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Capitol Update September 3, 2020

September 3 , 2020

California Federation of Republican Women
Sue Blair, President

By Eileen Freeman, CFRW Legislative Analyst

PROPOSITION 22 – App Based Drivers as Contractors & Labor Policies Initiative

CFRW Executive Committee Recommends:

I thought it would be important to give some background on this measure so there is a better understanding of how it got to this point.
In the 2019 Legislative Session, Assemblywoman Lorena Gonzalez, a San Diego Democrat, proposed AB-5 which would control contract labor.  Two years ago, the State Supreme Court essentially declared “gig” work to be an illegal misclassification and AB-5 was created to put the courts findings into law.  Uber, et al contended that they give drivers opportunities to supplement their incomes by working whenever it suits them.  It is not uncommon for someone to simultaneously drive for both Uber and Lyft.
This business model is not acceptable to unions and their political allies who contend it deprives gig works of rights and benefits of being on the payroll such as contributions for Social Security and Medicare benefits and overtime pay.  As independent contractors, gig workers cannot be union members and receive a 1099 for tax purposes.
Proposition 22 was created by Uber and Lyft. They raised $110,693,520 and collected the necessary signatures to get this on the ballot.  The proposition enacts labor and wage policies specific to app-based drivers and companies with minimum wage requirements and 30 cents a mile, limited hours during a 24 hour period, health care, occupational accident and life insurance.  So, the gig workers will be getting benefits.
The broader problem is that AB 5 affects many other contract workers such as film writers, truckers, even local government.  There were many attempts by these various groups to get Assemblywoman Gonzalez to support legislation to correct the problem but she has refused.  Other Legislators are looking at perhaps submitting bills to work thru the issues.  Prop 22 success will assist in supporting other changes for other contract workers.
Assemblywoman Gonzalez, has proposed a crackdown bill.  AB 1066 would allow the Department of Employment Development to delegate collection of unemployment insurance, 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 and now AB 1066 are basically taking away business and employee opportunities and new business models.  That is why the recommendation is a YES vote on Proposition 22.

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