Court Rules “Independent Contractor” Prop 22 Is Unconstitutional – Employment and HR

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Court rules “Independent Contractor” Prop 22 is unconstitutional

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On Friday, a judge in California’s Superior Court ruled that California Proposition 22 – which allowed certain gig economy workers to be classified as independent contractors – is unconstitutional.

California voters overwhelmingly passed the proposal last November, signaling their approval with companies like Uber, Lyft and DoorDash that gig workers should be classified as independent contractors rather than full-time employees. The verdict is the latest turn in a lengthy and expensive battle between gig economy giants and the state of California.

California lawmakers, with the support of workers’ unions, have long been pushing for independent contractors to be reclassified as workers. The state argues that workers receive more benefits and protection from employment status and that workers often have no real choice of work status. Those in favor of companies and workers deciding on their business relationship point out that the state can collect wage taxes such as social security and disability insurance from workers but does not receive such prepayments from independent contractors.

Ultimately, this ruling (which will be appealed against) means that the battle for independent contractors is ongoing. For most employers, however, Prop 22’s “gig economy” focus meant that most independent contractor classifications had to be reviewed and revised for legal compliance independently of Prop 22. The fight continues for the gig economy.

The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.

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