California Litigation Review Publishes Rachel Terp’s Article on Proposition 22

Proposition 22 exempted hundreds of thousands of California gig drivers from the statute that regulates who may be considered an independent contractor. Funded by tech giants and passed by California voters, Proposition 22 will have resounding effects in this state and beyond. Attorney Rachel Terp is proud to contribute an article on this important topic to the 2020 edition of the California Litigation Review, an annual law review published by the Litigation Section of the California Lawyers Association, published in June of 2021. Ms. Terp’s article, “The Many-Headed Hydra of App-Based Driver Classification” is available on this website (pdf / jpg), and excerpted below:

Proposition 22 was a last-ditch effort funded and led by Uber, Lyft, DoorDash, Instacart, Postmates, and other tech companies to buy a loophole in California’s worker protection laws. It worked, at least for now. As of December 16, 2020, most app-based drivers are, arguably, independent contractors under California law.

The lead up to Proposition 22’s approval and enactment could hardly have been more dramatic or high stakes, and the drama continues into 2021. The California Supreme Court’s 2018 Dynamex decision, codified by the state legislature in 2020, left little space for app-based rideshare and delivery companies to credibly justify classifying drivers as independent contractors. California’s courts were on the precipice of enjoining Uber and Lyft to treat drivers as employees. Then, California voters passed Proposition 22, which makes app-based drivers independent contractors under specific circumstances. Within days of the new law taking effect, large employers announced plans to outsource jobs to gig-companies, and the Service Employees International Union (“SEIU”) petitioned the California Supreme Court for a writ challenging Proposition 22’s constitutionality. The Court denied the writ, directing the SEIU to start its claim at the trial court level.

This article describes these developments and Proposition 22’s possible impacts on independent contractor litigation, both ongoing and potential.

Ms. Terp thanks the excellent editors of the California Litigation Review and Attorney Catha Worthman for their contributions to this article.

This article was completed before (and published after) the May 2021 decision of the Biden Administration’s United States Department of Labor to rescind the Trump Administration’s independent contractor rule, which was a positive and noteworthy development.