California Voters Approve Ridesharing Drivers from Labor Protections

California voters approve Uber-Lyft-sponsored proposition 22

Written by Taher Kameli & Chathan Vemuri

In an earlier post, we talked about how the First District Court of Appeal in California ruled that Uber and Lyft drivers were employees and were entitled to full protections under California’s Assembly Bill 5 law (AB5) such as paid sick leave, overtime, and fair wages.[1] Around the same time, however, Uber and Lyft were sponsoring a state ballot-initiative for Election Day known as Proposition 22 that would have exempted their drivers from the protections of AB5 and identified them as “independent contractors” rather than “employees.”[2] This would override the state Appellate Court’s decision and set the legal standard for how ridesharing drivers would be classified for labor law purposes. This is exactly what happened last week.

 

On Tuesday, November 3 of 2020, on Election Day, California voters passed the Proposition 22 ballot measure exempting gig companies from treating their drivers as employees as opposed to independent contractors.[3] This followed a record-breaking expensive campaign led by Uber and Lyft (amounting to $200 million) to promote the ballot measure, outspending that of opponents of the measure such as the California Labor Federation.[4]

 

Whether it was ads at common thoroughfares such as billboards, mailers, commercial advertisements, ads at public events such as sports competitions, or, most importantly, notifications on the apps themselves supporting the measure, Uber and Lyft spread positive awareness of the measure far and wide.[5] They particularly appealed to riders sense of convenience, emphasizing longer wait times and higher priced fares if the Proposition did not go through.[6]

 

Experts point out that voter reliance on these services and desire to avoid disruptions in them, coupled with lack of knowledge about the specifics about the legal dispute allowed companies like Uber and Lyft to set the terms of the debate around Proposition 22, attracting voters’ support even if they didn’t fully understand the different sides of the issue, much less support one side or the other.[1]

 

The desire alone to continue relying on these services meant support for Proposition 22, especially as Uber and Lyft both publicly threatened to leave California if Proposition 22 was not passed.[2] Opponents of Proposition 22 could not compete with their comparatively modest ad campaign and limited access to voters.[3] Notification supporting Proposition 22 sent via the app to Uber drivers also helped drive the support for Proposition 22,  emphasizing the potential loss of work opportunities with the app should the measure fail as well as, most controversially, requesting an OK on the messages before letting drivers continue with the App.[4]

 

Indeed, this same tactic of requesting acknowledgment of these adverts prior to continued use of the app was used with riders as well.[5] This has led to controversy over whether the pro-Proposition 22 campaign coerced voters to support the ballot measure.[6] Although a lawsuit over “political coercion” on the matter was dismissed, the question continues to be part of debates about the Proposition, with many critics arguing that gig-economy companies like Uber and Lyft effectively “bought” support for Proposition 22 to become a law.[7]

 

However, the victory of supporters of Proposition 22 in California carries great national significance, as other states around the country potentially consider legislation forcing gig-economy companies to classify their freelance workers (drivers, etc.) as “employees”. These states may see California as an example of what companies like Uber and Lyft could do should similar measures be considered elsewhere.[8] Considering the heavy reliance people have on workers in these gig sector jobs. The idea that these workers are denied full benefits given to other workers labeled as “employees” such as paid sick leave, worker’s compensation, the minimum wage, and access to PPE, is extremely contentious. [9]

 

Many arguing that to do so leaves gig workers vulnerable to business decisions of gig economies that do not feel accountable to national labor laws and standards.[10] Labor organizations seek greater activism from affected workers over the passage of measures like Proposition 22, especially as they continue to experience the pressures of workers in the midst of the Coronavirus pandemic without getting the same treatment.[1]

 

Already, drivers in California have mobilized against Proposition 22 itself with protests, while in New York, drivers were able to win a federal court ruling requiring the state to pay gig-economy drivers the same unemployment benefits provided to employees.[2] Before the pandemic, there were discussions between Uber and Lyft on one side and New York labor groups, where New York Governor Andrew Cuomo suggested a compromise that granted bargaining rights to Uber and Lyft drivers short of employee status.[3]

 

Although such talks have stalled since the onset of the COVID-19 pandemic, there are some who still suggest a compromise can be achieved meeting both the needs of gig economy companies and those of their drivers while others, including drivers themselves, argue that such concessions would be ineffective if they result in endless battles to get protections as opposed to getting them to begin with as recognized employees.[4] At the federal level, politicians like President-elect Joe Biden and Vice President-elect Kamala Harris, have publicly opposed Proposition 22 and have sought to create a federal version of California’s AB5 statute to protect gig economy workers as employees, alongside traditional employees.[5]

 

In addition,  groups and figures close to these two politicians have strong ties to the gig economy or support it, with Vice President-elect Harris’s own brother-in-law being Uber’s chief legal officer.[6] So even their opposition to such actions by gig companies may only go to a point. Yet if the unsuccessful lawsuit of Uber drivers against Uber for possible coercion to support Proposition 22 has demonstrated anything[7], it is that many drivers no longer feel comfortable with what they feel to be a business model that shields companies like Uber and Lyft from accountability.

