California’s Proposition 22 is a 2020 voter-approved law that classifies app-based rideshare and delivery drivers as independent contractors rather than employees, while requiring the companies that run those platforms to provide a minimum earnings guarantee, a quarterly health care subsidy, and occupational accident insurance. It is codified as the Protect App-Based Drivers and Services Act at sections 7448 through 7467 of the California Business and Professions Code, and the California Supreme Court upheld it in July 2024.1Justia Law. Castellanos v. State of California If you drive for Uber, Lyft, DoorDash, Instacart, or a similar app in California, Prop 22 is the law that defines your working relationship with the platform.
Who the Law Covers
Prop 22 applies to “network companies” and the drivers who use their apps. A network company is any business that runs an app or online platform connecting drivers with customers for rideshare transportation or delivery.2California Legislative Information. California Business and Professions Code 7463 – Definitions That sweeps in the major rideshare platforms along with food, grocery, and package delivery services.
The definition of delivery is broad: picking up items anywhere and delivering them to a customer-chosen destination within 50 miles, by car, bicycle, scooter, or on foot. Rideshare means transporting one or more passengers. A worker who meets this description is treated as an app-based driver under the law, so long as the company satisfies four conditions described below.
Prop 22 does not apply to truck drivers, janitors, construction workers, nurses, or any of the other occupations that remain subject to California’s general worker-classification rules. It is a carve-out for one industry, not a template that spreads to gig work generally.
What Drivers Get Under Prop 22
Minimum Earnings Floor
Prop 22 creates a “net earnings floor” with two parts.3California Legislative Information. California Business and Professions Code 7453 – Compensation The first is an hourly minimum of 120 percent of the applicable minimum wage for engaged time. With California’s statewide minimum wage at $16.90 per hour in 2026, that works out to roughly $20.28 per hour; a higher local minimum wage replaces the state figure where it applies.4Department of Industrial Relations. Minimum Wage The second is a per-mile vehicle payment, set at $0.30 per engaged mile when the law took effect in 2021 and adjusted annually for inflation.
The important catch is the phrase “engaged time.” That clock starts when you accept a ride or delivery request and stops when the request is completed. Time spent logged into the app waiting for a ping does not count. If you are online for 60 minutes but only actively on trips for 35, the earnings floor covers 35 minutes. The company reviews each pay period (up to 14 days) and must make up any shortfall in the following period. Tips are on top of the floor, and the company cannot take any share of them.
Health Care Subsidy
Drivers who hit minimum weekly thresholds of engaged time qualify for a quarterly cash subsidy toward health insurance.5California Legislative Information. California Business and Professions Code 7454 – Health Insurance Subsidy A driver averaging 25 or more engaged hours per week receives 100 percent of the average Affordable Care Act employer contribution, which comes to roughly 82 percent of the average statewide Covered California bronze premium. A driver averaging 15 to 24 engaged hours receives half that amount. Fewer than 15 engaged hours a week means no subsidy.
The subsidy is paid as cash toward whatever plan you choose; it is not enrollment in a company plan. Because drivers file as independent contractors, premium tax credits through the ACA marketplace may also be available depending on household income, and the two can interact at tax time.
Occupational Accident Insurance
Any network company operating in California for more than 90 days must carry occupational accident insurance for its drivers.6California Legislative Information. California Business and Professions Code 7455 – Loss and Liability Protection Coverage applies whenever a driver is online, meaning logged into the app and available for requests, not only during engaged time. The minimums are at least $1 million in medical coverage for on-the-job injuries, disability payments at 66 percent of average weekly earnings for up to 104 weeks, and death benefits for a spouse, children, or other dependents calculated under the same formula used in standard workers’ compensation.
One gap worth knowing: if you are online with two apps at once and get hurt while actively on a trip for one of them, the other platform’s insurance is not on the hook. The paying insurer can later seek reimbursement from the others.
What Drivers Give Up
The flip side of independent-contractor status is exclusion from a long list of employee protections California provides.
- No overtime pay for working more than 8 hours in a day or 40 in a week.
- No state unemployment insurance if work dries up or you are deactivated from a platform.
