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Over the years, California’s gig economy has expanded, ranging from delivery to freelance platforms. But what happens when there is an accident and workers need compensation? Understanding the coverage gap and how to bridge it is crucial for individuals who earn a living independently in California.
A divide in classification
Most freelance workers are classified as “independent contractors.” This is a status that typically disqualifies them from state-mandated Workers’ Compensation benefits (which cover medical care, wage replacement, and permanent disability).
AB 5 and the ABC test
Assembly Bill 5 (AB 5), which went into effect in 2020, radically reshaped the problematic classification. AB 5 codified the ABC Test, creating a legal assumption that all workers are employees.
For workers not covered by Prop 22 (like freelance writers, cleaners, or non-app delivery drivers), the company must prove they meet all three parts (A, B, and C) of the test to remain contractors. If a worker can prove the company failed the ABC Test, they are legally an employee entitled to full Workers’ Compensation benefits from the California Division of Workers’ Compensation (DWC).
Proposition 22: the exception for app drivers and delivery
Since late 2020, Proposition 22 has created a limited, separate system for app-based rideshare and delivery drivers (Uber, Lyft, DoorDash, etc.) by classifying them as independent contractors by law. In exchange, the platforms must guarantee Occupational Accident Insurance (OAI):
- Accident insurance: Covers medical costs for on-the-job injuries up to $1,000,000. This is a cap, unlike the unlimited medical care provided by Workers’ Compensation.
- Disability payments: Provides 66% of the driver’s average weekly earnings for up to 104 weeks after the injury. Average earnings are calculated based on the driver’s earnings over the preceding 52 weeks.
OAI only applies when the driver is “engaged” (actively transporting or en route to a pickup/delivery). It does not cover illness or comprehensive permanent disability benefits offered by traditional Workers’ Compensation.
Reclaiming your rights
These California laws offer two distinct paths to compensation:
- For non-app gig workers: Your legal challenge is under AB 5 to prove you are an employee entitled to full DWC benefits.
- For app drivers (Prop 22): You should challenge the platform’s private insurer to ensure you receive full OAI benefits.
Understanding which test applies to you is crucial. The necessary first step to successfully claim benefits is to contact an experienced workers’ compensation attorney.