California voters passed Proposition 22, Uber and other gig economy giants’ ballot measure to exempt themselves from AB-5 which requires the company to reclassify their drivers as employees, not independent contractors; this is a major victory for Uber, Lyft and other similar companies who spent $200 million on their ballot measure campaign against the California labor law, while opposers only spent $20 million against the initiative. This win will allow the gig economy to maintain its current business model; as independent contractors, workers will not be qualified for various employment protections and benefits. This also comes after Uber drivers sued the company for purportedly coercing drivers to vote for the proposition.
Uber, Lyft, and others have faced a litany of litigation from workers, the state of California, and other entities over their alleged misclassification; the court has ruled that drivers are employees and that Uber and others must comply with AB-5 and a California regulator issued an order that gig economy workers are employees under AB-5. The proposition was their last resort to be exempt from AB-5 after failing to do so in court.
Supporters of the proposition were pleased that it passed, claiming that drivers would be able to maintain their independence, but while having new benefits such as a guaranteed minimum wage and health care subsidies. Retiree James Patterson noted to AP that he likes being able to make his own schedule. “You can just work when you want and stop whenever you want. And as someone who is retired, it’s nice to get a little supplemental income whenever you need it.”
Meanwhile, those who opposed the proposition felt this was a major blow to gig economy workers. Labor attorney Shannon Liss-Riordan stated, “It should be a good wake-up call for us all, across the country, if these companies think they can buy their way out of having to comply with basic labor laws. I’m worried about what these companies may try to pull off on a national basis.”
Prior to the proposition’s approval, Uber and Lyft had threatened to leave or drastically cut service in California if they were required to classify drivers as employees. Additionally, Uber claimed that there would be a big price increase if the proposition was not approved and fewer drivers.
As part of Proposition 22, Uber, Lyft and other gig economy companies will provide: at least 120 percent minimum wage during “engaged time” with no caps on what a driver can earn; $0.30 per mile to cover gas as well as wear and tear; a healthcare stipend; occupational accident, automobile accident, and liability insurance. While these benefits are more than the drivers were getting before the proposition passed, it is less than they would be getting as employees. According to Ballotpedia, the proposition passed 58.40 percent in favor to 41.60 percent opposed with 100 percent of precincts reporting.
Lyft’s president, John Zimmer, claimed that this decision is a “turning point for the future of work in America.”
