Proposition 22: What Your California Business Needs to Know, and How Konfer Can Help

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Enterprises that utilize app-based independent contractors in California need to be aware of Proposition 22. The ballot-initiated legislation has been in effect since 2021, despite several legal challenges and appeals that are ongoing. However, with the most recent ruling in 2023, it is likely that Proposition 22 is here to stay, and while there are many benefits for enterprises from this legislation, it is a highly complex regulation with high potential for compliance mishaps.

Broadly, Proposition 22 mandates the following for enterprises with app-based contractors:

  • Payments to drivers for the difference between their net earnings and an earnings floor based on multiple factors such as state minimum wage and mileage driven

  • Twelve-hour work limit during a 24-hour period

  • Company-provided healthcare subsidies for drivers, with differing values in subsidies based on time driven

  • Company-provided accident, disability and death insurance for drivers with specific conditions

  • Drivers must adhere to company polices for sexual harassment, discrimination, driving under the influence, and must pass background checks

This is a highly simplified look at the proposition. Each of these requirements contains several conditions, rules, and exceptions that need to be monitored and adhered to continuously. Rideshare and grocery delivery companies must verify that each individual driver is compliant with all of the regulations at all times, which is a tedious process due to the minute differences that affect each rule. For example, the driver’s average weekly driving time affects their insurance guarantees, and their driving time within the last twenty-four hours affects the work time limit. If a driver crosses that twelve hour limit and a company cannot identify that immediately, they could face severe financial penalties.

That is where Konfer can help your enterprise. In order to manage the onerous compliance regulations of Proposition 22 for a large volume of assets (app-based workers), it is important to implement governance by design and operationalize your compliance process. Konfer Playbook creates control questions to form a comprehensive checklist from any regulation including Proposition 22. This can be purchased as a one-time package from our store. Control questions can help your team with gap analysis by identifying contractors who are not compliant with, for example, insurance requirements and work-time requirements, potentially avoiding penalties for your business.

For large enterprises with a high volume of independent contractors, we recommend utilizing Konfer’s Playbook and the full platform to continuously and autonomously monitor your organization for compliance issues. By providing necessary data to Konfer, your team will be empowered to run the compliance process continuously, identify any compliance issues as soon as they happen, and rectify gaps with minimal business disruption. If these scenarios apply to your organization, contact Konfer for a product demo and make sure your enterprise stays ahead of the compliance curve.

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