What do we need to know about it now? What's its current status?

Prop 22 has been in effect since it passed with overwhelming support from California voters in 2020, but it's currently under legal challenge. A 2021 ruling from a California county judge — who found the ballot initiative to be unconstitutional — threatens its status going forward. Proponents of Prop 22 appealed the court ruling, and the case was heard by a state appeals court in December 2022. The three-judge panel on the appeals court hasn't yet delivered its verdict on the case, so the ballot initiative stands for the time being. Regardless of which direction that verdict takes, I expect either party is likely to file another appeal after the ruling.

Is Prop 22 unique? In other words, does it have implications for states other than California or are there similar laws in other states?

Prop 22 is certainly the first large-scale effort to introduce a portable benefits structure that works for independent workers and work platforms and there are now newly burgeoning efforts at different stages in the legislative process in other states, like Massachusetts, Georgia, and Vermont. As the nation's most populous state and its largest economy, the outcome of Prop 22 in California will have ripple effects across the country. From my perspective, Prop 22 is a "first draft" that should and will be built upon and refined by other states as we pursue a new model of benefits protections in the United States.

For companies that don't have large numbers of contractors, what's at stake? Why should they care?

The outcome of this legal battle will affect far more than the major gig companies and their workers. If Prop 22 is struck down, the California gig economy could look radically different, for rideshare and delivery drivers and their many customers. Gig companies would have to change their business models, and workers would lose much of the flexibility they now enjoy. That will have real consequences for workers.

Under a reversion to AB-5 rules, it's highly likely that gig platforms will end up employing fewer workers under a W2 construct, putting tens of thousands — if not hundreds of thousands — at risk of having to find other income streams. That's especially risky in today's economy where over 1 million Americans are expected to turn to gig work this year as unemployment rises. And of course, fewer workers means more expensive rides and grocery deliveries. In other words, a decision like this will have macroeconomic effects that will be hard to ignore yet difficult to predict.

What do you hear from independent workers at your company about either Prop 22 or the concept of portable benefits?

We recently conducted a survey of 4,000+ workers we serve, and overall we heard that gig workers and all independent workers don't want to — or can't, due to caregiving responsibilities, other jobs, or other personal constraints — be tethered to a traditional job. They value being contractors because it gives them enormous flexibility: 8 in 10 said they're happy with the freedom they have, and most said it's less stressful than a regular job. But they also want affordable, reliable, and portable benefits and protections — especially when so many gig workers have multiple income streams. We need to do more work to provide those portable benefits, but we should listen to workers when they say they want a new model that keeps what they like about being their own boss.

In the context of a potential recession, why are laws like Prop 22 important? What are the potential costs and benefits?

The way the world works has changed dramatically over the last 70 years, yet our benefits system remains tightly coupled with traditional full-time employment. That doesn't work for the 60 million Americans who have participated in non-traditional work in the last 12 months, nor does it work for Americans who have never received benefits, such as those working for small businesses or as part-time workers. Prop 22 was a step in the direction of creating a new, alternative benefits system and starting to decouple benefits from employment classification

And right now, many Americans are looking for ways to brace themselves and their families for the possibility of a recession. Many are cutting back spending or relying more heavily on credit cards, while others are taking on part-time work to earn more — all in an effort to support their households through an economic future that's increasingly uncertain.

Read more: Nearly half of U.S. gig workers report difficulty accessing health insurance, study finds

What is certain is that laws like Prop 22 can help protect earning power and support economic stability. In 2021, we saw average hourly wages for gig workers in California go up to $35 from just $27 in 2019. We need to protect people's ability to earn that kind of money in a fragile economy. There's already evidence that hundreds of thousands of Americans will turn to gig work this year, and it'll serve as a kind of safety net.

For companies and policymakers, what lessons should they take from Prop 22? What should they be pursuing?

I hope the message is clear: independent workers and the companies they obtain work through recognize that the employer-based benefits model desperately needs to evolve to meet the needs of today's workforce. It's time for lawmakers and regulators at every level of government to recognize that. The good news is that it's already spurring innovation in the benefits space. Proposals for portable benefits — put forward by workers and companies alike — are cropping up all over the country. Policymakers should continue to work directly with those on the frontlines of this movement — and make sure to listen to the middle, not just the polar ends of the debate — to help put forward the solutions we need to modernize benefits for workers of all stripes.

For human resources and benefits professionals specifically, why should they be talking about Prop 22 to their internal leadership?

No matter what your opinions are on the ballot measure, Prop 22 marks a significant step forward in the debate about how to design benefits for the modern mobile workforce — one that isn't tethered to outdated employment paradigms. Prop 22 should prompt HR professionals to start conversations about how to retain and support non-traditional workers with individualized benefits, like ICHRAs, or start offering alternative forms of financial safety nets to their valued contingent workforces as they compete to retain the best talent, regardless of classification.

Ultimately, Prop 22 is part of the growing movement toward portable benefits that Stride has seen firsthand in our work with gig companies and workers. It has never been more apparent that we need to rethink the way we provide benefits to better support workers in today's rapidly-changing economy. Prop 22 is also an example of the private sector doing exactly what it should — championing ideas that benefit companies and workers alike. Prop 22 was spearheaded by platforms that work with millions of the very people who are at the heart of this movement — independent workers. While there are folks on both sides of the debate re: whether Prop 22 should be upheld, we can all learn from the example it sets: companies and policymakers can and should move the needle forward on important conversations around how to modernize benefits and support workers.