Proposition 22 Passes, Locking In Sub-Employee Status For Gig Workers

Proposition 22, a historically expensive effort by gig companies to continue classifying their workers as independent contractors, was approved by California voters Tuesday.

The measure was placed on the ballot by a handful of gig companies — namely Lyft, Uber, DoorDash, Instacart and Postmates — after the California Legislature passed AB 5 last year. The new law forces those companies to classify more of their workers as employees rather than contractors, and offer them workers' compensation, overtime pay and other basic benefits they hadn't previously had to provide.

The ballot initiative and the fight to get it passed was unprecedented for numerous reasons, from the amount of money behind it to the use of apps in the campaign strategy.

Proposition 22 will provide an exemption from AB 5 for any company that provides transportation or delivery services through an app. It would enshrine into law a kind of third employment category: the contract gig worker, one with fewer benefits than a traditional employee. This has for years been a goal of gig companies, who have pursued it at the federal level, and have already had success getting legislation on the books in a number of states.

The statute created by Proposition 22 would be very hard to change at the local and state level. It prevents local governments from passing laws that require companies to provide additional benefits and protections for gig workers. It is also among the hardest statutes for the Legislature to alter because of a provision requiring a seven-eighths supermajority.

Proposition 22 was also the most expensive ballot initiative campaign in California history. Backers raised over $200 million, almost all of which came from five gig companies: Lyft, Uber, DoorDash, Instacart and Postmates. That was 10 times as much as that raised by the opposition, which drew most of its funding from organized labor.

Gig companies said the proposition was essential for them to continue operating in California as they have been, with some, like Lyft and Uber, even threatening to temporarily suspend service if it didn't pass. Labor advocates, though, opposed the proposition, arguing it would establish a substandard class of workers that could spread to other industries and other states.

Proposition 22 defies all three branches of California's government, each of which has either directly or indirectly deemed the longstanding gig economy worker classification illegal.

In this contest, gig companies also had an unprecedented direct-to-voter access advantage, never before seen in a state proposition contest. The companies used their own app-based platforms to push their message to millions of consumers and workers, a strategy many election observers have said will form the playbook for app-based campaigns in years to come.