver for on-demand giants like Uber and Lyft as it exempts app-based drivers who work for them from having to be classified as standard employees. Instead, gig economy workers will be ruled as independent contractors who are not entitled to the benefits of a salaried employee including sick days and unemployment insurance. Prop 22 does usher in some worker protections, which include a minimum earnings standard and some healthcare benefits — albeit nothing near what full-time W-2 employees receive.
Like virtually everything political (including contested elections), worker classification regulations vary from state to state, and ultimately, each state has to define its own sets of rules on this topic. Given the cost-saving benefits that Prop 22 brings to businesses, other states could be moved to follow suit in future legislative moves. Prop 22 could “serve as a new blueprint for other states,” Seth Berenzweig, founder and managing partner of the business law firm Berenzweig Leonard, told NBC News.
It’s not just the savings benefits to companies that make measures like Prop 22 potentially attractive — it’s also the principle of enabling workers to stay self-employed and to be entitled to decent base hourly compensation. Under Prop 22, base hourly pay is about $16.80. That’s higher than the federal minimum wage, which has been at a standstill of $7.25 per hour since 2009, and also higher than the California minimum wage standard of $13 an hour for large businesses. Still, there are valid concerns around initiatives like Prop 22. For instance, if an Uber driver contracts COVID-19 while on the job, will they be covered by Uber for sick leave or unemployment benefits? The answer under Prop 22 is no.
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