CA Prop 22 and Health Insurance for App-Based Drivers

An app-based driver is someone who drives for a ride-hailing app like Lyft and Uber or other apps like Postmates, Instacart and DoorDash. Someone who works as a driver for one of these apps either provides pre-arranged transportation services or on-demand delivery services in a personal vehicle. Working as an app-based driver can be a great side gig for someone who wants to use their weekends or a few hours each weekday after their full-time job to earn some extra money.

If you are an Uber driver or Lyft driver or you want to become an app-based driver in California, you should know about CA Proposition 22.

What Is CA Proposition 22?

Prop 22 in California was a ballot measure that determined ride-hailing companies should classify workers as independent contractors. The measure allows these companies to adopt the corresponding wage and labor policies. The initiative was voted on during the state election in November 2020.

Assembly Bill 5

CA Proposition 22 is an exception to Assembly Bill 5, which states that gig-economy workers must be classified as employees by companies that hire ride-hail drivers. The bill includes a test that determines whether a worker should be classified as an independent contractor. The test requires:

• The worker to be performing work outside of the company’s typical course of business.
• The worker to be free from the company’s direction and control in work performance.
• The worker to be working in an established business, occupation or trade of the same nature as the work they perform for the company.

Why Assembly Bill 5 Was Challenged

State employment laws related to labor did not contain policies specific to app-based drivers. Proposition 22 proposed wage and labor policies specific to these drivers and companies after conflicts between the California court and the ride-hailing companies Uber and Lyft. Despite Assembly Bill 5, Uber and Lyft refused to comply with the law, wanting to continue classifying drivers as independent contractors.

After the California court ordered the companies comply with the law, they stated they would no longer operate in California if they were forced to classify drivers as employees unless the court postponed its ruling.

Support for Proposition 22

Uber, Lyft, Instacart and DoorDash supported Prop 22 for the ballot election. In an analysis of Prop 22, California’s Legislative Analyst’s Office stated that many gig drivers work part time and only occasionally or for a short time. Uber released a study that found, depending on the market, fares would significantly increase for ride-hailing consumers if these companies were required to comply with Assembly Bill 5.

According to Uber, the vast majority of their drivers across the country work part-time hours each week. If Uber were required to classify its drivers as employees rather than independent contractors, the company would need to terminate the majority of its drivers, as they can support only a certain number of full-time jobs.

Companies like Uber, Lyft, Postmates, Instacart and DoorDash contributed millions of dollars to campaigns that supported Proposition 22. As a result, it has become California’s most expensive ballot measure in the state’s history. Funding was given to the campaign known as Yes on Prop 22, and the proposed legislation was promoted directly to customers using their apps.

These companies also took additional measures to gain support by encouraging — and sometimes forcing — workers to support the legislation. Instacart instructed workers to put pro-Prop 22 stickers in their customers’ shopping bags. DoorDash ordered its delivery drivers to use bags with the words “Yes on 22.” And Uber sent drivers messages in its app, prompting them to click either the “Yes on Prop 22” option or the “OK” option.

What Does This Mean for App-Based Drivers?

For app-based drivers, Proposition 22 may spell some changes, including a connection between Prop 22 and health insurance. As a result of being an exception to Assembly Bill 5, companies do not need to provide gig drivers with certain mandated employee benefits, such as:

• Overtime
• Employer-provided health benefits
• Paid sick time
• Unemployment insurance
• Bargaining rights

New Protections for Gig Drivers in California

Instead of the benefits provided to employees, gig drivers are given new protections, including:

• A health insurance stipend if they drive more than 15 hours each week
• A workplace that mandates safety training and criminal background checks
• Thirty cents per mile for costs during every engaged mile driven en route or with a passenger
• Medical expenses and some lost income if they are hurt while waiting or driving
• A workplace that prohibits discrimination and includes sexual harassment policies
• Accidental death insurance provided or made available for their spouse or dependents
• 120% of the local minimum wage paid for every hour spent driving but not for time spent waiting
• A limit of working no more than 12 hours within a 24-hour period, except when they have been logged off for at least six uninterrupted hours
• A written agreement that protects them from being terminated for reasons other than the reasons included in the agreement

If the hiring company considers you an independent contractor, you may be granted these benefits. But you will not be given the full suite of protections provided to workers classified as employees.

How You Are Classified as an Independent Contractor

You may be classified as an independent contractor if the company hiring you:

• Does not restrict you from performing other lawful work.
• Allows you to perform delivery or ride-booking services for other companies, including competitors.
• Does not prescribe specific times of day, a minimum number of hours or specific dates during which you must perform your services.
• Does not mandate that you accept certain service assignments or requests as a condition for being able to continue accessing the company’s platform or app.

