Time to Ante Up

By: By Mark Webb
Mark Webb
Mark Webb

We are now entering the third week after America’s latest rough venture into the harsh environs of elections. There is some clarity in the results even if considerable uncertainty about the consequences. While California is preparing its final vote tally, there are two ballot measures California voters resoundingly approved. These two initiatives, Proposition 22 relating to app-based drivers, and Proposition 24 enacting the California Privacy Rights and Enforcement Act of 2020 (CPRA) will become law on or before December 16.

Proposition 22, the “Protect App-Based Drivers and Services Act,” was widely viewed as a measure by large digital platforms such as Uber, Lyft, and DoorDash to resolve ongoing disputes with the State of California over the employment status of drivers accessing these platforms. That would be a correct assessment. It will potentially change the environment going forward but its effect on ongoing enforcement actions and litigation will likely have to be resolved by the Courts.

It is also worth noting that while AB 5 (Gonzalez) and the Dynamex decision may have been the inciting incidents for Proposition 22, disputes over classification status of app-based drivers were being litigated long before the Supreme Court embraced the “ABC Test”. It is equally true that Proposition 22 will not end the debate even for those businesses directly affected by it.

Then there is Proposition 24. Didn’t we just do something about privacy? Yes, that was the California Consumer Privacy Act of 2018 (CCPA). The CCPA became effective January 1 of this year. The Attorney General adopted regulations implementing the CCPA effective August 14, and has a new set of proposed regulations in the queue. CCPA enforcement actions began July 1.

So, why are we doing this again, so soon? The short version is that the people who brought us the CCPA didn’t like how Sacramento treated their brainchild – which resulted in withdrawing their first initiative – and decided to go to the ballot again with something more akin to their vision. Thus, the CPRA. It easily passed even with opposition from privacy rights and consumer groups who said the CPRA didn’t go far enough. And while Facebook appeared to be the poster child for why we needed the CPRA, it should be noted that the social media Leviathan did not oppose the initiative.

Is this another case of California leading the nation on issues such as the gig economy and digital privacy rights? Maybe. Then again, maybe not. There is a good argument to be made that a change in administration in Washington D.C. will also change the way the United States Department of Labor looks at independent contractor and co-employment issues. In addition, Democrats in Congress recently introduced legislation to make the ABC Test the law of the land. Similarly, Congress has staked out digital privacy for scrutiny, which is likely connected to their examination of anti-trust issues and the tech Leviathans. In other words, Propositions 22 and 24 may be table stakes for a much bigger debate.

Whether that is the case depends in large part on events in Georgia in January. Depending on who has 51 votes in the United States Senate in 2021, there may be even more legislation – and disruption – on these two vital subjects in the very near future.

Note: The opinions expressed herein may or may not be those of Workers’ Comp Executive. Mark Webb is a former Arizona insurance regulator, insurance company chief compliance officer, and is an expert in corporate governance, risk and compliance. He is the owner of Prop 23 Advisors.