California Allows App-Based Drivers to Be Independent Contractors
Author: Michael Cardman, XpertHR Legal Editor
November 4, 2020
Gig economy companies like Uber, Lyft and Doordash will soon be able to classify app-based drivers as independent contractors if they guarantee a minimum earnings level, provide healthcare subsidies and insurance, and meet other requirements.
On Election Day, California voters approved Proposition 22, a ballot initiative that will amend the state code to establish that app-based drivers are independent contractors, not employees, as long as their hiring party - i.e., a Transportation Network Company (TNC) or Delivery Network Company (DNC) - does not:
- Set specific dates, times of day, or a minimum number of hours during which drivers must be logged into the company's app;
- Require drivers to accept any specific customer request as a condition of maintaining access to the company's app; or
- Restrict the drivers from working with competitors, except when they are engaged on the app, or from working in any other lawful occupation or business.
Among other things, TNCs and DNCs also would have to:
- Guarantee earnings of at least 120% of the state or local minimum wage for each hour a driver spends driving and at least $0.30 for each mile driven (adjusted for inflation every year);
- Provide healthcare subsidies, up to the average Affordable Care Act (ACA) employer contribution for the applicable average monthly covered California premiums;
- Provide occupational accident insurance and accidental death insurance;
- Develop a sexual harassment policy that meets state standards and require drivers to complete safety training;
- Conduct criminal background checks on drivers; and
- Make sure drivers log off the app for at least six hours after they have been on for 12 cumulative hours in any 24-hour period.
While there are many hurdles to overcome, it will be easier for drivers to be classified as independent contractors under these criteria than under the ABC Test established by the state legislature last year.
The amendments would take effect December 16, 2020, if the Secretary of State certifies the results of the election on December 11, 2020, as planned.