News Analysis Nov 6, 2020 2:57 PM EST

California says 'no' to making app-based workers into employees

Freelance workers now take up almost 15 percent of the economy signaling more people may choose to participate in the gig economy and are relieved at the passage of California's Proposition 22.

California says 'no' to making app-based workers into employees
Nicole Russell Texas, US
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Uber, Lyft, and DoorDash, arguably some of the most influential and lucrative gig economy giants have won a major ballot measure in California to classify their app-based drivers as independent contractors, not employees.

Voters passed the highly controversial Proposition 22 by a hefty margin, winning by nearly 60 percent. While this doesn't entirely undo AB 5, the state law requiring them to shift their contractors to employee status, it does exempt them from the law, which Uber and Lyft repeatedly said would increase their costs and which they would have promptly passed down to consumers.

According to Bloomberg, the modern-day spin on personal taxi services spent approximately $200 million on the campaign to achieve this, the "most expensive ballot initiative in the state's history." Instacart and Postmates, which are owned by Uber, were also part of the campaign.

"California has spoken and millions of voters joined their voices with the hundreds of thousands of drivers who want independence plus benefits," the Yes on 22 campaign said in a statement. "Prop 22 will protect drivers' preference to be independent contractors with the flexibility to work when, where, and how long they want."

CNBC reported that Uber and Lyft's stocks jumped after the win, with Uber's shares up more than 11 percent.Uber and Lyft had already sued California about the implementation of AB 5, which compelled them to reclassify their workers as employees. Just two weeks before the Nov. 3 election, a California appeals court said Uber and Lyft must follow the law.

The outcome of this ballot measure could have changed how the gig economy operated in California, a state where these companies enjoy a significant share of the nationwide market.

Opponents to Proposition 22 claimed that workers who are classified as independent contractors and not employees don't enjoy benefits like paid overtime or unemployment insurance, and that they could easily be exploited.

"Billionaire [corporations] just hijacked the ballot measure system in CA by spending millions to mislead voters," a coalition of gig workers opposing Prop 22 posted on Twitter. "Uber, Lyft, & the other gig [companies] took a ballot measure system meant to give voice to ordinary Californians and made it benefit the richest [corporations] on the planet."

Proponents of the measure claim companies like Uber and Lyft exemplify the best of the gig economy and claim that the pros outweigh the cons: People that choose to be independent contractors for companies like Uber often choose such work because it is flexible, the income acts as supplemental or bonus pay, and the freedom the company allows accommodates workers lifestyles.

CNBC said freelance workers now take up almost 15 percent of the economy signaling more people may choose to participate in the gig economy and are relieved at the passage of California's Proposition 22, than perhaps previously thought.

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