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The topic of whether certain workers should be classified as employees or contractors has been hotly debated in CA. A court decision added another chapter to this saga.

About Proposition 22

Proposition 22 was included on California’s November 2020 election ballot. If it passed, app-based drivers and other “gig workers” would be deemed independent contractors instead of employees. That would effectively overturn Assembly Bill 5, which updated the ABC method for determining how workers should be classified.

This was a controversial topic. Corporations such as Uber, Lyft and DoorDash heavily promoted Proposition 22 and suggested it would benefit workers in various ways. On the other side, many residents and legislators felt it would be detrimental to millions of workers.

The Proposition was voted into law by a large majority. Following the election, its legality was questioned. A case to overturn it was filed and eventually heard at a Superior Court.

The Court’s Decision

Judge Frank Roesch oversaw the case. He ruled that Proposition 22 was unconstitutional. Roesch wrote that it “limits the power of a future legislature to define app-based drivers as workers subject to workers’ compensation law” and that the entirety of it is unenforceable. He also declared that the Proposition’s requirement for a seven-eights vote of approval to pass any future amendments was not constitutional.

Numerous legislators in the Golden State have been in favor of reclassifying independent contractors as employees. They believe employees receive superior benefits and protections. Additionally, they note that the state collects payroll taxes from employees but is not always able to obtain the necessary documentation and payment from contractors.

An Appeal Is In The Works

California has not heard the last word on the contractor or employee debate. The Superior Court finding is being appealed.

A spokesperson for the Protect App-Based Drivers & Services Coalition (PADS) wrote about the court’s decision. His commentary suggested the judge made a serious error and ignored a century’s worth of case law which requires the court to guard the voters’ right of initiative. It also included a reminder that the majority of CA residents voted in favor of the Proposition.

What Employers Should Know

Until this case goes through the appeal process, Proposition 22 will remain in effect. That means organizations which currently classify workers as independent contractors may continue to do so. We will watch for updates to this situation.

Running Background Checks

Whether your organization is bringing on contractors, employees or volunteers, running comprehensive background checks is a critical part of the process. These reports can include criminal searches, verifications and a variety of position focused searches. They help employers make informed decisions, create safe workplaces and demonstrate they are conducting due diligence.

Backgrounds Online can help you customize screening packages for any type of position. We also make efforts to keep up with laws that affect employers throughout the United States and provide a variety of educational resources. When you’re ready to run background checks for employment purposes, please contact us. We are available to assist you Monday through Friday from 5am to 6pm PT.