On March 13, the First Appellate District for the California Court of Appeal upheld the legality of Proposition 22. The upshot is that independent contractors earning money from companies like Uber, Lyft, Instacart, DoorDash, and others can continue doing so as independent workers. This is good news for those workers, for consumers, and the businesses in the gig economy.
As background, in 2019, the California legislature passed a bill known as AB-5. The law imposed a new state test for determining independent contractor (IC) status known as the ABC test, so called because it includes three specific factors (A, B, and C), and a worker must meet each of those factors to be considered an IC. Otherwise, a worker is considered a formal employee. Under AB-5, many ICs would suddenly become employees, losing the flexible work conditions to which they had become accustomed.
Gig economy companies launched a ballot initiative, Prop 22, which created an exemption from AB-5 for businesses that agreed to provide specific benefits. In November 2020, Prop 22 passed with a large margin of 58-41.
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Unions had been among the strongest advocates of AB-5 (in fact, the lead sponsor of the bill later quit the legislature to work for the California Labor Federation). This is hardly surprising, since independent contractors are not covered by the National Labor Relations Act. So, as one might expect, the unions...
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