(CNN) In a major win for gig economy companies, CNN projects California voters have passed a costly and controversial ballot measure to exempt firms like Uber and Lyft from having to classify their. Concerns over employee misclassification, especially in the gig economy, drove support for the bill, but it remains divisive. The law codifies and expands the scope of the so-called 'ABC test', established in the Dynamex ruling. That test states that a worker must be classified as an employee, and not a contractor, unless the employment meets all of the following conditions: (A) the individual is free from direction. Freelance writers in California who have been seeing their publishing opportunities sharply cut back or even eliminated by publishers are blaming the state’s new gig economy law, which goes into.

• California Gig Law Musicians
• California Gig Law Issues
• Truck Drivers California Gig Law
• California Gig Law Exceptions

On November 3, 2020, California voters passed ballot initiative Proposition 22, the so-called California gig worker law, which, effective January 1, 2021, will exempt app-based transportation and delivery companies such as Uber, Lyft, and Door Dash from providing employee benefits to certain drivers. At the same time, Proposition 22 will enact certain wage and labor policies specific to app-based drivers and companies. Essentially, Proposition 22 creates a new type of worker, an independent contractor that enjoys certain similar benefits and protections afforded to employees. This post provides an overview of the new California gig worker law.

California Proposition 22 Overview:

Minimum Earnings Threshold

Proposition 22 entitles app-based drivers to a minimum earnings threshold. The minimum earnings threshold is 120% of the minimum wage (applied to a driver’s “engaged” time) plus an additional $0.30/engaged mile (to be adjusted for inflation). “Engaged” time is the time between a driver accepting a service request and completing the request.

Hour Limitations

Under the new California gig worker law, app-based drivers cannot work more than 12 hours during a 24-hour period without logging off for an uninterrupted 6 hours.

Healthcare Subsidies

With the new gig worker law, companies must provide healthcare subsidies equal to 82% of the average California Covered (CC) premium for each month. This subsidy applies to drivers who average at least 25 hours per week of engaged time during a calendar quarter. Companies provide healthcare subsidies equal to 41% of the CC premium each month for drivers that average between 15 and 25 hours of engaged time per week during a calendar quarter.

Occupational Accident Insurance

Proposition 22 requires companies to provide or make available occupational accident insurance. The insurance must cover at least $1 million in medical expenses and lost income resulting from injuries suffered while a driver is “online.” Online is defined as the time where a driver is using the app/is eligible to receive service requests but not when engaged in personal activities. The insurance provides disability payments equal to 66% of a driver’s average weekly earnings during the previous four weeks before suffering injuries while online. The disability payments can last 104 weeks (or two years).

Accidental Death Insurance

Under the new California gig worker law, companies provide or make available accidental death insurance for the benefit of a driver’s spouse, children, or other dependents when the driver dies while using the app.

Additional California Proposition 22 Policies

In addition, California’s new gig worker law also requires companies to establish a variety of other programs and policies. Such as:

• Anti-discrimination and sexual harassment policies.
• Training programs for drivers related to driving, traffic, and accident avoidance.
• Recognizing and reporting sexual assault and misconduct.
• Zero-tolerance policies for driving under the influence of drugs or alcohol.
• Criminal background checks for drivers.

Further, Proposition 22 criminalizes false impersonation of an app-based driver, classifying it as a misdemeanor.

California Gig Worker Law Hybrid Status

in effect, Proposition 22 creates a hybrid worker, potentially allowing companies and workers the best of both worlds. The new law guarantees baseline compensation and benefits while maintaining freedom and flexibility. While companies are required to provide certain benefits, they are not required to provide full-time benefits to gig workers who companies have little to no control over. This is a promising development for gig workers. Other industries as well as companies in other states are paying close attention to the effects of Proposition 22. Some have already analyzed how a similar arrangement could benefit themselves and their workers.

