After a two-year legal battle in California, ride- hailing giants Uber Technologies Inc. and Lyft Inc., along with other major gig-economy players in the state, will not be forced to reclassify their drivers as employees. But this does not mean that the fight is over.
Some expect drivers to continue to advocate for further rights and benefits from these companies. Others anticipate that last week’s passage of Proposition 22 could open doors for other companies to lobby for initiatives, as Uber and Lyft did, in other states that are weighing gig labor laws.
The ballot measure — which Uber, Lyft, DoorDash and others bankrolled with more than $200 million — allows the companies to continue to classify their drivers as contract workers. The companies have argued that this model provides workers with flexible hours and independence.
The legal battle between Uber and Lyft and California ensued when the state this year implemented Assembly Bill 5, a labor law passed in September 2019. The law aimed to reclassify workers for ride-hail, food delivery and other app-based gig economy companies. Uber and Lyft went into defense mode, warning that the measure would obliterate their operations.
If drivers in California had been granted employee status on Election Day, Uber and Lyft might not have been viable going forward, said Bryant Greening, attorney at LegalRideshare, a personal injury law firm in Chicago.
“This was really a life-or-death moment for them,” Greening told Automotive News. “Their livelihood depended on AB5 being stricken and something much more favorable like Prop 22 taking its place.”
But now, it is difficult to know what the vote might mean moving forward, said Tia Koonse, legal and policy research manager at the UCLA Labor Center.
“The overall battle to improve the working conditions is not over,” Koonse said. “Drivers and delivery workers will continue to fight to improve the conditions that make their work so precarious.
“Even the companies knew they had to provide concessions to drivers in the end for better working conditions,” she added. “That’s why I think that the conversation is not over.”
Uber and Lyft said they would have had to scale back their service or shrink their work forces if forced to provide full employee benefits, which would ultimately have caused labor costs to skyrocket.
The companies also threatened to pull out of California — and Uber said it would consider shifting to a franchise model — if they had been forced to reclassify their workers.
But leaving California, a major market for Uber and Lyft, would have seriously impacted both as they struggle to find steady footing amid a pandemic-induced avoidance of shared transportation — on top of existing financial challenges.
Yes on 22, an advocacy group that supported the ride-hailing ballot measure, said the flexibility that the contract-worker model provides is key to drivers who need a less-traditional working schedule.
“Prop 22 was successful because it represented the best interests and preferences of hundreds of thousands of app-based drivers across the state,” the group said in a statement.
The measure provides drivers with new benefits, including health care contributions for those who work at least 15 hours a week, occupational accident insurance to cover medical bills for injuries sustained while driving or delivering and a minimum earning guarantee equal to 120 percent of the minimum wage, Uber and Lyft said after the vote.
But even when Prop 22 takes effect in December, “it’s not full health benefits. It’s not paid sick time. It’s not reimbursements for expenses reasonably incurred. [Drivers] are not going to be compensated for time spent waiting for rides,” Koonse said.
“We know that drivers want to see a significant amount more income,” she added. “They want to see transparency in fares. They want to see transparency in deactivation and customer ratings processes. They want to see way more than the pittance contained within the ballot.”
Chase Copridge, a gig-economy worker out of San Francisco, said companies such as Uber, Lyft, DoorDash and Instacart are “preying upon the uncertainty that we’re living in” with Prop 22.
“These companies need to be held accountable for what they do.”
It’s hard to know what broader impact the measure’s passage will have.
Harry Campbell, founder of The Rideshare Guy website, said it doesn’t bode well for states considering legislation similar to Assembly Bill 5, such as Massachusetts and New York.
“Now the companies have shown if they spend enough money, they can take their case to the voters and pass a proposition to keep drivers as [independent contractors],” Campbell said in a statement. “I expect many states will work to find a compromise between labor and gig companies that keeps drivers classified as ICs but affords them some benefits.”
To Greening, the vote offers a road map for others to follow.
“There is an opportunity for other industries and other states to follow suit, and I think it’s going to be much easier for them to do so because there’s a model in place,” he said.
“Time will tell as to how this law plays out in practice, what it looks like for a driver on a day-to-day basis, what it does to their earnings,” Greening added.
“I think the conditions are worse off for drivers today than they were yesterday.”