The issue of gig worker classification has been a contentious topic in California and beyond, as we reported in our previous editions.

Proposition 22, passed by California voters in November 2020, allows app-based transportation and delivery companies to classify their drivers as independent contractors. This decision overturned Assembly Bill 5 (AB 5), which mandated employee status for many gig workers, entitling them to comprehensive benefits such as minimum wage, overtime pay, and unemployment insurance.

In August 2021, a California Court ruled Proposition 22 unconstitutional, challenging the framework set by the ballot measure.

However, in March 2023, the 1st District Court of Appeal overturned this ruling, stating that Proposition 22 must remain state law. This marked a significant victory for app-based companies, reinforcing the independent contractor model and its implications.

The Service Employees International Union and a group of rideshare drivers, who had initially challenged Proposition 22, appealed the Court of Appeal's decision.

On June 28, 2023, the California Supreme Court granted their request to review its constitutionality.

The court, however, ruled that Proposition 22 was a valid exercise of voter initiative power, providing a critical legal framework for gig economy companies.

The ruling grants app-based companies the flexibility to manage their workforce efficiently, allowing for scaling up or down based on demand without the constraints of traditional employment models.

Companies must, however, ensure compliance with Proposition 22's requirements, including providing minimum earnings guarantees, healthcare subsidies, and accident insurance.