The gig economy has become a significant part of California’s labor market, offering flexibility and new opportunities for millions of workers. However, the nature of gig work raises important questions about the rights and protections available to these workers. California has been at the forefront of addressing these issues, implementing laws and regulations aimed at providing gig workers with greater security and benefits. Here, a Los Angeles employment attorney explains the protections available.
Classification of Workers: AB 5 and Prop 22
AB 5 – The ABC Test
One of the most significant developments in California was the passage of Assembly Bill 5 (AB 5) in 2019. AB 5 established a strict standard, known as the ABC test, to determine whether a worker is classified as an employee or an independent contractor. Under the ABC test, a worker is considered an employee unless:
- A: The worker is free from the control and direction of the hiring entity in performing the work.
- B: The work performed is outside the usual course of the hiring entity’s business.
- C: The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
This classification is crucial because employees are entitled to benefits such as minimum wage, overtime pay, workers’ compensation, unemployment insurance, and the right to organize, while independent contractors typically are not.
Proposition 22
In response to AB 5, companies like Uber, Lyft, and DoorDash backed Proposition 22, which was passed by voters in November 2020. Prop 22 allowed app-based rideshare and delivery companies to classify their drivers as independent contractors rather than employees, while still providing certain benefits. Under Prop 22, these gig workers receive:
- A guaranteed minimum earnings floor of 120% of the local minimum wage for engaged time (time spent driving passengers or delivering food).
- A healthcare subsidy for drivers who work more than 15 hours per week.
- Occupational accident insurance and accidental death insurance.
- Protection against discrimination and sexual harassment.
However, Prop 22 was controversial and faced legal challenges. In 2021, a California judge ruled that parts of Prop 22 were unconstitutional. This decision has been appealed, but the California Supreme Court upheld the law in July 2024. As a result, Uber and other app makers can still treat drivers and delivery workers as independent contractors.
Wage and Hour Protections
For workers classified as employees under AB 5, California’s minimum wage laws apply. As of January 1, 2024, the minimum wage is $16 per hour for all employers, regardless of size. Employees are also entitled to overtime pay for working more than eight hours in a day or 40 hours in a week.
However, under Prop 22, app-based drivers are guaranteed a minimum earnings floor only for engaged time, not for all hours worked. This means that time spent waiting for a ride or delivery request may not be compensated at the same rate.
Meal and Rest Breaks
Employees in California are entitled to meal and rest breaks. Workers classified as employees must receive a 30-minute unpaid meal break if they work more than five hours in a day and a 10-minute paid rest break for every four hours worked. These protections generally do not apply to independent contractors, although some gig companies may offer breaks as part of their policies.
Health and Safety Protections
Traditional employees are entitled to workers’ compensation and occupational safety protections under California law. Gig workers classified under Prop 22 do not have access to traditional workers’ compensation but receive limited coverage through occupational accident insurance provided by their platforms. Safety training and guidelines are also required under Prop 22, although these measures may not be as comprehensive as those for employees.
Unemployment Benefits and Healthcare
Gig workers classified as independent contractors generally do not qualify for unemployment benefits. While the federal Pandemic Unemployment Assistance (PUA) program temporarily extended benefits to gig workers during COVID-19, this was a temporary measure. Under Prop 22, some healthcare subsidies are available for drivers who work more than 15 hours per week, but these subsidies are less comprehensive than traditional employer-sponsored health insurance.
Anti-Discrimination Protections
Gig workers in California, whether classified as employees or independent contractors, are protected against discrimination based on race, gender, age, disability, and other characteristics. Prop 22 also includes provisions that protect app-based drivers from discrimination and harassment.
Collective Bargaining and Organizing Rights
Employees in California have the right to unionize and collectively bargain, but independent contractors do not enjoy these rights under the National Labor Relations Act (NLRA). Despite this, some gig workers have organized through associations to advocate for better working conditions and protections.