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Posted in: Personal Injury | Auto Accident

How Prop 22 Affects Passengers and Drivers of Uber, Lyft and Other TNCs

Jul 28, 2022

We are living in a “gig” economy. More people than ever are working as ride-hail and food-delivery drivers for transportation network carriers (or TNCs) like Uber, Lyft and DoorDash.

There are certainly benefits to this type of work, such as flexibility and independence that appeal to many workers attempting to fill gaps in their finances. However, what many fail to consider are its disadvantages, such as stress, lack of benefits and the increased chance of getting into an accident.

As recently highlighted by California’s Proposition 22, drivers for app-based companies, must now consider their liability in an accident. As if filing an auto accident claim isn’t stressful enough, Prop 22 has clouded the issue of liability within the ride-and-delivery industry.

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Here’s a closer look at the rise of gig apps, an overview of what Prop 22 means for California gig workers and their passengers, and why proactively protecting yourself in the event of a car accident, or other driving-related issue, is critical.

The Rise of TNC Gig Apps

The traditional economy has undergone a major transformation. Many conventional 9-to-5 work schedules have gone the way of the dinosaur. Instead, many workers are turning to “gig” work, which allows them to control the type, time, and amount of work they take on.

While gig workers perform a wide variety of tasks, including everything from providing technical support to writing and editing work, ride-and-delivery jobs are the most prevalent and well-known type of gig work.

Led by TNCs like Uber, Lyft and DoorDash, the popularity of these services is skyrocketing and is expected to exceed $185 billion by 2026. During the pandemic, food-delivery apps like Uber Eats,GrubHub and others also underwent a major boom.

The gig economy has appealing benefits for many workers, including work autonomy, flexibility, reduced risk of job and income loss, and increased earning potential. For TNCs, having an influx of gig workers provides business advantages like agility and scalability, as well as reduced costs for employee benefits and commercial space.

But, the gig economy has also led to new challenges and questions — including whether gig workers should be viewed as “employees” or “independent contractors.” Not surprisingly, the interests of gig workers and TNCs often don’t align. This was clearly exemplified in the controversy surrounding Proposition 22.

What Is Prop 22?

During California's 2020 elections, Prop 22, the App-Based Drivers as Contractors and Labor Policies Initiative, was included on the California ballot. It sought to define app-based ride- and delivery- drivers as independent contractors, which would exclude them from critical employee rights, such as minimum wages, expense reimbursement, and unemployment compensation.

Led by TNCs seeking to deny their workers access to employee rights and benefits, these companies developed Prop 22 in response to growing business concerns. According to the National Employment Law Project, these TNCs spent more than $224 million on a campaign promoting Prop 22 and it is far inferior set of benefits for app-based workers.

Due to what was widely perceived as false advertising, Prop 22 passed with a 58.62 percent “Yes” vote. Much of the focus was on the impact of the loss of overtime pay, sick time, healthcare, and unemployment insurance for these drivers. However the issue of liability for traffic accidents was widely overlooked.

Prop 22, Drivers and TNCs: Who’s Responsible?

Given how quickly the ride-and-delivery industry took off after Uber started its enterprise in 2009, it’s not surprising that traffic accidents among TNC drivers soon followed. In the early days of the emerging gig economy, TNCs suggested that because their apps were merely matchmaking services between drivers and fares drivers were solely liable for any injury claims and lawsuits.

However, in 2014, California passed AB 2293, which defined these companies as “transportation network carriers.” For the benefit of both drivers and their passengers, iAB 2293 established that the TNC insurance company would be the primary insurer and carry a minimum insurance policy of $50,000 for drivers.

The California Public Utilities Commission’s (CPUC) also determined that as “common carriers,” Uber, Lyft and other TNCs had a duty to their passengers, and were responsible for providing “the utmost care and diligence for their safe passage.”

Just six years later, TNCs responded with Prop 22 that sought to mitigate the financial impact of treating drivers as employees, and reclassified them as independent contractors. Its passage in late 2020  also put liability into question, leaving many people wondering whether Prop 22 reduced or eliminated employee liability in personal injury cases.

In August 2021, just a few months after Prop 22 passed, a California Superior Court judge ruled that Proposition 22 was unconstitutional. The Protect App-Based Drivers and Services Coalition, as well as other pro-TNC organizations responded that they would appeal the ruling. Whether the California Supreme Court will uphold or reverse Prop 22 remains to be seen, meaning gig drivers and their passengers may be in limbo if an accident occurs. For one gig driver, who hired Dunnion Law to represent him, the outcome firmly placed liability on his employer, Uber. 

What Prop 22 Currently Means for Drivers and Passengers:

For gig drivers, it’s important they understand that as independent contractors, they could be held liable if their passengers are injured. They may also be held responsible for payment of any personal injuries or property damage sustained while driving.

Furthermore, their liability may be impacted by other complicating factors, such as whether the driver was logged into the app at the time, was waiting for a passenger, was en route to pick up a passenger, and other conditions that may not yet be defined.

In this constantly changing legal landscape, the takeaway is clear for drivers and passengers alike - in the event of an accident, experienced legal counsel can make all the difference when it comes to determining which parties are responsible, and getting you the compensation you deserve.

As with any personal injury case, time is of the essence. A legal team with knowledge and experience in this area can help ensure that your case proceeds smoothly well before the statute of limitations expires on your claim.

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