Washington State Gig Worker Laws

Washington State does not yet have a gig worker classification structure. It is important to classify workers correctly. Penalties for misclassifying an independent contractor who is actually an employee could be significant. Foundry Law Group has previously written about factors to consider when classifying your workers. In addition, if you determine that someone you hired as an independent contractor is likely an employee, we have provided guidance on the necessary steps to reclassify that person as an employee.

California Gig Worker Law Resources

A legislative analysis of California’s Proposition 22 can be found here.

The full text of California’s Proposition 22 can be found here.

Contact Foundry Law Group

In many cases, deciding whether your worker is an independent contractor or an employee can be a confusing determination. Foundry Law Group is available and happy to assist with any questions you may have, please contact us for more information.

What’s the Deal with the New California Gig Worker Law (AB5)?

A change is coming to freelancers and other workers in California, affecting a broad spectrum of people, including writers, designers, cosmetologists, and Uber/Lyft drivers. Some people are pleased with it, others… not so much. It’s a new state law taking effect in January 2020, known as AB5 (Assembly Bill 5) or the “gig worker law” or the “gig worker bill.” Here’s what you need to know.

California Gig Law Musicians

First, the backstory. Legally speaking, there are essentially 2 types of workers: employees and independent contractors (aka “freelancers” or “gig workers”). Companies, as well as many workers, often prefer an independent contractor situation rather than traditional employment for several reasons. But companies do not necessarily get to decide whether a worker is an employee or an independent contractor; nor does the worker. The law decides this.

How does the law determine who is an independent contractor?

Before April 2018, workers generally could be considered freelancers if the hiring entity did not have control over the freelancer, including things like schedule, method of performing the services, etc. (the “control” standard). Control over the worker means they are an employee instead of a freelancer. That month, the Dynamex court case was decided which created a higher standard for a worker to be considered a freelancer. The court said that you may be an independent contractor only if you meet ALL of the following:

(a) you are free from the control and direction of the employer;
(b) you perform work that is outside the hirer’s core business; AND
(c) you customarily engage in “an independently established trade, occupation or business.”

This became known as the “Dynamex Test.” The 2nd requirement – whether you perform work within the hirer’s core business – potentially moves millions more workers from freelancers into the employee category.

In September 2019, the California legislature passed AB5, known as the “Gig Worker Law,” which goes into effect January 2020. AB5 essentially reaffirms the Dynamex Test. But it also created many exemptions, and a very complex structure for determining when those exemptions apply. For those who are exempt, the older “control” standard applies.

Some professions were given blanket exemptions, including doctors, lawyers, finance professionals, and others. Others were given conditional exemptions, including marketing professionals, human resources, graphic designers, fine artists, photographers, ‘freelance’ journalists, ‘freelancer’ writers or editors, and others.

In particular, the conditions on journalists, photographers, and writers are highly controversial, and many people are concerned it may “wipe them out.” These professionals may be exempt only if they do not provide content submissions to any particular client more than 35 times per year. The idea is that if you are writing more than 3 stories per month for a media company, you really “should” be on staff with that company.

The trouble is, these companies may not agree with that. And instead of simply converting a freelancer to an employee, they may just drop the worker altogether. Many such companies are considering shutting out California based freelancers to avoid the new regulations.

See more details about the new law at our Guide to Freelancer vs Employee.

What can I do about the new law?

If you’re not sure how the new law applies to you, contact a business or employment lawyer.

California Gig Law Issues

If you’re not happy with the changes, you can contact the office of Assemblymember Lorena Gonzalez, who wrote the law. She says she is open to making some changes. Or contact your own California assemblymember and/or state senator (see our Guide to Legal Basics), or Governor Newsom’s office. Also, there will likely be a ballot measure in November 2020 to overturn the new law. It’s being funded by Uber, Lyft, and DoorDash.

If you are happy with the changes, then you can just sit back and enjoy.

Truck Drivers California Gig Law

Either way, let us know if you are concerned how the new law affects you.

California Gig Law Exceptions