What do you see when you imagine the future of work? Is it all robots and AI? Are people only working four days a week? Predictions of how we’ll work ten, 20, or 30 years from now are constantly changing — this year, for example, the pandemic has forced us to alter our vision of the office and imagine a world in which remote work is the norm.
One of the biggest modern shifts in working life has been the explosion of the gig economy. It’s become so omnipresent that some believe gigging is the future of work. This Election Day, gig work is essentially up for vote in California, through a ballot measure called Proposition 22. It’s a law that would make it legal for app-based gig companies to continue treating their workers as if they’re self-employed, instead of classifying them as employees, and it has the potential to set precedent for legislation around the country.
So, why should you care, even if you’re not a California voter or an Uber driver? Because it’s not just strictly about app-based gig work. It’s a test of what model of work we want in the future, and what the relationship between an employer and employee should be. Ahead, we’ve broken down what the issues are, and what exactly Proposition 22 would change.
Why worker classification matters
As a worker, you fall under one of two classifications: employee or independent contractor. Being classified as an employee means your employer has certain obligations to you, including paying you at least minimum wage, overtime, workers’ comp, and paying unemployment insurance taxes so that you can withdraw unemployment benefits if you lose your job.
Rideshare companies like Uber and Lyft (as well as other app-based companies), have been calling their workers independent contractors since their founding, avoiding these employer obligations. But a push to enforce the distinction between classifications has ramped up in the past year with the passing of a California law called Assembly Bill 5.
After AB 5 became law, a court ordered rideshare companies to correct their misclassification immediately. Uber and Lyft asked for a hold on reclassifying drivers, claiming they couldn’t change their business model so quickly. Uber and Lyft even threatened to shut down in California if the court order was not stayed. Last week, an appeals court upheld the order.
But after November 3rd, it may be moot — because if Proposition 22 passes, it would create a near-permanent exemption on employee classification just for app-based rideshare and delivery service companies.
What does Proposition 22 actually do?
Proposition 22 is, essentially, a special law just for app-based companies like Uber, Lyft, Postmates, Instacart, and DoorDash. Under Prop 22, they would not be subject to the existing laws around employee classification. This exemption would essentially create a lesser class of employees who are deprived of the full workers’ protections and benefits that other employers have to provide.
Prop 22 proposes an apparent compromise to being above the law — like wage floor and expense reimbursement policies — but these are weaker than what’s already enshrined in labor law. A report published by the National Employment Law Project (NELP) and the Partnership for Working Families details why Prop 22 is no substitute for real employment protections. “Gig companies do claim that [Prop 22] will offer an unprecedented amount of benefits, but that is extremely misleading,” says Brian Chen, a staff attorney at NELP and one of the report’s authors. “Workers would take home less money every week. They would not be able to access paid sick or family leave. It also opens them up to discrimination on the basis of immigration status.”
The report breaks it down further:
• Prop 22 offers 120% of the minimum wage, but it’s misleading. The 120% only applies to the time rideshare drivers have a passenger (called “engaged time”). Drivers can spend over a third of their time waiting for a ride request, which is in part why wages for Uber drivers are so low — this waiting time isn’t compensated. According to the NELP report, under Prop 22, full-time rideshare drivers would make about $200 less per week than if they were simply treated as employees subject to state minimum wage laws.
• Drivers get about $287/week less in mileage reimbursements. Under California law, as employees, full-time drivers would have to be compensated at a rate of 57.5 cents per mile, for every mile driven. Under Prop 22, not only is the reimbursement rate 30 cents per mile, only the miles driven while completing a ride request are reimbursed.
• Bare-minimum health insurance. Under Prop 22, companies would not offer employer-sponsored health insurance, but instead give subsidies for California’s health insurance marketplace. Those who drive over 25 hours/week (counting only engaged time) would get a subsidy for 82% of the “average premium payment for the lowest-cost plan.” Not only does this mean that in actuality, depending on which plan they have, drivers may get far less than 82% of their premium paid for — the lowest-cost plans generally have higher out-of-pocket costs. The California marketplace’s Bronze plans, for example, will have a $6,300 deductible next year.
• App-based gig workers can’t unionize — maybe ever. A recent National Labor Relations Board ruling excluded rideshare drivers from being able to organize and collectively bargain for better terms of work. California can pass a law that includes them, but not if Prop 22 passes. The initiative makes that almost impossible, by requiring support from 7/8ths of the legislature to amend any part of Prop 22.
Prop 22 lets corporations set their own labor laws
“One of the key reasons that Proposition 22 is so dangerous is that it’s an unprecedented corporate power grab that would lock hundreds of thousands of drivers in the state of California into a permanent underclass of workers,” says Chen. “And it’s an extremely worrying sign that any company, if it has enough money, can buy their way to self-regulation rather than being regulated for the public good.” To date, almost $200 million has been spent by corporations like Lyft and Uber on the Yes on Prop 22 campaign.
Opponents argue that Prop 22 is like letting a fox guard the henhouse. By pushing through favorable legislation, companies can let themselves off the hook. “If you don't like the employment laws of the state in which you reside, you can rewrite them to your own liking,” Chen says. “You can dismantle and outlaw unions and craft just the level of workers' rights that you'd like to provide while crushing the actual demands of workers who are organizing for their rights.”
“This isn't even about the simple question of who's an employee and who's an independent contractor,” he continues. “The three branches of the state of California have already answered that question. What Proposition 22 does is fundamentally call into question what a job is, and what work should mean.”
Prop 22 encourages precarious, unstable gig work
According to a 2019 Upwork/Freelancers Union study, about 57 million people said they did some gig work in the previous 12 months, which is about 35% of the labor force. While gig work has existed for a long time, terms like “gig economy” or “permalancer” became popular right around the time of the Great Recession, as soaring unemployment coincided with the rise of online or app-based part-time work. Many people have embraced it as a blessing, but increasingly, people are recognizing its pitfalls.
Uber and Lyft argue that being an independent contractor allows flexibility and freedom, but many experts disagree. “They really are talking about a very specific thing, which is strictly scheduling flexibility — the ability to turn on the app when you want to work,” says Chen. Even this scheduling flexibility is overstated. Peaks and lulls in demand as well as rideshare companies’ own methods of incentivizing certain hours means that drivers’ schedules can become pretty fixed.
What’s more, gig workers are often underemployed and engage in the gig economy to make ends meet, not because they just want some extra cash. This kind of unregulated, unprotected work offers little stability. “We need to think about the bigger issue, which is really the economic security that allows people to actually have a say in their lives,” says Chen.
“We’re in a time when too many workers who have been excluded from decent jobs with livable wages are made to accept this insecure work,” says Chen. “Proposition 22 threatens to lock in this exploitative model.”
Prop 22 can spread to other industries and states
The vote on Prop 22 will send a statement that reverberates beyond just the app-based gig work industry. “It’s a race to the bottom, in the sense that the working conditions for Uber drivers, Instacart shoppers are not strictly limited to those businesses,” says Chen. “Misclassification, particularly enabled through an online app, can spread to any number of industries. It will turn good jobs into bad jobs. It’ll turn unionized workforces into non-unionized workforces. It really is this corrosive effect that will degrade the quality of work, and what we think of as acceptable work, across any number of industries.”
Is this the future of work that we dream of? If Prop 22 passes, similar legislation could be introduced in other jurisdictions. Right now, the race is tight. A Berkeley IGS poll conducted between October 16-21 showed that 46% of likely voters support Prop 22, while 42% oppose it. “Proposition 22, whether it passes or fails, is going to be the playbook that companies try to replicate in [other] states in the years to come,” says Chen.