Uber and Lyft drivers in California will remain independent

By Kate Conger

Drivers and other workers for so-called gig economy companies in California will not become their employees.

California voters carried Uber and Lyft to victory, overwhelmingly approving Proposition 22, a ballot measure that allows gig economy companies to continue treating drivers as independent contractors.

Uber, Lyft and the delivery service DoorDash designed the measure to exempt the companies from a state labor law that would have forced them to employ drivers and pay for health care, unemployment insurance and other benefits. As a concession to labor advocates, the initiative offers a wage floor and limited benefits to drivers.

The Associated Press projected early Wednesday that Prop. 22 had carried 58% of the vote. Prop. 22 faced the strongest opposition in San Francisco, where Uber and Lyft are headquartered, with more than a 19-point deficit.

The vote resolves the fiercest regulatory battle that Uber and Lyft have faced and opens a path for the companies to remake labor laws throughout the country. The fight pit labor groups and state lawmakers against ride-hailing and delivery startups that spent $200 million in support of the measure.

In voting to support Uber and Lyft, Californians rejected the principles outlined in a 2018 state Supreme Court ruling and enshrined in a 2019 state law that said workers who perform tasks within a company’s regular business — and are controlled by the company and do not operate their own firms — must be treated as employees. Under Prop. 22, gig workers are exempted from these rules and can continue to work independently.

The Yes on Prop. 22 campaign, backed by Uber, Lyft and DoorDash, celebrated the victory.

“California has spoken,” Geoff Vetter, a spokesman for the campaign, said in a news release. “Prop. 22 represents the future of work in an increasingly technologically-driven economy.”

Uber’s stock rallied almost 3% Tuesday as polls suggested that Prop. 22 was likely to pass. Lyft’s stock was also up 7%.

Uber’s chief executive, Dara Khosrowshahi, thanked drivers for the win in a late-night email.

“The future of independent work is more secure because so many drivers like you spoke up,” he wrote. He said Uber would make the new benefits promised by Prop. 22 available “as soon as possible.”

“The last 14 months in California have been the most critical point on this issue,” said Bradley Tusk, a venture capitalist who advised Uber on political issues during its early years.

Emboldened by the election, Uber and other gig economy players will likely pursue federal legislation to formally enshrine gig work in the nation’s labor laws.

The passage of Prop. 22 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.

Many local officials believed that California was too gentle for too long when it came to regulating Uber and Lyft and naïve about how powerful and influential the ride-hailing companies would quickly become.

“For all too long, Uber and Lyft banked on the timidity of public officials throughout the country,” said Dennis Herrera, the city attorney of San Francisco.

Herrera has sued Uber and Lyft in an attempt to force them to employ their drivers, and the litigation continues.

“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,’” he said.

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