Uber and Lyft win California vote to prevent drivers from becoming employees
Uber, Lyft, and other app-based transportation and delivery services spent $ 200 million (roughly Rs. 1.5 billion rupees) in a winning bet to bypass California lawmakers and courts to preserve their business model by preventing them from drivers become employees eligible for job benefits and protections.
The titans of the so-called gig economy funded the most expensive ballot measure in state history, which was decided Tuesday with 58 percent of more than 11 million voters choosing to keep drivers classified as independent contractors capable of set your own hours.
Shares in both companies rose 11-13 percent ahead of the opening bell on Wednesday after the big win.
The result was a defeat for the unions that had pushed for a state law aimed directly at Uber and Lyft, requiring that they provide drivers with protections such as minimum wage, overtime, health insurance and expense reimbursement.
Proposition 22 supporters said the result showed voters wanted to preserve the flexibility of the current system. Opponents said the companies had bought their own law and vowed to keep fighting for drivers’ rights.
Uber and San Francisco-based Lyft had threatened to pull out of California if they lost. They got additional support in the fight from DoorDash, Instacart, and Postmates, and all could have had their businesses upset if it failed.
Pro-labor Democrats in the Legislature last year passed the landmark law known as AB5 to expand a 2018 California Supreme Court ruling that limited companies from classifying certain workers as independent contractors.
The companies sought an exemption and took their fight to the voters with a campaign that included television spots, billboards and messages that appeared on their app for both customers and drivers.
Opponents said companies exploit drivers to keep profits high and that the ballot measure would deprive workers of rights such as overtime pay and workers’ compensation.
Supporters said the measure would allow drivers to keep the freedom to work the hours they choose and provide other benefits.
Bill French, 62, a former high school baseball coach who voted for the measure in Huntington Beach, said he retired early so he could supplement his salary as an Uber driver and work whenever he wanted.
“I don’t need them to control me and tell me when I’m going to work and when I’m not,” French said.
More than $ 225 million (approximately Rs. 1.7 billion rupees) was spent on the race, and unions contributed around $ 20 (approximately Rs. 150 million rupees) of that.
“The obscene amount of money these multi-million dollar corporations spent misleading the public does not relieve them of their duty to pay drivers a living wage,” Art Pulaski of the California Labor Federation said in a statement. “The end of this campaign is just the beginning of the fight to ensure concert workers receive fair wages, sick pay, and care when injured on the job.”
The expense, which did not represent coupons of $ 30 (approximately Rs. 2,200) Uber Eats and other services offered to customers to promote their brands will likely fund future voting measures on steroids, said political science professor David McCuan of Sonoma State University.
“What Prop. 22 does is raise the tide of all ballot measures,” McCuan said. “Set records that are going to be broken next time. … It makes the parallel route of direct democracy a playing field that will be measured in billions in a few (electoral) cycles. ”
The measure was supported by nearly the entire state except the San Francisco Bay Area and a strip of coastal counties to the north.
Although drivers would remain independent contractors exempt from mandates such as sick leave and expense reimbursement, they would receive some “alternative benefits,” including a guaranteed minimum wage and health insurance subsidies if they average 25 hours of work per week.
CEO of Uber Dara khosrowshahi sent a letter to drivers Tuesday night thanking them for their support and promising details in the coming weeks on how they can enroll in benefits like accident insurance.
The will of the voters could undermine a recent appellate court decision that sided with state attorney general Xavier Becerra, who sued the companies for misclassifying drivers as contractors in violation of AB5.