Capitol Update October 15, 2020

PROPOSITION 22  –  App Based Drivers as Contractors & Labor Policies InitiativeCFRW Executive Committee Recommends:

HISTORY
 
Proposition 22 is the result of action taken by the California Legislature by adopting AB-5 in the 2019 session. This bill was pushed by the unions to limit contract workers primarily aimed at Uber & Lyft.

The union’s contention was they should be employees just like cab drivers. Unfortunately, the language has affected many other industries including trucking, screen writers and local government that offers classes through park agencies.
 
Uber and Lyft sued claiming the State did not have the right to regulate this business model.  The State Supreme Court essentially declared “gig” work to be an illegal misclassification and therefore AB-5 was put into law.   
 
This business model is not acceptable to unions and their political allies who contend it deprives gig workers of rights and benefits of being on a payroll, such as contributions for Social Security and Medicare benefits and overtime pay. As gig workers they receive a 1099 for tax purposes.
 
Prop 22 enacts labor and wage requirements and 30 cents a mile, limited hours during a 24 hour period, health care, occupational accident and life insurance.  With Prop 22, gig workers will get benefits.
 
The broader problem is with AB-5 in general. There have been several bills during this session to “fix” the affects of AB-5 on other industries. Assemblywoman Gonzalez who carried AB-5, has not been receptive to correcting the other industries. There was a bill signed by the Governor, AB 2257 which gave some relief to government groups but it is not broad enough. This next legislative session will see more proposed bills but the unions will be there to oppose. Assemblywoman Gonzalez proposed AB 1066 that would allow the Dept. of Employment Development to delegate collection of unemployment insurance and payroll taxes. It specifically mentions going after companies using “misclassified independent contractors”. 
 
The question is, how much government intervention should occur in a business model that is working not only for the companies, but also for the contract employee?  AB 5 basically takes away business and employee opportunities and creative new business models. 
 
This is why, the recommendation is a YES vote on Proposition 22.