Rideshare companies Uber & Lyft have won a major vote on their employee contractor status after California voted to pass Proposition 22 after a lengthy and costly campaign.
Rideshare companies like Uber and Lyft, as well as delivery services operating in the gig-economy are celebrating the win and passage of California’s Proposition 22 which states that the company’s drivers should be classified as contractors, rather than given employee status.
As voters took to the polls for the Presidential election, California voters were given the opportunity to vote on Proposition 22, which Uber, Lyft and major food delivery services like DoorDash spent more than $200 million in their campaign.
The companies were protesting California’s labor law – known as AB5 – which would give those employed by rideshare and delivery service companies like Uber & Lyft official employee status, as well as the requisite benefits of that status.
Earlier this year, both Uber and Lyft threatened to suspend their services in California after a court ordered the AB5 labor law to be enforced. The passage of Proposition 22 means that Uber and Lyft can officially classify their drivers as contractors, and are therefore not required to offer them benefits like and award minimum wage, health insurance or unemployment benefits.
Uber’s CEO, Dara Khosrowshahi has issued a statement saying the vote was a “win for drivers across California,” before retweeting a message from Jason Calcanis calling California politician Lorena Gonzales a “grifter” that “failed to hand gig workers over to the big-money unions.”
The tweet has since been deleted by Uber’s CEO.
Uber & Lyft have, through their campaigning, said that the companies will make contributions toward their driver’s health insurance, potential insurance subsidies, as well as a guaranteed hourly earnings rate.
Khosrowshahi also emailed its drivers regarding the victory, stating that “we’re looking forward to bringing you these new benefits – like health care contributions and occupational accident insurance as soon as possible.”
In reference to the more than $200 million spent on campaigning for the passage of Proposition 22, William Gould, a Stanford Law School Professor and former chairman of the National Labor Relations Board said that “two hundred million plus is much cheaper from their perspective than paying the employees these benefits that legislature has established for them.”
Share prices for both Uber and Lyft jumped at news of the passage of the proposition, with Lyft jumping more than 12% and Uber up 14%.
A representative of Gig Workers Rising, a group calling for Uber & Lyft to award employee status rather than contractor status to its drivers has called the vote “a loss for our democracy that could open the door to other attempts by corps to write their own laws.”
Nicole Moore, organiser of Rideshare Drivers United has also issued a statement saying “we were outspent 20:1. We were outgunned. But we haven’t gotten this far because it was easy. We are fighters. And we punch above our weight. We stand strong when we stand together. We will fight – in the courts, in Sacramento and in the streets,” she said.
Jesse Jauregui, partner with law firm Alston & Bird has told Bloomberg that “legal pushback may continue, but Proposition 22 sets the tone for other states to follow in recognising gig workers as a central part of today’s economy and the future of work.”
“Proposition 22 is pointing to a new ‘third way’ of structuring the nature of work and may become the model for other gig workforces to follow,” Jauregui says.
Meanwhile, across the Atlantic in London, Uber and the UK’s highest court room have been locked in a five-year legal battle regarding the same classification for employees and their contractor status in an attempt to avoid the added operating costs of covering wages and health insurance costs.