2020Transportation Network Companies
Transportation Network Companies (TNCs)

Written By ESR News Blog Editor Thomas Ahearn

On November 3, 2020, “California Proposition 22, the App-Based Drivers as Contractors and Labor Policies Initiative” was approved by voters in the state to allow app-based ride-hailing and delivery services such as Uber and Lyft to keep classifying their drivers as independent contractors instead of employees.

A “yes” vote for California Proposition 22 – which was passed by a margin of roughly 58 percent to 41 percent – supported this ballot initiative to define app-based transportation rideshare and delivery drivers as independent contractors and adopt labor and wage policies specific to app-based drivers and companies.

Proposition 22 considered app-based drivers to be independent contractors and not employees or agents. Therefore, the ballot measure overrode California Assembly Bill 5 (AB 5), which was signed in September 2019, on the question of whether app-based drivers are employees or independent contractors.

California Proposition 22 defined app-based drivers as workers who provide delivery services on an on-demand basis through a business’s online-enabled application or platform or use a personal vehicle to provide prearranged transportation services for compensation via a business’s online-enabled application or platform.

On October 22, 2020, a California appeals court ruled in a unanimous decision that Uber and Lyft must comply with a preliminary injunction requiring them to stop classifying their drivers as independent contractors so they receive the same protections and benefits as other workers at the transportation network companies (TNCs).

The appeals court decision did not address who should win The People of California v. Uber Technologies and Lyft but said the trial court “properly considered the harm shown by the record” in light of “its determination that the People showed a reasonable probability – indeed, an ‘overwhelming likelihood’ – of prevailing at trial.”

On August 10, 2020, California Superior Court Judge Ethan Schulman ruled that Uber and Lyft failed to comply with A.B. 5, a law that sought to ensure that “gig economy” workers could receive health insurance, workers’ compensation, and paid sick and family leave. Independent contractors are not provided these benefits.

The complaint filed in May 2020 on behalf of the People of the State of California claimed that Uber and Lyft misclassified drivers as independent contractors and not employees in violation of A.B. 5. Uber and Lyft helped to champion Proposition 22, a ballot initiative that would exempt them from A.B. 5, in the November 2020 election.

Gig economy businesses are taking the background checks of their on-demand workforces more seriously with ongoing monitoring and continuous screening on workers, according to Employment Screening Resources® (ESR), which selected this trend as one of the “ESR Top Ten Background Check Trends” for 2020.

Employment Screening Resources® (ESR) – a leading global background check provider – offers solutions for screening “gig economy” workers and a white paper titled “Background Screening of Extended Workforce Necessary to Compete in Modern Economy.” To learn more about ESR, visit www.esrcheck.com.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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