California’s Proposition 22 gives app-based rideshare and delivery drivers a specific set of gig worker rights — a minimum earnings floor, a healthcare stipend, and accident insurance — in exchange for staying classified as independent contractors rather than employees. That tradeoff is the whole point of the law. You keep scheduling flexibility and the contractor label, and you lose unemployment insurance, workers’ compensation, overtime, and paid sick leave.
Who Prop 22 Actually Covers
Prop 22 applies only to drivers working through a “network company” — a digital platform that connects customers with drivers for rideshare trips or for delivery of food, groceries, or other goods. Think Uber, Lyft, DoorDash, Instacart, and similar apps.
If you drive for a traditional taxi company, a restaurant’s in-house delivery fleet, or a logistics firm that dispatches by phone, Prop 22 doesn’t apply to you. Those jobs are still governed by California’s standard ABC test under Labor Code Section 2775, which presumes most workers are employees.1California Legislative Information. California Code LAB 2775 – Worker Status Employees
Your contractor status under Prop 22 also depends on the platform meeting four conditions: it cannot set your schedule, cannot require you to accept any particular request, cannot stop you from working for competitors during your downtime, and cannot block you from holding other jobs. If a company violates any of these, you may fall out of Prop 22 and back under the ABC test as a presumed employee.2California Secretary of State. Proposition 22 – Protect App-Based Drivers and Services Act
The Earnings Floor
Network companies must pay you at least 120% of the applicable minimum wage for “engaged time,” plus a per-mile vehicle expense payment. With California’s 2026 minimum wage at $16.90 per hour, that floor comes out to $20.28 per hour of engaged time.3Department of Industrial Relations. Minimum Wage
Read the definition carefully. Engaged time starts when you accept a ride or delivery request and stops when you complete it. Waiting for your next request, driving to a pickup before accepting, or sitting in a parking lot between jobs does not count. If you’re logged in for eight hours but only engaged for four, the guarantee is calculated on those four hours.2California Secretary of State. Proposition 22 – Protect App-Based Drivers and Services Act
The per-mile payment started at $0.30 per engaged mile in 2021 and adjusts each year with the Consumer Price Index. The State Treasurer’s Office publishes the current rate. For comparison, the IRS standard mileage rate for business driving in 2026 is 72.5 cents per mile, which gives you a rough benchmark for what driving actually costs.4Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents per Mile, Up 2.5 Cents
If your actual net pay for a period falls short of the combined hourly and per-mile floor, the company owes you the difference in the next pay period. Tips do not count toward the guarantee.
Healthcare Stipend
You can qualify for a quarterly healthcare stipend based on how many engaged hours you log per week during the quarter. Average 25 or more engaged hours per week, and you receive roughly 82% of the statewide average Covered California bronze plan premium. Average between 15 and 25 engaged hours, and you get about half that — around 41%. Fall below 15 engaged hours per week on average, and you get nothing.5Covered California. App-Based Drivers (Prop 22) Health Insurance Stipend for Enrollers Quick Guide
Because the threshold is engaged time, not app time, a driver who sits logged in 30 hours a week but only runs trips for 14 of them falls short. The stipend comes to you as cash. You arrange your own coverage through Covered California or elsewhere.
Accident Insurance and Safety Rules
In place of workers’ compensation, companies must carry occupational accident insurance for you. The coverage includes at least $1 million for medical expenses and disability payments equal to 66% of your average weekly earnings for up to 104 weeks after an injury. Average weekly earnings are figured by taking your total platform earnings over the 28 days before the accident and dividing by four.2California Secretary of State. Proposition 22 – Protect App-Based Drivers and Services Act
One useful distinction: this coverage kicks in whenever you’re “online” with the app, not just during engaged time. If you have the app open and are available for requests, you’re covered even between jobs. The coverage ends when the app is off or you’re on personal errands.
Companies must also provide accidental death coverage for the benefit of your spouse and dependents, run criminal background checks before you start, maintain anti-discrimination policies, provide sexual harassment prevention training, and enforce zero-tolerance rules on driving under the influence.6California Department of Insurance. Implementation of Insurance Provisions of Proposition 22
What You Give Up
Because you’re a contractor, several protections California employees take for granted don’t apply to you:
- No unemployment insurance. If you’re deactivated or work dries up, there’s nothing to claim.
- No traditional workers’ compensation. The occupational accident policy above replaces it, and the state system is generally broader.
- No overtime pay, no matter how many hours you work in a day or week.
- No paid sick leave under California’s mandatory employee sick leave law.
- No full expense reimbursement under the Labor Code. You get the per-mile vehicle payment set by statute, which may not cover your actual cost of operating a vehicle.
Deactivation is a separate pain point. Prop 22 refers to “mandatory contractual rights and appeal processes” but doesn’t spell out what those processes have to look like, and lawsuits over how companies handle deactivations are still ongoing as of 2026.
Taxes You Now Owe Yourself
This catches a lot of new drivers off guard. Because the platforms aren’t your employer, they don’t withhold income tax, Social Security, or Medicare. All of it is on you.7Internal Revenue Service. Independent Contractor (Self-Employed) or Employee
Self-employment tax runs 15.3% — 12.4% for Social Security and 2.9% for Medicare. An employee only pays half of each; you pay both halves. Single filers with net self-employment income above $200,000 owe an additional 0.9% Medicare tax on the excess. You can deduct the employer-equivalent portion when figuring adjusted gross income, which softens things a bit.8Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
The IRS also expects quarterly estimated tax payments since nothing is withheld. For 2026, the deadlines are April 15, June 15, September 15, and January 15, 2027. Miss them and the underpayment penalty grows the longer you wait.9Internal Revenue Service. Estimated Tax
Platforms issue a Form 1099-K when payments to you exceed $20,000 across more than 200 transactions in a year. The threshold reverted to that level after the lower amount in the American Rescue Plan was repealed. Earn less than that and you still owe tax on the income and still have to report it.10Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold
Deductions are the counterweight. Vehicle expenses (either the 72.5 cent IRS standard rate for 2026 or your actual costs), the business portion of your phone, and other ordinary business expenses all come off your taxable income. Tracking mileage carefully every single day is the easiest thing you can do to cut your tax bill.
Is Any of This Likely to Change?
Prop 22 survived its constitutional challenge. In July 2024, the California Supreme Court unanimously upheld Section 7451 — the provision classifying app-based drivers as independent contractors — in Castellanos v. State of California. The Court held that the legislature’s power over workers’ compensation does not prevent voters from defining worker categories through a ballot initiative.11Justia. Castellanos v. State of California
The ruling was narrow on purpose. The Court declined to decide whether Prop 22’s amendment restrictions improperly limit the legislature’s future authority, saying it would reserve that question for an actual case involving the legislature trying to extend workers’ compensation to app-based drivers.
And that’s hard to do. Prop 22 can only be amended by a seven-eighths supermajority in both chambers of the legislature, and any amendment has to be consistent with the measure’s original purpose. The classification rule in Section 7451 can’t be amended by the legislature at all. Granting drivers collective bargaining rights would also trigger the seven-eighths requirement. Voters can still change or repeal the law through another ballot initiative with a simple majority, but as of 2026 the contractor classification stands and no court challenge threatens it.2California Secretary of State. Proposition 22 – Protect App-Based Drivers and Services Act