 

Overall, the passage of Proposition 22 represents a major advance by the gig economy against established labor standards and other states have taken note. Yet this may elicit stronger challenges not only from other state legislatures, the federal government, or organized labor groups, but also their own drivers as well. The business model proffered by gig-economy companies like Uber and Lyft, although once celebrated for providing flexible work schedules and low-cost customer service, maybe harder to sustain and defend, as protections given to employees become more and more necessary as reliance on gig workers increase.

 

Please fill out the form below or give us a call at +1 (312)-233-1000 if you have any questions about the significance of measures like Proposition 22 and what they mean for gig-employers and their responsibilities.

[1] Kari Paul, Prop 22: Uber’s Victory in California Could Harm Gig Workers Nationwide, The Guardian (Nov. 11, 2020, 6:05 EST) available at https://www.theguardian.com/us-news/2020/nov/11/california-proposition-22-uber-lyft-doordash-labor-laws

[2] Kate Conger and Noam Scheiber, Fight Over Gig Workers Persists Despite Win for Uber and Lyft, N.Y. Times (Nov. 11, 2020) available at https://www.nytimes.com/2020/11/11/business/economy/california-gig-workers-ballot-uber-lyft.html

[3] Id.

[4] Id.

[5] Kari Paul, Prop 22: Uber’s Victory in California Could Harm Gig Workers Nationwide, The Guardian (Nov. 11, 2020, 6:05 EST) available at https://www.theguardian.com/us-news/2020/nov/11/california-proposition-22-uber-lyft-doordash-labor-laws

[6] Kate Conger and Noam Scheiber, Fight Over Gig Workers Persists Despite Win for Uber and Lyft, N.Y. Times (Nov. 11, 2020) available at https://www.nytimes.com/2020/11/11/business/economy/california-gig-workers-ballot-uber-lyft.html

[7] Andrew J. Hawkins, Uber and Lyft Had an Edge in the Prop 22 Fight: Their Apps, The Verge (Nov. 4, 2020, 2:30 PM EST) available at https://www.theverge.com/2020/11/4/21549760/uber-lyft-prop-22-win-vote-app-message-notifications

[1] Andrew J. Hawkins, Uber and Lyft Had an Edge in the Prop 22 Fight: Their Apps, The Verge (Nov. 4, 2020, 2:30 PM EST) available at https://www.theverge.com/2020/11/4/21549760/uber-lyft-prop-22-win-vote-app-message-notifications

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Kate Conger and Noam Scheiber, Fight Over Gig Workers Persists Despite Win for Uber and Lyft, N.Y. Times (Nov. 11, 2020) available at https://www.nytimes.com/2020/11/11/business/economy/california-gig-workers-ballot-uber-lyft.html

[9] Alissa Walker, Uber and Lyft Just Bought a Law in California, Curbed (Nov. 5, 2020) available at https://www.curbed.com/2020/11/california-uber-lyft-prop-22.html

[10] Kari Paul, Prop 22: Uber’s Victory in California Could Harm Gig Workers Nationwide, The Guardian (Nov. 11, 2020, 6:05 EST) available at https://www.theguardian.com/us-news/2020/nov/11/california-proposition-22-uber-lyft-doordash-labor-laws

[1] Kate Conger, Appeals Court Says Uber and Lyft Must Treat California Drivers as Employees, N.Y. Times (Oct. 22, 2020) available at https://www.nytimes.com/2020/10/22/technology/uber-lyft-california.html

[2] Id.

[3] Kari Paul, Prop 22: Uber’s Victory in California Could Harm Gig Workers Nationwide, The Guardian (Nov. 11, 2020, 6:05 EST) available at https://www.theguardian.com/us-news/2020/nov/11/california-proposition-22-uber-lyft-doordash-labor-laws

[4] Id.

[5] Alissa Walker, Uber and Lyft Just Bought a Law in California, Curbed (Nov. 5, 2020) available at https://www.curbed.com/2020/11/california-uber-lyft-prop-22.html

[6] Id.