In 2018, the California Supreme Court came down with its ruling in Dynamex v. Superior Court leaving behind the old “Borello” test and implemented the “ABC test” for determining whether an individual is an employee or independent contractor. In 2019, California passed the now infamous law, AB5, which codified the Dynamex decision. The uproar was significant and app-based services like Uber, Lyft, and Grubhub spent $200 million to get Prop 22 on the ballot and in related advertising.
On November 3, 2020 California voters approved Prop 22 by almost a 60/40 margin but what happens now? The app-based service companies previously threatened to leave the state should Prop 22 fail but with one of the largest gig-economies in the nation, the effects on these businesses would have been massive. As a result of Prop 22’s passage, most drivers will receive 120% of minimum wage guarantee, reimbursement for certain expenses, insurance subsidies, as well as provide mandatory safety and anti-harassment trainings. To paraphrase The Rolling Stones, you can’t always get what you want, but if you try sometimes you get what you need. Here, Prop 22 didn’t exactly give app-based companies what they completely wanted but if they plan on staying in business in California, it certainly gave them what they needed.
The end result appears that app-based services will be able to keep things close to the status quo but what effect does Prop 22 have on other California businesses still struggling with how to implement AB 5? The short answer is, we don’t know yet. AB5 is a dense piece of legislation that has more explanations for its exceptions than it does for its enumerated applications. Until the California state legislature gets around to clarifying AB5 and courts slowly but surely work to clarify its application, the services of a knowledgeable and skilled employment attorney are going to be more and more valuable.