Retailers Can Relax as Voters Give Gig-Economy Exemption

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Retailers Can Relax as Voters Give Gig-Economy Exemption

By Mike Troy - 11/04/2020
Retailers Can Relax As Voters Give Gig-Economy Exemption Instacart Shopper
Those who provide service on the Instacart platform can be classified as independent contractors following passage of Proposition 22 in California.

Retailers that use the services of Instacart, Postmates and DoorDash won a victory on Nov. 3 as voters in California approved a ballot measure that preserves the companies’ ability to classify workers as independent contractors.

In a vote with national implications, Proposition 22 in California passed by a 58.5%-to-41.6% margin, thereby allowing companies that rely on crowd-sourced labor to classify workers as independent contractors. Their ability to do so was challenged earlier this year when California’s Assembly Bill 5 (AB 5) went into effect with new requirements on how workers should be classified. Prop 22 effectively exempts companies reliant on crowd-sourced labor from complying with the worker classification provisions of AB 5 and eliminates any uncertainty that food retailers may have had about service continuity.

To secure a victory, proponents of Prop 22 spent nearly $200 million -- a new record -- on an extensive advertising campaign and overwhelmed the resources of organized labor, which opposed the measure. Shortly after AB 5 passed, gig economy stalwarts such as Uber, Lyft, Instacart, DoorDash and Postmates banded together and secured the signatures needed to place Prop 22 on the ballot. They also made sure that the measure was artfully worded so that those in favor of the companies' complying with AB 5 and classifying workers as employees had to vote “no” on the measure.

Proponents of the measure contended that its passage would save jobs, preserve worker flexibility and also protect vulnerable communities that would be at risk of reduced service levels. Opponents of Prop 22, maintained that a “no” vote was needed to protect workers and treat businesses equally, because treating workers as employees requires those employers to make contributions to Medicare, Social Security and unemployment insurance programs.

With the Proposition 22 issue settled, that doesn’t mean that the issue of worker classification goes away, or that retailers shouldn’t be concerned about a growing dependence on service providers that rely on independent contractors. Proponents of workers’ rights and organized labor are tenacious, and their challenges to the gig economy are likely to take another form in 2021 and beyond.