Big tech and organized labor are battling it out—and Californians are getting caught in the crosshairs.
Proposition 22, a ballot measure that classified app-based drivers as independent contractors, passed with a majority vote of 58 percent during the November general election. Since the law was enacted in mid-December, Californians have encountered rising fees, app-based drivers are having difficulty receiving tips, and workers are being laid off. With new legal hurdles and souring public opinion, the ballot measure is off to an inauspicious start. Although many are blaming big tech, the real culprit is aging labor law.
United States labor law utilizes a binary classification scheme, where workers are either employees or independent contractors. The word “employee” is embedded in the regulatory structures governing employment, such that companies with employees must abide by a vast array of legal obligations. But this rigid classification methodology, and its derivative legal tests, inconsistently applies to gig workers.
In recent years, California judges have lamented that worker classification tests, specifically the Borello Test, are inaccurate. Since 1989, the Borello Test, established in S.G. Borello & Sons Inc. v. Department of Industrial Relations, was the predominant method to determine employee versus independent contractor status in California. In Douglas O’Connor, et al. v. Uber, Judge Edward Chen asserted that the “application of the traditional test of employment – a test which evolved under an economic model very different from the new ‘sharing economy’” created “significant challenges” when applied to Uber’s business model. Judge Vince Chhabria, who presided over similar cases, found that the “test the California courts have developed over the 20th Century for classifying workers isn’t very helpful” in addressing contemporary problems. This has since been referred to as the “square peg into a round hole dilemma” by legal experts.
Assembly Bill 5 codified the ABC Test, which was first introduced in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. These metrics were designed to be more predictable, consistent, and simplistic than the Borello Test. Under the ABC Test, app-based companies would have been required to classify their workers as employees and ultimately forgo the defining features of gig employment. After losing in the courts, these companies turned to voters as a last-ditch effort.
The Yes on Prop 22 coalition, funded by companies such as Uber, Lyft, and DoorDash, poured over $200 million into its campaign to “save app-based jobs and services.” The coalition warned that if the ballot measure did not pass, gig apps would have higher prices and workers would be laid off. Despite passing Proposition 22, Californians are still experiencing these economic woes.
In order to garner more votes, app-based companies promised better compensation, health benefits, and civil rights protections for gig workers, even though such guarantees necessitated more fees and changes. By doing so, gig work began to resemble traditional employment, rather than an alternative work arrangement.
But saying “no” to Proposition 22 would not have yielded better outcomes. Classifying gig workers as employees would have resulted in a greater erosion of choice, flexibility, and autonomy, if not a complete discontinuation of services in the state.
The ballot measure was never intended to fix antiquated employment classifications. It was a direct response to the ABC Test which, rather than sort through the nuance of gig work, hastily classified these workers as employees.
Gig workers and consumers will continue to experience economic woes until there is significant clarification in state and federal employment classifications. Some legal experts have advocated for a third, hybrid status for gig workers, a category in between independent contractor and employee. Although Proposition 22 attempted to create this third category, it did so unilaterally and covered its blindspots with a multi-million dollar campaign. For this reason, critics have dismissed the proposal as an example of big tech writing their own exemption.
Genuine reform ought to include policymakers, app companies, gig workers, and consumers. This is the spirit of American labor. Stakeholders come together at the bargaining table and usher change through compromise. Assembly Bill 5 and Proposition 22 suffered from a lack of imagination, failing to consider the possibilities, such as a portable benefits system, that may be possible when employment classifications are revised.
California is a legal and social experiment in labor law reform. Assembly Bill 5 missed the mark and Proposition 22 followed suit. Let’s go back to the drawing board and think about how gig workers fit into our modern, ever-evolving economy.
Rachel Chiu is a Young Voices contributor who writes about technology and employment policy. She studied and researched labor relations at Cornell University. Follow her on Twitter: @rachelhchiu.