Though Prop 22 is limited to app-based drivers, workers in California should continue paying attention to how courts handle issues surrounding the amendments to Assembly Bill 5. These changes will likely continue affecting employment classification in California and across the nation.

The Future of California’s Gig Economy

The fight over the gig economy’s future in California is already in full swing. A group of gig workers and a labor union already filed a lawsuit in California’s Supreme Court challenging Prop 22. The Service Employees International Union (SEIU) includes a ride-hail customer and a few ride-hail drivers seeking to overturn Proposition 22.

SEIU argues that Prop 22 unconstitutionally limits the state legislature’s power to put in place a workers’ comp program or pass legislation in the future concerning workers’ rights. Additionally, the complaint alleges the Proposition violates the requirement in the state’s constitution that a ballot measure must address a single subject.

The union also argues a large corporation should not be allowed to bankroll a ballot initiative. But others say Proposition 22 has the support of voters and many app-based drivers who voted to protect driver independence and implement new protections.

The California Supreme Court had thrown out the case in February 2021, and the union refiled the case with the Alameda County Superior Court.

If you are a gig driver in California, this lawsuit and potential future lawsuits may impact how you are paid and reimbursed for your work, along with what benefits you are provided.

How Can App-Based Drivers Get Health Insurance?

Health insurance can be a significant concern for independent contractors. If you do not have another job that provides you with an employer-sponsored health care plan, you may be wondering what health insurance you can get as an app-based driver.

The Affordable Care Act 

Though ride-booking companies like Uber do not directly provide health insurance to their independent contractors, health insurance is still important for workers. Under the Affordable Care Act, workers can enjoy certain benefits that allow them to be flexible in the way they earn a living.

If you want to work for a ride-hailing company part time while you pursue your career, the Affordable Care Act allows you to do so. You do not have to rely on an employer to provide you coverage. Instead, you can obtain the coverage you need, work part time and seek a potential career.

If you are a 1099 employee, you may already have health insurance through the Affordable Care Act. When you begin driving for a ride-booking company, you would continue using this health insurance.

COBRA

If you are transitioning from a position as a full-time employee to a position as an independent contractor, you may also qualify for COBRA. Under federal law, employees are allowed to remain on an employer-sponsored health insurance plan for a certain amount of time after leaving a company.

COBRA tends to have a higher cost as a health insurance option, as your plan is no longer paid in part or in full by your employer.

Open or Special Enrollment Period

You may also be able to obtain a health insurance plan during the open enrollment period or during a special enrollment period. The open enrollment period takes place for a limited time each year. If you need to obtain health insurance outside of open enrollment, you will need to qualify for a special enrollment period. For instance, you may be eligible for special enrollment if you lose your job.

The job of an app-based driver can be a risky one. You could be in an accident while driving and be injured as a result. Your injuries may require medical attention and treatment, and while your passenger may have some protection, you do not unless you purchase health insurance on your own. If you end up getting hurt, you need to have coverage for your medical expenses and recovery.

How Do You Choose a Health Care Plan?

If you are a California resident and want to work as an app-based driver, follow the tips below to choose a health care plan that is right for you:

1. Consider the Health Care Benefits You Will Actually Use 

How do you anticipate you will use your health insurance? If you are young, have no pre-existing medical conditions and expect a lower need for health care, you may want a plan with a lower monthly premium and a higher deductible. Though you will pay more out-of-pocket if you need health care services, if you do not end up needing these services, you can save money.

On the other hand, if you are older, have a pre-existing condition or will be working in a dangerous area, you may want to obtain a health care plan that offers more comprehensive coverage. Though this plan may be more expensive month-to-month, it will provide more protection and can save you money over time.

2. Compare the Annual Costs 

When you are considering which health insurance plan is right for you, you may be focused on the cost of your monthly premiums. But be sure to review your annual costs, as well. You should know what your plan is going to cost you each year and make sure it’s affordable. Comparing the annual prices of different plans will allow you to choose the right plan for you and your budget.

3. Review Your Health Plan Options 

Consider all the health insurance options available to you before you make your final decision. Health insurance plans can vary in the benefits they offer and the costs you will pay, so review each plan thoroughly to understand what is and isn’t included.

As a California resident, you can easily and quickly apply for health insurance at Health for California Insurance Center. Our app is simple and intuitive, solving what is usually a time-consuming, complicated process.