Workers Comp Zone


The Prop 22 ballot measure has passed, giving Uber, Lyft, and DoorDash a big victory.

Prop 22 exempts the app-based transportation and delivery companies from the application of AB 5 and the Dynamex “ABC employment test”.

Over $200 million in ad spending did the trick, as the gig-driver companies broke the record for the most spending on a California ballot initiative, in a sort of hail-mary bet-the-company campaign.

Any reader who did not see these ads must have just awakened from a long hibernation or a trip to a deserted island.

The ads worked.

Tallies as of November 4 show that Prop 22 was approved by 58.4% of the electorate, with 41.6% opposed. It was favored in all but 9 of California’s 58 counties,. The few counties where opponents prevailed were in the Bay Area and the North Coast counties. Prop 22 was favored by every county in the Central Valley and every county in Southern California.

This is a grievous political loss for organized labor in California, and a spray of cold water in the face of many prominent legislators and the applicant attorney bar.

At the moment Prop 22 only creates a carve-out from the application of AB5 for the app-based transport and delivery services. It follows legislation passed in 2020 that gave legislative exemptions from AB5 to certain occupations and groups. 

One can bet there there will be more trade groups and businesses coming to the legislature to plead their case for an exemption from AB5. Perhaps other well heeled groups will seek their own exemption at the ballot box if they do not get relief.

Commentators on Prop 22 have already noted that a large post-Prop 22 boost in stock price of Uber and Lyft made the ballot expenditure well worth the cost. This will not be lost on other groups.

 I expect that eventually there will be efforts to work out a new employment category for folks who don’t fit well within the employee or independent contractor model. There are think tanks that have produced research papers and seminars on this issue, such as the effort by The Brookings Institution’s Hamilton Project:

In Canada, there is the “dependent contractor” concept, dealing with workers who do not neatly fit as an employee or independent contractor. An analysis from lawyers at Baker and MacKenzie explains the hybrid status of some workers in a Canadian case involving drivers working with Foodora, an app-based food delivery company. Under Canadian law, those workers had the right to unionize:

Taking the lead on an issue like this may be a thankless task for California politicians, however. So at the moment we’re in a situation where AB5 generally applies unless a business or occupation gets a legislative or ballot pass.

My recent blog post noted that the injury benefits provided by Prop 22 are not equivalent to benefits that California workers’ comp provides:

But AB5 was so recent that California workers’ comp never got a real foothold with the app-based drivers and delivery people. And it won’t be happening now.

Stay tuned.

Julius Young