California Proposition 22 Passed

New Benefits for California App-Based Drivers

California Proposition 22 passed. That means those driving for Uber, Lyft, or Postmates, etc., will not be categorized as regular employees here in California. However, there will be new benefits for these app-based drivers, including some guarantees.  We will briefly describe the new benefits available to app-based workers operating as independent contractors. So, let’s get started!

Changes to Driver Income

Proposition 22 provides an Earnings Guarantee!  Yes, you read that right.  The net earnings floor establishes a guaranteed minimum level of compensation for app-based drivers that cannot be reduced. This guarantee consists of the total earnings for that period calculated by the driver’s actual hours engaged.

Every app-based driver is to be paid the sum of 120% of the applicable minimum wage for all engaged time.   

Each earnings period employers must compare driver’s net earnings against their net earnings floor.  If the driver’s net earnings in any period are less than the floor, the employer must include an additional sum accounting for the difference in the app-based driver’s earnings no later than the next earnings period.

In addition, Uber, Lyft, etc. cannot interfere with your gratuities.  And no fees of any sort may be extracted from your tips.

Mileage Reimbursement

The compensation for vehicle expenses shall be thirty cents ($0.30) per engaged mile.  This will create an extra calculation on the IRS Schedule C when determining the mileage deduction.  Utilizing one’s actual vehicle costs may be more beneficial moving forward.  We’ll find out!

If you are reading this article but not yet comfortable working with Schedule C clients, I recommend taking the Pronto Tax School online course Schedule C Mastery

Available Healthcare Subsidy

Moving on to the topic of health insurance. App-based drivers may be eligible for a subsidy greater than or equal to 100 percent of the average monthly Covered California premium for each month. First, drivers must work an average of 25 hours or more per week of engaged time in the calendar quarter in order to be considered.

Second, for drivers who work an average of at least 15 but less than 25 hours per week of engaged time in the calendar quarter to be considered.  They may receive a payment greater than or equal to 50 percent of the average ACA contribution for the applicable average monthly Covered California premium for each month in the quarter.

To be clear, Proposition 22 only potentially provides a health insurance premium subsidy. App-based workers will not receive health insurance, only the possibility of an insurance premium subsidy.

Disability Insurance Available

Another new benefit drivers will receive is occupational accident insurance to cover medical expenses and lost income resulting from injuries suffered while working.

In the case of a work-related injury, disability payments will be up to 66 percent of the app-based driver’s average weekly earnings.  Income from all network companies as of the date of injury is included.  Regardless of the driver income there is a minimum and maximum range of weekly payments app-based workers can receive.  These benefits potentially extend through the first 104 weeks following the injury.

Platforms & Applications Allowing a Voice

These businesses must now listen to both customers and app-based workers. All applications and platforms must establish an in-house process for app-based drivers, customers, and rideshare passengers to submit complaints that ensures confidentiality. The system will allow those affected to submit complaints electronically.

These platforms and applications now guarantee no one will be retaliated against as a result of making a good faith complaint or participating in an investigation.

Safety Training to be Provided

Every network company will provide each app-based driver with safety training. The safety training required by this section shall include the following subjects:

*Collision avoidance and defensive driving techniques.

*Identification of collision-causing elements such as excessive speed, DUI, and distracted driving.

 *Recognition and reporting of sexual assault and misconduct.

*And, for app-based drivers delivering prepared food or groceries, food safety information relevant to the delivery of food, including temperature control.

Please be sure to share this information with your clients who are going to be affected.  Thus far only the approved wording has been released.  No other information has been provided on exactly how all of this will come to be.  Expect more detailed instructions from the State of California in the near future.

Free eBook for Download

If you are interested in charting a new career path that allows for a safe working environment combined with unlimited earning potential, then I suggest you become a tax preparer.  If you do that, I can honestly say absolutely anything is possible for your future.  You will get out of it what you put into it.  So yes, you can literally work hard enough to become wealthy in a relatively short period of time.  To begin your path to wealth and freedom please enjoy this free eBook written by long-time tax professional and teacher, Andy Frye.

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Training for Your Needs!

Please click the button below for your primary tax credential.

Not sure which credential applies to your situation?  Click here to reach our support team and we'll help you decide.