Did the Ballot Proposition Impact Personal Injury Liability?
California’s Proposition 22 was passed by voters in November 2020 with a 58.63% “Yes” vote. The proposition re-designates drivers for app-based delivery and transportation companies as independent contractors instead of employees. At the time, almost all the discussion was centered upon the proposition’s expected impacts upon the employee benefits generally required for workers under California law, including overtime pay, sick time, health care, and unemployment insurance in exchange for the greater flexibility — for both the drivers and the companies — of independent contractor status. Another issue that was barely discussed at the time was the possible Proposition 22 effects on Uber and Lyft liability in personal injury claims and lawsuits stemming from traffic accidents.
History of Uber and Lyft Liability
Founded in 2009, Uber officially launched its app and services in San Francisco in 2011, expanding to some thirty-five cities by 2013 and launching its associated Uber Eats food delivery service in 2014. By 2019, Uber had expanded its services to numerous countries worldwide and became a publicly traded company via IPO. Lyft, the second-largest app-based ridesharing company behind Uber (and its main competitor), also started service in California, being founded in 2012, expanding nationwide and into Canada by 2017, and now providing services in several hundred U.S. and Canadian cities. Although Uber and Lyft are the best-known examples of app-based transportation services, many companies have since been spawned, including other food delivery services like DoorDash and Grubhub.
Accidents happen, so almost as soon as Uber and Lyft began operations, there were traffic accidents involving Uber and Lyft drivers. The companies’ response to initial injury claims and lawsuits was that they had no liability whatsoever, arguing that their drivers were solely liable and that their applications merely provided a service that allowed fares and drivers to match up with one another.
The response to these arguments was the passage of AB 2293 in California in 2014 and similar laws in most other states. Entered into the Public Utilities Code beginning at section 5430, this law defined these companies as “transportation network carriers.” It established minimum insurance requirements to cover Uber and Lyft liability and their drivers, including up to $1 million in liability insurance coverage and underinsured motorist coverage depending upon which stage of the service the accident occurred in.
Uber and Lyft Liability and Regulation as “Charter Carriers” and “Common Carriers”
In addition to state laws such as California’s AB 2293 that established minimum insurance requirements for these app-based transport companies, other groups and agencies have also further defined and regulated Uber and Lyft liability concerning their app-based services. In California, the Public Utilities Commission (CPUC) has long had the authority to regulate carriers of passengers over the state’s public highways. The CPUC chose to adopt the same terminology of AB 2293, defining a new class of carriers as “transportation network carriers.”
(It should also be noted that the “ridesharing” name often associated with Uber and Lyft is actually a misnomer — they are more accurately called “ride-hailing” services. “Ridesharing” is specifically defined in the California Public Utilities Code and Vehicle Code as situations where two or more people are sharing a vehicle for a common work-related purpose such as commuting.)
The CPUC further chose to use language defining these services as providing “prearranged transportation services for compensation,” making them subject to regulation as “charter carriers” — language which further establishes Uber and Lyft as “common carriers” under California law, having a higher duty toward their passengers, including exercise of “the utmost care and diligence for their safe carriage.” (California Civil Code 2100.) This establishes Uber and Lyft liability exposure beyond the mere insurance coverage minimums described in AB 2293.
Was Proposition 22 About Uber and Lyft Liability?
The apparent (and primary) purpose of Proposition 22 was to address the status of app-based drivers and similar workers as independent contractors rather than direct employees. Obviously, this would save the companies a great deal of money – enough that they were willing to spend more than $200 million on Prop 22 — on mandated employee benefits like workers compensation coverage, unemployment insurance, health insurance, etc., as well as providing both the companies and the workers additional scheduling flexibility by eliminating rules for rest breaks, meal breaks, and overtime.
This effort by Uber, Lyft, and others in the “gig economy” followed a court case in 2018 (Dynamex Operations v. Superior Court) and state law in 2019 (Labor Code 2750.3), which established a presumption that these workers were employees rather than independent contractors. This law was important to Uber and Lyft liability issues because it appeared to settle the question of “vicarious liability” in personal injury incidents involving drivers for these companies.
Vicarious liability describes a situation in which one person or entity can be held liable for injuries and damages caused by the negligence of another person or entity. The most common application of vicarious liability in personal injury claims and lawsuits is the extension to an employer of liability for the actions of a negligent employee or agent through the doctrine of respondeat superior. In the context of Uber and Lyft liability and other app-based transportation services, this presumption in the Labor Code that their workers were employees rather than independent contractors appeared to make the vicarious liability of Uber and Lyft for its drivers’ negligence more directly and solidly established.
Although the purpose of and apparent motivation for the backers of Prop 22 was the economic benefit of shifting benefit, employee-protecting insurance, and scheduling costs and risks to the drivers, another consideration was the impact of Proposition 22 upon Uber and Lyft liability in personal injury cases by reducing or eliminating vicarious liability simply by re-designating their drivers as no longer being “employees.”
Did Proposition 22 Change Liability?
Almost certainly not. Both the proposition and its entry into California state codes address its purpose of protecting workers’ right to work as independent contractors for these transportation network companies. They describe the workers’ right to establish their own hours and locations for work.
Prop 22 does actually increase the app-based transportation companies’ obligations toward their drivers in certain respects, including:
- Occupational insurance for medical bills and income losses due to injuries suffered while the driver is online;
- Disability payments of two-thirds of the driver’s average earnings;
- Benefits for spouses and children for driver accidental death;
- Workers’ compensation benefit for drivers injured by a passenger;
- For companies that meet Proposition 22’s definition of “deliver network companies” and whose drivers meet its definition of “delivery company couriers,” it also requires minimum insurance coverage of $1 million for injuries to third parties caused by their drivers.
For all the changes Proposition 22 made to the relationships between app-based transportation network companies and their drivers, it did not:
- Change the issue of vicarious liability for negligent drivers;
- Change the strict liability of the companies as regulated charter party passenger carriers for the actions of their drivers;
- Change the status of Uber, Lyft, and similar companies as “common carriers” of passengers under Civil Code 2168 and resulting duty under Civil Code 2100 to exercise “utmost care and diligence;.”
- Establish or change any liability limitations or insurance minimum coverages other than adding the new insurance requirements mentioned above.
Although the re-definition of app-based drivers as independent contractors under Proposition 22 may have consequences for the drivers in the area of employee benefits and protections, it does not appear to have had any negative impact at all upon the liability of Uber, Lyft, and other members of the industry for injuries and damages caused by their drivers who may be negligent.
Watch this video from the Australian Broadcasting Corporation about the rise of Uber:
Sacramento Uber and Lyft Accident Lawyer
My name is Ed Smith, and I’m a Uber and Lyft accident lawyer in Sacramento. If you or a loved one has sustained an injury in a traffic accident involving an Uber or Lyft driver or another app-based transport service driver, please call our injury lawyers at (916) 921-6400 or (800) 404-5400 to receive our free and friendly advice. You can also reach us through our online contact form.
You can learn more about us by reading our client reviews and some of our past verdicts and settlements at:
Photo Attribution: Image by Foundry Co from Pixabay
gm [cs 1419] cha