Several state ballot initiatives affect employers and the workplace.
Most of the focus of the November 3, 2020 election has been on the Presidential and Congressional elections. However, there were several state ballot initiatives affecting employers and the workplace. Some of these ballot initiatives represent substantial changes to key workplace policies and, even though enacted on at a state level, may influence national priorities such as the classification and treatment of independent contractors in the "Gig" economy, and individual privacy rights. Others may signal continued momentum on certain trends, such as higher minimum wage thresholds, paid leave expansion, and cannabis legalization. Here are summaries of some of these important ballot initiatives affecting employers.
California Proposition 22, App-Based Drivers as Contractors and Labor Policies Initiative - Approved
Proposition 22 considers app-based drivers to be independent contractors rather than employees. California state labor laws such as minimum wage will not extend to "App-based drivers." This ballot initiative does not affect other types of workers who are subject to California Assembly Bill 5 (AB 5). In addition to defining app-based drivers as independent contractors, Proposition 22 enacts certain labor and wage policies applicable to app-based drivers and companies, including:
- Payment of the 120% of the minimum wage for engaged time
- Health benefits subsidy payments
- Insurance (accident, disability, etc.)
- Antidiscrimination and sexual harassment policies
- Training programs (driving, misconduct, etc.)
- Zero-tolerance policies for drugs or alcohol
- Criminal background checks for drivers
Proposition 22 specifically requires companies to develop anti-discrimination and sexual harassment policies; develop training programs for drivers related to driving, traffic, accident avoidance, and recognizing and reporting sexual assault and misconduct. Companies are required to have zero-tolerance policies for drugs or alcohol; and conduct criminal background checks for drivers.
The initiative also restricts the ability of the California legislature to amend the law by setting a majority threshold for legislative approvals of 88 percent and permitting only amendments that are consistent with and further the purposes of the Act.
This initiative establishes a significant exemption from California's expansive definition of employment under AB 5. It also establishes a precedent for a third category of workers for platform-based or app-based "Gig economy" workers, in addition to employees and independent contractors.
California Proposition 24 Consumer Privacy Rights Act (CPRA) – Approved
The Proposition 24 ballot initiative creates a new California Privacy Protection Agency to implement and enforce the CPRA and exempts employment-related and business-to-business data through 2022. The initiative generally modifies and expands on the Consumer Privacy Act; such as allowing consumers to prevent businesses from sharing personal information, correct inaccurate personal information and limit businesses' use of sensitive personal information including geolocation, race, ethnicity and health information.
Organizations will need to update their California privacy programs to include as a new category of personal information, "sensitive data," which includes government identifiers, account and log-in information, geolocation data, race or ethnic origin, religious beliefs, etc. This initiative will be addressed in detail in a subsequent Eye on Washington.
Colorado Proposition 118, Paid Family and Medical Leave Insurance - Approved
Proposition 118 was approved, creating a new Paid Family and Medical Leave program for Colorado employees. It will provide 12 weeks of paid leave, with an additional four weeks available in specified circumstances. This program will be administered by the Colorado Department of Labor and Employment.
Beginning in 2023, employers will pay a payroll tax of 0.9 percent of wages, split evenly between employers and employees. After 2024, the tax rate will be reset based on aggregate benefits paid in the prior calendar year. Businesses with less than 10 employees are exempt from the employer share (i.e., will pay only the 0.45 percent withheld from employees). Companies can apply for exemption if they have an equivalent paid leave plan that meets specified criteria.
Beginning in 2024, Individuals will be eligible for benefits after they have earned $2,500 and have been employed for at least 180 days.
Colorado is the first state to establish an ongoing paid family and medical leave program through a ballot initiative, although other states have enacted short-term paid sick leave mandates through ballot measures.
Florida Amendment 2, $15 Minimum Wage Initiative – Approved
Amendment 2 will increase the Florida state minimum wage, currently $8.56 per hour, to $15.00 per hour in 2026. Increases are graduated, as follows:
- $10.00 effective September 30, 2021;
- $11.00 effective September 30, 2022;
- $12.00 effective September 30, 2023;
- $13.00 effective September 30, 2024;
- $14.00 effective September 30, 2025; and
- $15.00 effective September 30, 2026.
The minimum wage will be adjusted annually thereafter based upon the Consumer Price Index.
For context, 29 states currently have a minimum wage above the federal minimum wage of $7.25. In addition to Florida, several states including California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey and New York have laws that will eventually raise the state minimum wage to $15 per hour. The District of Columbia adopted a minimum wage of $15 beginning July 1, 2020.
Cannabis Legalization Initiatives – Approved
Five states had ballot initiatives addressing either medical or recreational cannabis use. All of these measures passed. Voters in Arizona, Montana, and New Jersey decided to legalize recreational marijuana. Voters in Mississippi and South Dakota decided to legalize medical marijuana. These ballot initiatives are named:
- Arizona Proposition 207
- Mississippi Initiative 65 and Alternative 65a
- Montana Ballot Issue CI-118 and Amendment Ballot Issue I-190
- New Jersey Question 1
- South Dakota Constitutional Amendment A and Initiative Initiated Measure 26
In previous years, some states that voted to legalize recreational or medical marijuana established programs that provide guidance for employers. Some of these latest ballot initiatives also contain guidance for employers. Some states plan to develop more specific guidance. Despite cannabis legalization laws in many states, cannabis is still illegal under federal law. Employers in states where medical and/or recreational use has been legalized need to consider what this means for their pre-hire and workplace drug testing policies, especially for employers in industries that are directly regulated by federal law, such as transportation, and those that are federal contractors.
Ballot Measures That Failed to Pass
- Portland, OR Measure 26-218 would have created a payroll tax of 0.75% on employers with 26 or more employees beginning in 2022 to fund transportation.
- Illinois constitutional measure would have allowed a graduated income tax.
- Illinois Constitutional Amendment 1 would have removed constitutional language barring progressive personal income taxation, and legislation passed earlier in the year would have set rates based on income.
ADP® will continue to monitor and assess the impact of the recent elections on federal and state policymaking; enforcement priorities and the regulatory agenda of the various agencies; e.g., Department of Labor, Treasury & IRS; EEOC and others.
ADP Compliance Resources
ADP maintains a staff of dedicated professionals who carefully monitor federal and state legislative and regulatory measures affecting employment-related human resource, payroll, tax and benefits administration, and help ensure that ADP systems are updated as relevant laws evolve. For the latest on how federal and state tax law changes may impact your business, visit the ADP Eye on Washington Web page located at www.adp.com/regulatorynews.
ADP is committed to assisting businesses with increased compliance requirements resulting from rapidly evolving legislation. Our goal is to help minimize your administrative burden across the entire spectrum of employment-related payroll, tax, HR and benefits, so that you can focus on running your business. This information is provided as a courtesy to assist in your understanding of the impact of certain regulatory requirements and should not be construed as tax or legal advice. Such information is by nature subject to revision and may not be the most current information available. ADP encourages readers to consult with appropriate legal and/or tax advisors. Please be advised that calls to and from ADP may be monitored or recorded.
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Updated on November 10, 2019