On election day, ballot measure Proposition 22, backed by App-based driver and delivery companies Ubder, Lyft, DoorDash, Instacart and Postmates passed in California, creating an exemption from labor legislation passed last year that required them to classify drivers as employees as opposed to independent contractors.

At issue is the future direction of a large portion of the economy – specifically, the ‘gig economy,’ and the economic security of workers in the face of the push and pull between two historical employment classifications and an emerging third model.

Last year’s AB 5 legislation in California caused more individuals to fall under the first classification – that of employee – with protections such as hourly minimum wages, overtime and unemployment and worker’s compensation benefits. Employees are also able to seek protections under federal and state civil and human rights laws. AB 5 also placed an emphasis on low wage workers in fields such as construction, home health care and janitorial services.

However, a trend among tech companies including the five that backed Proposition 22, has been to make heavy use of independent contractors, who do not have the above protections as they are considered independent of the companies for whom they provided services to. There has also been much focus on whether such classifications on the part of the companies have been correctly made, and whether they were seeking to provide less protections and pay while essentially treating workers as employees.

In an attempt to provide clarity as to the classification process, California’s Supreme Court set forth a 3 part test in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, essentially looking to see whether an employee’s work was free from the hiring entity’s control, whether the work was outside of the the hiring entity’s usual course of business and whether a worker has an independent business engaged in the type of work being performed. AB 5, drafted by California Assemblywoman Lorena Gonzalez was a codification of Dynamex.

Now with the passage of Proposition 22, a third model has emerged under which App-based drivers and couriers who use their own vehicles to provide on demand services are classified as independent contractors without the traditional protections of employees, but are provided such things as a guaranteed minimum pay rate while assigned a task, a review process for terminations and health stipends if they work enough hours.

Uber has been putting thought into such a third model as can be seen in what they refer to as priorities to ‘enhance the quality and security of independent work,’ and Door Dash CEO Tony Xu called the passage of Proposition 22, a ‘new framework,’ with ‘historic new protections’ in a company blog post.

However, Assemblywoman Gonzalez tweeted in response to Proposition 22’s passage that, “Uber & Lyft didn’t spend $200m talking about unions, they spent it lying about worker protections,” and vowed to continue to fight. Additionally, organizations such as the Gig Workers Collective are attempting to create a union of App-based drivers. It should also be noted that Proposition 22 was opposed by President Elect Joe Biden and Vice-President Elect Kamala Harris, who both supported a bill passed by the House of Representatives, but not the U.S. Senate that would seek more classifications in the direction of employees.

The direction of this third model going forward and the impact it might have on the rest of the country is unclear.


The State of NYC’s Digital Economy in Q1 2021

INTRODUCTION In taking a look at the state of NYC’s digital economy covering the first quarter of 2021, the area that looms largest is not surprisingly the devastating effect the pandemic has had on the larger economy.  Positive news and hopes for recovery have often focused on the digital economy, the shift to which has […]

Google Calls DOJ Antitrust Action ‘Deeply Flawed’

In a blog post by SVP of Global Affairs Kent Walker, Google responded on Tuesday to the arguments found in the antitrust action brought against it by the U.S. Department of Justice the same day, asserting that consumers are not forced to use their search services, but that they choose to because the company offers the “best […]

Calling Google the ‘Monopoly Gatekeeper of the Internet,’ U.S. Justice Department Files Antitrust Action

On Tuesday, the U.S. Department of Justice along with eleven states that include Florida, Texas and Arkansas filed a civil action against Google in the U.S. District Court for the District of Columbia alleging that the company unlawfully maintained “a monopoly in general search services and search advertising,” in violation of Section 2 of the Sherman Act. […]

The State of NYC’s Digital Economy in Q1 2021
INTRODUCTION In taking a look at the state of NYC’s digital economy …
Google Calls DOJ Antitrust Action ‘Deeply Flawed’
In a blog post by SVP of Global Affairs Kent Walker, Google responded on …

Following Nation’s First Cybersecurity Regulation, NYS Releases Recommendations to Regulate Social Media Platforms

On Wednesday New York State’s Department of Financial Services (DFS) released the results of its investigation into the July 15 hacking of the Twitter accounts of cryptocurrency firms and public figures such as Presidential candidate Joe Biden, using the opportunity to call for increased and more effective regulation of social media platforms. In a statement accompanying the report, DFS […]

International Agreement for Digital Tax Framework Delayed

On Monday the OECD announced that its efforts to develop a consensus international framework when it comes to taxing the digital economy has been delayed. Noting in a statement that while digital transformation “spurs innovation, generates efficiencies, and improves service while boosting more inclusive and sustainable growth,” the pace of change currently threatens to bring about unilateral digital tax […]

U.S. DOJ Announces Cryptocurrency Enforcement Framework

Noting that cryptocurrency is a “technology that could fundamentally transform how human beings interact and how we organize society,” yesterday U.S. Attorney General William Bar announced the publication of “Cryptocurrency: An Enforcement Framework,” calling it a ‘first-of-its kind’ effort. Drafted by the Department of Justice Cyber Digital Task Force, it seeks to provide “a comprehensive […]

Microsoft Announces App Store Principles to “Ensure Fairness” in the Digital Economy

Two days after the U.S. House Antitrust Subcommittee released the results of its investigation into Apple, Amazon, Facebook and Google on October 6 concerning their potential monopolistic control over the digital economy, Microsoft added its voice to the conversation. Notably absent as a target of the investigation, the company acknowledged in a blog post that “app stores have become […]

House Antitrust Subcommittee Sees Need to Restore Competition in the Digital Economy

On Tuesday the U.S. House Judiciary Antitrust Subcommittee released a report entitled “Investigation of Competition in the Digital Marketplace,” which sets forth their view that Apple, Amazon, Facebook and Google have been exercising monopolistic control over the digital economy. The result of a more than 16 month investigation which gathered information from anti-trust experts, market […]

‘Too Big to Care’

While speaking to the European Parliament’s Internal Market Committee, Internal Market Chief Thierry Breton recently said that digital platforms may have become “too big to care.” He stated this in the context that they “tend to neglect the consequences of their actions in our daily environments, whether it be in work [or] in our social […]