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Proposition 22: The Battle for Support of Gig Workers has Begun

Proposition 22, a bill that classifies drivers as independent contractors, was passed during the US general election held on November 3rd, 2020 with a whopping 58 percent of the ballots in California. The new state bill came following a bitter struggle backed by key ridesharing app companies.  Uber, Lyft and other impacted tech companies were at the helm of the fight against a labor law, AB5 that was passed in 2019.

“With this vote, drivers and delivery people will get what so many of you have been asking for: access to benefits and protections, while maintaining the flexibility and independence you want and deserve.

The future of independent work is more secure because so many drivers like you spoke up and made your voice heard – and votes across the state listened.”
~ Uber CEO Dara Khosrowshahi

The battle to support gig workers is foundational to JAUNTIN’ where we are building products and services to advance support and enable gig platforms for this new way of work so let’s explore what is at stake in this early battle for worker protections.  

What is Proposition 22?

The new Proposition 22 Bill (i.e., the Protect App-Based Drivers and Services Act”)  defines app-based transportation (rideshare) and delivery drivers as independent contractors and adopts labor and wage policies specific to app-based drivers and companies. The proposition grants app-based transportation and delivery companies a special exception to Assembly Bill 5 by classifying their drivers as “independent contractors”, exempting employers from providing benefits to certain drivers. 

 “California voters have spoken, and they stood with more than a million drivers who clearly said they want independence plus benefits. Prop 22 is now the first law in the nation requiring health, disability and earnings benefits for gig workers. Lyft stands ready to work with all interested parties, including drivers, labor unions and policymakers to build a stronger safety net for gig workers in the US.”
~ Lyft Chief Policy Officer, Anthony Foxx.

However, Prop 22 means that rideshare and delivery drivers lose the guarantee of minimum wages, as currently protected under AB5. 

The requirements for Proposition 22 Insurance are:

Loss and Liability Protection: No network companies shall find difficulties in operating unless there is the following insurance coverage[1]:

1. Occupational accident insurance to cover medical expenses and lost income resulting from injuries suffered while the driver is online with a network companies online-enabled application or platform. Policies shall at a minimum provide the following:

a. Coverage up to $1 million for medical expenses incurred.

b. Disability Payments equal to 66% of average weekly earnings from all network companies on the date of injury, subject to subdivision (a) of Section 4453 of the Labor Code for up to the 1st 104 weeks following the injury.

2. In the event of the death of the driver, coverage of burial expenses, and death benefits in accordance with Section 4701 and Section 4702 of the Labor Code.

3. Occupational accidental insurance or accidental death insurance under subdivisions (1) and (2) shall not cover an accident that occurs while online but outside of engaged time where the injured app-driver is in engaged time on one or more other network company platforms or where the app-based driver is engaged in personal activities.

4. Any benefits provided to an app-based driver under subdivision (1) or subdivision (2) of this section shall be considered amounts payable under a worker’s compensation law or disability benefit for the purpose of determining amounts payable under any insurance provided under California’s Uninsured Motorist Act (commencing with Section 11580 of the Insurance Code).

5. (i) For the benefit of the public, a DNC shall maintain automobile liability insurance of at least $1 million per occurrence to compensate 3rd parties for injuries or losses proximately caused by the operation of an automobile by an app-based driver during engaged time in instances where the automobile is not otherwise covered by a policy that complies with Section 11580.1 (1) of the Insurance Code. (ii) For the benefit of the public, a TNC shall maintain liability insurance policies as required by Article 4 (commencing with Section 5391) of Division 2 of the Public Utilities Code.

“The future of work is more secure[2]
~ Uber CEO Dara Khosrowshahi

Benefits of Proposition 22

Prop 22 ensures driver flexibility by maintaining the contractor status and at the same time provides new earning guarantees and benefits.  Further, it provides the drivers with occupational accident insurance to cover injuries and illnesses on the job and “funding for new health benefits” (applicable for drivers who work at least 15 hours a week). A driver who works for at least 15 hours will receive stipends towards private health insurance and additional stipends if they drive for more than 25 hours.

Prop 22 also promises “guaranteed minimum earnings” equal to 120% of California’s minimum wage. Those minimums, however, only apply to “engaged time” on the app, which is the 28-33% of workers’ shifts when there is a passenger in the car.[3]

“This decision will have impacts spread throughout the country. Unemployed workers want as many options as possible to bring in money to their families. With a precarious economy, the economy in tatters, and Covid continuing to surge, gig workers will rise to the forefront of many companies’ staffing choices.[4]
~ CEO, Influence Central. Stacy DeBroff.

So no minimum wage guarantees but in California driveshare and delivery workers are now supported with:

  1. Occupational accident insurance
  2. A healthcare stipend
  3. An earnings guarantee
  4. $0.30/engaged miles for expenses
  5. Automobile and liability insurance.

Conclusion

Proposition 22 has changed what it means to be a gig worker in California – and JAUNTIN’ is ready to support that transition.  Though Proposition 22 limits the initial support for gig workers by removing access to all the benefits required for full time workers it represents a step in the right direction to ensure improving support for people working in the gig economy, at least in California.  Our work at JAUNTIN’ is focused on supporting this transition across North America.  If you want to know more about Proposition 22 or other programs to support gig workers, please reach out.  We’re transforming how insurance is purchased, through seamless digital distribution of insurance policies tailored to the gig economy.  We understand that insurance isn’t one-size-fits-all, so our on demand and microinsurance options mean flexible benefits tailored for each gig worker. In the case of Prop 22, options include for per mile, per month, or per minute coverage.


[2] https://www.adweek.com/brand-marketing/potential-ripple-effects-proposition-22/

[3] Proposition 22: Analysing the impact on App-based driver’s earnings. Report by UC Riverside, School of Business, Center for Economic Forecasting Development.  

[4] https://www.adweek.com/brand-marketing/potential-ripple-effects-proposition-22/

Gig economy

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