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What Does Prop 22 Really Mean For Independent Contractors and The Gig Economy?

By August 27, 2020September 10th, 2021No Comments
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There has been a paradigm shift in the US workforce, keeping a whole sector of our economy in flux; the independent contractor. Becoming a 1099 or gig economy worker is exploding since the pandemic started. It proved to be a viable and dependable way of generating income when others are losing everything. 

However, there is proposed legislation that will force these hard-working individuals to be reclassified as W2 employees. California has taken a stance against independent contractors by introducing a bill late last year (AB5). AB5 tightens the guidelines that determine what an independent contractor is. These guidelines will require virtually ALL delivery drivers to reclassify as W2 employees. This has potential catastrophic effects on businesses with existing systems that utilize independent contractors.

For this reason, companies like Uber, Lyft and Doordash are fighting hard to stop this bill. California Attorney General, Xavier Becerra, attempted to force these companies to reclassify to a W2 model by using an executive order. Lyft had announced that August 21st it was going to stop all operations in California as a result of Xavier Becerra’s executive order. Luckily, California courts granted an emergency stay for Lyft and Uber, which stopped this reckless order from going into effect. What would happen if Proposition 22 failed? At minimum, the cost of goods delivered or ridesharing would increase dramatically, or worse, these companies would stop doing business in California completely. This means no more rideshare, no more food delivery, no more business delivery and no more same-day delivery.

Proposition 22 means keeping the following for today’s gig economy 1099 worker:
  • Flexible Work Hours
  • Control Over Their Taxes
  • Business Ownership And Its Perks
  • Control Over Their Paycheck
  • Freedom When Choosing Insurance

Proposition 22 was introduced in order to preserve all the benefits the independent contractor. Visit www.yeson22.com to read more about this incredibly important proposition.

As the gig economy continues to grow keep in mind the things that are at risk. Proposition 22 will preserve these principles. Assembly Bill 5 will destroy them. We hope the individuals who make our lives easier will continue to do so without worrying about their income, their livelihood, and their careers being upended by poor legislative decisions. Learn more about how Prop 22 will impact independent contractors here.