The evolving employment classification of rideshare drivers in California

Opportunities for ridesharing and food delivery jobs continue to increase, and rideshare drivers make up a growing portion of the American workforce. Rideshare drivers are generally classified as independent contractors, but in California and other parts of the country, there has been a significant push to make rideshare drivers employees.

Employee status versus independent contractor status

For tax purposes and employee rights, workers are classified as employees or independent contractors. Generally, if a dispute arises between a worker and a company that hires that worker, the “employee” status affords more legal protections than the “independent contractor” status. Additionally, employees may have access to workers’ compensation insurance, pension plans, employer-provided health insurance, and other employment protections and benefits. Independent contractors generally do not have access to those things through an employer.

Rideshare drivers continue to inhabit a gray area where it has been difficult to assign a status of employee or independent contractor.

To learn more about the legal definitions of “employee” and “independent contractor,” please see our overview of Employee Misclassification in California.

The rejection of Prop 22

In 2021, California’s Alameda Superior Court ruled against Proposition 22, which excluded app-based workers from protections under the state’s labor laws. The court found that Prop 22 violates California’s constitution and the rights of workers. The ballot initiative for Prop 22 was led by app-based companies, including Uber, Lyft and DoorDash, who wanted to avoid providing additional benefits and compensation to their workers. The court’s decision to strike down Prop 22 is still expected to be appealed by the same app-based companies.

Employee misclassification happens in multiple industries

Some employers unlawfully misclassify workers as “managerial,” “salaried” or “independent contractors” in order to cut costs. This happens in multiple industries, including food service, hospitality and retail.