(CN) — An expensive gamble by app-based gig companies paid off big time in California with the approval of a ballot measure that exempts firms like Uber and Lyft from a state labor law and lets them classify workers as independent contractors.
It's an outcome Uber and Lyft say most of their drivers support, but one opponents say allows “billionaire corporations” to write their own laws and denies wages, sick pay and unemployment insurance to hundreds of thousands of California gig workers.
Proposition 22 entitles California gig workers to new benefits such as guaranteed hourly earnings, mileage reimbursement and health care subsidies for some workers.
“Today, California voters agreed that instead of eliminating independent work, we should make it better,” Uber said in a statement Wednesday. “Soon, drivers in California will be guaranteed a minimum earnings standard of 120% of minimum wage and will gain access to important new benefits like healthcare, accident insurance, and more.”
Opponents say those benefits fall far short of what workers would get as employees under state law.
Proposition 22 succeeded with 58.4% of voters in favor and 41.6% opposed, according to unofficial results from the California Secretary of State’s Office.
It became the most expensive ballot measure race in California history with Uber, Lyft and other gig companies pouring $205 million into the Yes on Prop 22 campaign. Labor unions and other opponents raised $20.3 million to fight it.
Casting themselves as David standing up to Goliath, Proposition 22 adversaries credited themselves with running a formidable campaign despite being outspent 10 to 1 by gig companies.
“We were up against the most expensive campaign in California’s history and we put up a strong fight,” said Cherri Murphy, an Oakland-based Lyft driver and organizer with Gig Workers Rising, in a statement Wednesday.
The dispute over worker classification can be traced back to April 2018, when the California Supreme Court adopted a new labor standard in Dynamex v. Superior Court that made it harder for companies to treat workers as independent contractors. To label someone a contractor under the stricter standard, called the “ABC test,” a company must show it does not directly control the worker, that the work falls outside its usual course of business, and that the worker is “customarily engaged in an independently established trade.”
In 2019, Governor Gavin Newsom signed Assembly Bill 5, which codified the Dynamex standard into the state labor code. The law, introduced by Assemblywoman Lorena Gonzalez, a San Diego Democrat, took effect Jan. 1.
Uber, Lyft and Doordash vowed to pour at least $90 million into a ballot measure to exempt themselves from the law. That amount would more than double during the yearlong campaign.
The companies continued to classify workers as contractors after AB 5 took effect, leading California Attorney General Xavier Becerra to sue the two ride-hail tech giants in May for violating the statute.
In August, a San Francisco Superior Court judge ordered Uber and Lyft to classify drivers as employees pending the final result of the lawsuit. A state appeals court upheld that decision on Oct. 22.
Becerra’s office would not comment on whether approval of Proposition 22 makes that lawsuit moot, saying the election results are not yet certified and official.
Proposition 22 will grant gig workers guaranteed earnings of 120% of minimum wage, $0.30 reimbursement per mile for gas expenses, quarterly health care subsidies for drivers that work 15 hours per week or more, accident insurance for on-the-job injuries, an appeals process for deactivated drivers, and anti-discrimination and sexual harassment prevention protections.
Workers will not get sick pay, family leave, unemployment insurance or a chance to be compensated for time waiting between rides, one of the key legal disputes in the pending lawsuit.
Steve Gregg, an organizer with Gig Workers Rising who drove three years for Uber and Lyft before the Covid-19 pandemic, believes the Proposition 22 benefits fall short.
“I think it’s wholly inadequate,” Gregg said in a phone interview. “It doesn’t provide a safety net for employees.”
Murphy, Gregg’s colleague at Gig Workers Rising, also accused Proposition 22’s corporate backers of misleading voters and using “dirty tactics” to win.
Last month, Uber and Lyft were sued for sending allegedly coercive in-app messages to drivers supporting Proposition 22. A state judge refused to make Uber and Lyft stop sending the messages to drivers, finding the request for a temporary restraining order was “repugnant to free speech rights.”
Anthony Foxx, former U.S. Secretary of Transportation under President Barack Obama who now serves as chief policy officer for Lyft, hailed the result in a statement Wednesday. He said Proposition 22 is the first law in the nation requiring health, disability and earnings benefits for gig workers and suggested the model could be expanded to cover the entire country.
“Lyft stands ready to work with all interested parties, including drivers, labor unions and policymakers, to build a stronger safety net for gig workers in the U.S.,” Foxx said.
Murphy said she and other organizers will continue to fight tooth and nail to support employment protections and benefits for gig workers.
“Know this: our movement is strong and will not go away,” Murphy said. “We will keep fighting until all workers are treated with the dignity and respect we deserve.”
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