California Suddenly Rational: Uber and Lyft Win Proposition 22

Mish

Uber and Lyft Prevail on Proposition 22. Drivers are contractors, not employees.

Hooray for California

The state’s new labor law, AB5, classified Uber and Lyft drivers as employees. 

The companies put proposition 22 on the ballot in response.

I am pleased to report Uber and Lyft Prevail in California Proposition exempting them from state labor law.

Key Points

  • California voters weighed in on Proposition 22, a ballot measure that would exempt drivers for app-based transportation and delivery companies from being classified as employees.
  • The ballot measure had essentially become one of Uber and Lyft’s last hopes in the state to continue their operations under the status quo.
  • The companies faced a lawsuit from California’s attorney general, accusing them of violating the state’s new labor law, AB5.

Drivers Chime In

“In a historic election, California drivers sent a clear message that we want to be independent, and that what’s best for us is a new approach that preserves our independence while providing new benefits,” Bay Area rideshare driver Jimmy Strano said in a statement shared by Yes on 22, a committee funded by Uber, Lyft and DoorDash.

A Lyft spokesperson deferred to the statements from Yes on 22. Representatives from Uber and the California attorney general’s office did not immediately respond to requests for comment.

Prop 22 Final Results

Prop 22 results

Ride Share Guy on Prop 22

The Price of Sanity

Sanity prevailed but political action committees spent more than $785 million to support or oppose the 12 propositions on the November ballot, most of that by big tech firms. 

Mish

Comments (56)
No. 1-18
Rbm
Rbm

Well i voted against it. My thought was it would open the door to more companies “contracting” out their work to cut down on their labor cost.

Eddie_T
Eddie_T

Yes I noticed that immediately and it made me happy. These gig economy companies that run on apps are very good for both consumers and people who really need the work. It’s a win/win for the economy.

They need to be nurtured, not regulated out of business.

Making Uber divers employees kills the business model. The drivers who asked to be employees are just dumb....and they just want to have their cake and eat it too. It doesn’t work like that. They need to understand if they want the work, they have to pay their own taxes.

Eddie_T
Eddie_T

“Drivers”.....damn the autocorrect.

Sechel
Sechel

uber drivers as contractors really get abused. its a terrible business model for the dirvers and a really good one for uber. but this is the future. medallion taxi drivers should quit now.

Jojo
Jojo

Who is an employee and who is an IC has long been settled law. The IRS issued detailed regulations long ago but I don't believe that they can enforce them unless it audits the company.

See (for example):

Uber/Lyft have claimed that their drivers are NOT integral to the business, when in fact, they are and therefore should be classified as employees. Without drivers the companies have nothing to offer other than some possible scheduling/routing software, which could be done by much smaller companies at much lower overhead costs.

Hopefully the Prop 22 results will be challenged in court and the vote canceled because people in a state can't simply decide that they don't want to follow existing laws and regulations at the Federal level.

If this were allowed, then why not put a proposition to vote allowing legal slavery? I'd bet it would pass. If you can afford to capture and import someone as a slave, then why should you be prohibited from doing so?

Jackula
Jackula

I drove UBER and Lyft myself between projects, the big $5 per hour after expenses and taxes obviously did not cut it here in Los Angeles and I bailed after a couple of weeks.

Doug78
Doug78

I suppose the $15 an hour doesn't apply to them, does it?

Eddie_T
Eddie_T

No.....Uber costs more when demand is high, and drivers make more then. Good uber drivers also manage to schmooze for tips.

Eddie_T
Eddie_T

It’s like being a doorman....a low paying job that can pay very well, depending on having regulars who treat you well.

Webej
Webej

How ironic & disingenuous.
Increasing the scope of the precariate.
In the guise of protecting their rights.

Eddie_T
Eddie_T

Boy, the socialists are out tonight. Yeah.....protect those Uber drivers right out of a job.

Casual_Observer
Casual_Observer

More surprisingly, the proposition for affirmative action in workplaces and universities was rejected by 56-44. While this may seem surprising, California has always had a merit-based culture in the workplace and in higher education. CSU was created as a system for those who could not get into the UC system on merit.

LewisM
LewisM

CA is a relatively centrist state tbh. For all the handwringing about Jerry Brown for example, he governed quite conservatively, especially in comparison to the spendthrift Schwarzeneggar (R) and Newsom.

The issue is that the republican brand here is beyond toxic, for that you can thank Pete Wilson and Prop 187. It turns out that targeting and alienating latinos, the fastest growing demographic, was not a good long term electoral strategy. Surprisingly, AZ followed a similar path with the "papers please" law in 2010. Now AZ is lost to the republicans too.

phatmaster
phatmaster

My main gripe with 22 is it only focused on uber and lyft. Everyone should have a choice to be an employee

Jeff Dog
Jeff Dog

I wonder if they should teach voters to pick ballot initiatives YES vs NO with coin flip when they are not interested in the a specific issue. As it is now in California, leaving it blank is a NO. You can't just not vote.

JG1170
JG1170

The biggest problem is now all tech companies will be emboldened to write their own laws (in California) and lie to the public until it passes. Their win has set an awful precedent.

Jojo
Jojo

This opera ain't over yet!

Fight Over Gig Workers Persists Despite Win for Uber and Lyft
A successful ballot measure in California makes drivers and other workers contractors, but the companies face continued pushback.
By Noam Scheiber and Kate Conger
Nov. 11, 2020, 1:03 p.m. ET

Last week’s election produced a crisp result in at least one high-stakes contest: California voters approved a ballot measure that exempts companies like Uber and Lyft from having to treat workers as employees.

The measure freed the companies from a 2019 state law that entitled workers to protections like overtime pay, sick leave and unemployment benefits and could have upended the gig-economy business model. As a result, Uber, Lyft and other similar businesses appeared to be on the ascent. The two companies’ stock market value increased by roughly $20 billion in the week after the election, and executives indicated that they would seek to replicate their political gains elsewhere.

“Going forward, you’ll see us more loudly advocate for new laws like Prop. 22,” Uber’s chief executive, Dara Khosrowshahi, said on a call with financial analysts last week, referring to the successful ballot measure, which also granted workers health care subsidies and a minimum pay rate.

But the question of gig workers’ labor status remains largely unresolved nationally — with a series of pitched battles likely to ensue between gig companies and labor in Washington and in state capitals, and even among unions that disagree over the importance of employee status.

....

Jojo
Jojo

In case anyone is still following this thread, I offer this new article:

Opinion
What Happened in California Is a Cautionary Tale for Us All
A voter-approved measure strips gig workers of basic protections enjoyed by employees in other businesses.
By Terri Gerstein
Ms. Gerstein is the director of the State and Local Enforcement Project at Harvard Law School’s Labor and Worklife Program.
Nov. 13, 2020

What happened in California? Despite the state’s liberal reputation, voters there last week approved Proposition 22, a ballot initiative exempting many gig companies from state workplace laws and stripping their workers of basic, essential protections.

Uber, Instacart, Lyft, DoorDash and other on-demand providers of ride-shares and food and grocery deliveries spent $200 million pushing the proposal, an astounding sum that workers and their allies couldn’t remotely hope to match. Not surprisingly, Californians were misled by an avalanche of claims about the proposal’s impact on workers. The measure, which takes effect next month, was approved with 58 percent of the vote.
....


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