Voters Pass California Proposition 22

Uber, Lyft, and other companies that rely on gig workers scored a major win as California voters passed Proposition 22, a California labor law that will allow companies to withhold employment benefits from workers deemed “independent contractors.”

CNN Business reports that major players in the gig economy supported the bill, including DoorDash, Instacart, and Postmates, along with the major rideshare companies. They reportedly spent a combined $200 million pushing the bill on voters, arguing that recent efforts to classify contractors as employees took away workers’ independence.

“California has spoken and millions of voters joined their voices with the hundreds of thousands of drivers who want independence plus benefits,” Yes on 22 reportedly said in a statement after the election. “Prop 22 will protect drivers’ preference to be independent contractors with the flexibility to work when, where, and how long they want.”

California Moves to Make Gig Workers Employees

Proposition 22 was crafted in response to court orders requiring gig companies classify workers as employees entitled to benefits such as minimum wage, leave time, and breaks under California law. The California legislature had recently passed AB 5, a labor law meant to give employee rights to independent contractors.

According to CNN, an appeals court ruled two days before the election, affirming a lower court decision requiring Uber and Lyft to reclassify workers under AB 5.

In response to the lawsuit filed by the state, Uber and Lyft reportedly threatened to pull out of California.

“Uber and Lyft have used their muscle and clout to resist treating their drivers as workers entitled to those paycheck and benefit protections,” the attorney general for California said at the time of the court’s decision. “It’s time for Uber and Lyft to play by the rules.”

Rideshare Companies Claim Business Built on Independent Contractors

Both Uber and Lyft reportedly objected to California’s effort to make them classify their drivers as employees. Uber reportedly claimed that requiring the company to provide employee benefits to drivers would “dramatically restrict” the number of drivers they could hire.

Lyft’s CEO reportedly said the company would move out of California markets as a result.

Rippling Effect of Proposition 22

CNBC reports that the passage of the law may affect freelance work, not just in California, but across the nation. Reportedly, other states considering laws like California’s AB 5 that would give rights to independent contractors may pause after the passage of Prop 22.

“This vote shows you will get pushback wherever they would try another AB 5,” one expert told CNBC reporters. “This was a pretty clear slap in the face of AB 5.”

Critics Say Prop 22 Harms Workers

Labor advocates say that Prop 22 bamboozled voters into thinking that they were voting to give gig workers rights. Under the law, app-based drivers are defined as independent contractors; however, the law affords some rights to these workers, including minimum payment requirements, hour requirements, healthcare subsidies, and insurance.

However, critics point out that Uber and Lyft drivers would have been entitled to more rights if they were classified as employees under California’s AB 5 law. Labor advocates worry that independent contractors will miss out on important provisions, such as a safe workplace, worker’s comp, and unemployment coverage.

“Billionaire [corporations] just hijacked the ballot measure system in CA by spending millions to mislead voters,” reportedly tweeted a coalition of gig workers after the votes were tallied in favor of Prop 22. “Uber, Lyft, & the other gig [companies] took a ballot measure system meant to give voice to ordinary Californians and made it benefit the richest [corporations] on the planet.”

Labor law experts say that, by wining in California, gig companies now know that they can fight similar initiatives in other states and nationally.

“Uber and Lyft figure if they win in California they can win political fights in the rest of the states, and probably Congress,” a former U.S. Secretary of Labor told CNN Business. “Labor unions recognize its importance as well. If Uber and Lyft win this, more employers around the country will classify more of their employees as contract workers. That would mean big savings to employers, since contract workers don’t get Social Security or worker’s compensation, minimum wage, or other labor protections. By the same token, workers would be disadvantaged.”

Labor advocates say they are also concerned that the passage of Prop 22 will lead to lowered standards for worker rights generally.

“There is a strong likelihood that if [Prop 22] passes, it would create lower labor standards across the board for the delivery and logistics industry,” a labor law professor and advocate told CNN reporters.

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