Passage of California Prop 22 Is Big Victory for Gig Economy

California voters overwhelmingly approved Proposition 22, which will allow gig workers for Uber, Lyft, DoorDash and others to remain independent contractors. These three companies created the proposition to exempt them from a state labor law that would require them to treat drivers as employees and pay for healthcare, unemployment insurance and other benefits. Proposition 22 does include a wage floor and some benefits for drivers. San Francisco, headquarters for Uber and Lyft, presented the strongest opposition.

The New York Times reports that, “the Associated Press projected early Wednesday that Prop 22 had carried 58 percent of the vote.” Prop 22 pitted “labor groups and state lawmakers against ride-hailing and delivery startups that spent $200 million in support of the measure.”

A vote for the proposition “rejected the principles outlined in a 2018 State Supreme Court ruling and enshrined in a 2019 state law that said workers who performed tasks within a company’s regular business — and were controlled by the company and did not operate their own firms — must be treated as employees.”

“California has spoken,” said a Prop 22 spokesperson Geoff Vetter, who added that the proposition “represents the future of work in an increasingly technologically-driven economy.” Uber chief executive Dara Khosrowshahi “thanked drivers for the win … [stating] the future of independent work is more secure because so many drivers like you spoke up.” He added that the company would make the driver benefits listed in Prop 22 available “as soon as possible.”

With this win, says NYT, “Uber and other gig economy players are likely to pursue federal legislation to enshrine gig work in the nation’s labor laws.” But passage of the proposition is “a bitter loss for state and local officials who have long seen the ride-hailing companies as obstinate upstarts that shrugged off any effort to make them follow the rules.”

“For all too long, Uber and Lyft banked on the timidity of public officials throughout the country,” said San Francisco city attorney Dennis Herrera. “They said: ‘We’re not going to ask permission. We’ll sort of ask for forgiveness after the fact, once the horse has left the barn’.” Litigation instigated by Herrera continues.

CNN reports that, according to Ballotpedia, Prop 22 is “the costliest ballot measure in California’s history. Opponents of the proposition, backed by labor and union groups, spent about $20 million to fight it. The proposition “sidesteps Assembly Bill 5, which went into effect on January 1 and codifies an ‘ABC’ test to determine if workers are employees who are entitled to labor protections and benefits.”

AB5 was intended to “ensure workers aren’t exploited by gig companies.” Terri Gerstein at the Harvard Labor and Worklife Program and Economic Policy Institute stated the passage of Prop 22 will “leave thousands of California workers in a precarious and perilous position, without basic rights like workers’ compensation, unemployment insurance, or the right to a safe workplace.”

Related:
Here Are Some of the Potential Ripple Effects Proposition 22 Could Set Off, Adweek, 11/5/20
Uber, Gig Economy Companies See California Win as National Model, Reuters, 11/4/20