This transcript was generated from the episode audio and may contain minor errors.
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What's up, my friends? Welcome to Side Hustle School. My name is Chris Guillebeau, your host. When I talk to you about something that happened recently in the US election, I don't actually mean the big one. This was actually a separate election, something that was on the ballot in California.
And even if you don't live in California, even if you don't live in the United States at all, this could still be relevant for you. So that's what we're gonna talk about. California's voters recently approved Proposition 22, which changed the rules for some independent contractors who work for companies like Uber and DoorDash. But as I said, this change can affect others as well, not just drivers for Uber and DoorDash, and not just in California. So what does it mean?
We got a listener question about it. And this was actually a really interesting battle during the campaign where those companies, I think also Lyft and Instacart, maybe a few others, they spent upwards of $180 million, like $180 million lobbying for their cause, essentially. And it paid off in this case, at least for them. There was a fair amount of backlash because people are like $180 million, like what else could you do with that money? Maybe you could provide better care for your drivers, et cetera.
But the voters did decide by a pretty good margin that Uber drivers and similar are independent contractors, not employees, which was what was at stake in that campaign, again, called Proposition 22. So the thing is, if you ever do any kind of freelance work, or if you want to hire someone on a contract basis to do some kind of work for you, this can end up affecting you, even as I said, if you don't live in California. So let's talk about it, Proposition 22, coming up after this quick sponsor message. [Music]
Hey, Chris, this is Tracy, and I just want to say first that I've been following your projects since the art of nonconformity, and thank you so much for all your helpful advice over the years. So my sister lives in California, and she told me she was bombarded with ads both for and against Proposition 22, which was all about the rights of Uber drivers and other independent contractors.
I didn't totally understand it, but I also saw a lot of national news coverage about it. It ended up passing the election, and Uber seemed happy about it. So what does this mean for independent contractors in California and potentially somewhere else? Looking forward to what you have to say about this. Thanks.
- Hey, Tracy, you are the best. Thank you so much for following since the art of nonconformity, that's been a while. So glad to know you're out there. My best wishes to your sister as well. Okay, so Proposition 22, what was it?
For anybody out there who's like, "What are we talking about here?" Proposition 22 was the most expensive initiative in California's long history of direct democracy, which means it's a form of government where essentially anybody who wants to can get something on the ballot for the whole state to vote on as long as they gather enough signatures and have some money basically behind it, which is not the fairest system in lots of ways. It creates all kinds of confusion, but that's another topic. So Proposition 22 specifically was about whether Uber and Lyft drivers and other app-based drivers can remain independent contractors or if they have to be employees. And so if they have to be employees, then those companies have to provide lots of benefits for them. They have to pay a lot more in taxes, et cetera.
So all the companies were very opposed to this. And this whole proposition was in response to legislation that made it extremely difficult to hire independent contractors, not just for Uber or Lyft, but for anybody. Because depending on your interpretation of the law, this new legislation, anyone who did anything for you might be eligible for employee status. So I got a lot of emails from people in California where like, I wanna hire a freelance designer, but now I'm worried. If I hire someone to make my website, do they have to be my employee?
So it was one of those things that kind of created unintended consequences. It wasn't that great for a lot of people. So this proposition changed that. This proposition changed it. It did pass, but only for drivers.
So that was one of the exclusions here. What it means is for everybody who isn't Uber or Lyft, DoorDash driver, they can continue to be a contractor. Everyone else was excluded, probably because Uber and Lyft funded it. So no doubt some confusion will remain. As for what it means elsewhere, like geographically speaking, the reason why these companies spent close to $200 million advocating for their cause isn't only because California is the world's fifth largest economy, which is pretty incredible if you think about it.
Like if California was a country, it would be the world's fifth largest economy. So that's significant. But also what happens in a major case like that can often lead to similar cases, legislation. So in this case, they were able to head it off. And even though everybody else was excluded, it was only about drivers, I do think it means that it's probably easier to be an independent contractor and hire people to perform services for you without worrying as much about whether they have to be your employees.
So it's gonna continue to play out. There's gonna be other jurisdictions, et cetera. But it is a significant step in clarifying, well, this is what most people want. Most people do actually want the option to be independent contractors if they so choose. A brief analysis for you there.
Thank you again, Tracy, for the question. Thanks, listeners, all of you. You're amazing. I'm so grateful to be able to make this show for you. Got a lot more coming up, so be sure you're subscribed.
My name is Chris Guillebeau. This is "Side Hustle School." from the Onward Project.