- No workers’ compensation. The occupational accident insurance above is narrower: it caps disability at 104 weeks and does not cover personal activities performed while online.
- No paid sick leave, which California requires for employees.
- No access to state-funded paid family leave for bonding with a new child or caring for an ill family member.
- No general expense reimbursement under Labor Code section 2802. The per-mile payment during engaged miles is all you get from the company.
Whether that trade is a fair one is the heart of the ongoing debate over Prop 22. Supporters point to the scheduling flexibility drivers keep. Critics argue the earnings floor and subsidies do not come close to replacing the full package of employee protections.
The Four Conditions Companies Must Meet
Independent-contractor status under Prop 22 is not automatic. The network company must satisfy all four of these conditions, or the driver could be reclassified as an employee under California’s standard labor rules:7California Legislative Information. California Business and Professions Code 7451 – Protecting Independence
- The company cannot set your schedule or require a minimum number of hours.
- The company cannot require you to accept any particular ride or delivery as a condition of staying on the platform.
- The company cannot stop you from working for competing apps, except while you are actively completing a trip for them.
- The company cannot bar you from any other job or business outside the platform.
These conditions override California’s otherwise strict ABC test from Assembly Bill 5, which presumes workers are employees unless three independent-contractor factors are met.8Franchise Tax Board. Worker Classification and AB 5 FAQs Prop 22 says that, for app-based drivers, section 7451 governs “notwithstanding any other provision of law.”
Safety, Background Checks, and Anti-Discrimination
Before giving you access to the platform, a network company must run a local and national criminal background check.9California Legislative Information. California Business and Professions Code 7458 – Criminal Background Checks Some offenses, including serious felonies and hate crimes, are permanent disqualifiers; others disqualify a driver only if the conviction is within the past seven years. Once you consent to the initial check, the company can monitor on an ongoing basis without new consent.
Each company also has to publish a sexual harassment policy, with a complaint process and anti-retaliation protection, and every driver must confirm receipt before working.10California Legislative Information. California Business and Professions Code 7457 – Sexual Harassment Prevention Safety training on collision avoidance, defensive driving, and recognizing impaired or distracted driving is required too.
Companies cannot refuse to contract with, terminate, or deactivate a driver based on race, color, national origin, religion, age, disability, sex, gender identity, sexual orientation, medical condition, genetic information, marital status, or military or veteran status, outside of bona fide occupational qualifications or genuine safety needs.11California Legislative Information. California Business and Professions Code 7456 – Antidiscrimination
Tax Consequences for Drivers
Because Prop 22 drivers are independent contractors, they owe self-employment tax on their net earnings: 15.3 percent total, covering both the employee and employer shares of Social Security and Medicare.12Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) Higher earners face an additional 0.9 percent Medicare surcharge above $200,000 for single filers or $250,000 for joint filers.
Drivers report income and deduct business expenses on Schedule C. The most important deduction is usually vehicle costs, either actual expenses or the IRS standard mileage rate, which is 72.5 cents per mile for 2026.13Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents That federal rate is substantially higher than Prop 22’s per-mile reimbursement, so the deduction typically more than offsets the Prop 22 payment at tax time. No taxes are withheld from gig earnings, so most drivers need to make quarterly estimated payments to avoid underpayment penalties.
Why Prop 22 Is Hard to Change
Prop 22 was passed as a voter initiative, so the Legislature cannot repeal or rewrite it by ordinary majority vote. The statute itself requires a seven-eighths supermajority in both chambers for any amendment, and any amendment must be “consistent with, and further the purpose of” the original law. That is one of the highest amendment thresholds attached to any ballot initiative in California history. In practical terms, Prop 22 can be undone only by another ballot measure or by a court striking it down.
Courts have had their chance. After drivers and the Service Employees International Union sued in 2021, the California Supreme Court ultimately upheld the law in Castellanos v. State of California on July 25, 2024, ruling that voters may legislate on matters touching workers’ compensation through the initiative process.1Justia Law. Castellanos v. State of California The legal foundation of Prop 22 is settled, even as the policy argument continues.