The gig companies defeated legislation to make drivers employees after running a record $200 million campaign to deny workers employment. Shares of Uber and Lyft surged as the stock market opened, jumping at least 15 and 18 percent, respectively, as it became clear the companies’ fears about the costs and business impacts of a potential employment model would not be realized.
Both sides of the debate treated Prop 22 as an existential battle. For labor advocates, it was about the precariousness of a growing economic class of workers. For corporate interests, it was about the viability of the gig economy business model, which has yet to prove profitable despite raising billions from venture capitalists and shareholders. The measure was holding support with 99 percent of precincts reporting at least partial results, according to the California secretary of state. Industry experts said its passage, with the support of a clear majority in a deep blue state, had the potential to kick off similar efforts in labor friendly locations to codify the gig economy’s independent contractor model in law.
The decision on Prop 22 could be replicated around the country, something that has prompted such on-demand apps as Uber, DoorDash, Lyft and Instacart to turn this into the most expensive ballot campaign in state history. Those backing the effort had spent more than $200 million to beat the legislation by Monday, more than 10 times as much as Prop 22′s opponents.
California voters typically support labor rights, but gig companies successfully confused the issue through “deceptive design in the measure itself,” as well as the volume of spending to push out the companies’ messages, said Ken Jacobs, chair of the University of California at Berkeley’s Labor Center. Gig companies threatened workers by arguing that if Prop 22 failed, they would have to adhere to a set schedule and that there would be fewer jobs overall, despite the fact that companies have been able to comply with higher labor standards in New York City, Jacobs said.
Bradley Tusk, an early Uber investor and adviser, said the pandemic may have increased voter sensitivity to rising prices amid economic uncertainty, even if it also drove sympathy for the plight of drivers. Beyond the unprecedented spending, however, the campaign’s greatest asset may have been the way the measure was written, he said.
“The wording was brilliant,” Tusk said. “The ‘yes’ vote was a lot easier than a ‘no’ vote.”
Jerome Gage, a volunteer spokesperson for the No on 22 campaign who has been driving full time for Lyft since 2018, said they put up a good fight. “We were keeping up with them,” Gage said. “It shows that people care about these issues.”
Geoff Vetter, a spokesperson for the Yes on 22 campaign, said in a statement that Prop 22 represents the future of work.
“California has spoken and millions of voters joined their voices with the hundreds of thousands of drivers who want independence plus benefits,” Vetter said. It “will protect drivers’ preference to be independent contractors with the flexibility to work when, where, and how long they want.”
Gig workers in California have been facing the most challenging era since the model emerged. They are navigating jobs upended by a pandemic, the economic downturn, social unrest, wildfires, plummeting requests for rides and surging demands for delivery. Many say that after being enticed into the line of work by flexible hours and good pay, they feel they’ve been squeezed and marginalized after companies attracted enough drivers to cut back what they pay.
Chase Copridge, 33, moved from Kentucky to California several years ago seeking out what he saw as the promise of the gig economy. He works for Instacart, DoorDash and Amazon Flex, and has driven for Uber and Lyft in prior years. He now earns as little as $150 day, down from $400 in 2016 when he started.
Today he lives in a gray 1993 Ford Econoline van he parks in a safe parking zone in Oakland.
“I got caught up in the gig economy’s nonsense, and I got caught in a vicious cycle,” said Copridge, who begins every week $260 underwater because he rents a Chevrolet Bolt for work.
Copridge was dismayed by the measure’s passage but vowed to continue to press for better protections for gig workers.
“This was an outright attack on democracy to buy their way out of a law,” he said, adding, “it won’t just stop with ride-share and delivery.”
With an estimated one million gig workers, California has been the largest U.S. market for such laborers since app-based companies emerged a decade ago. Concerns over the treatment of those workers, and others without job projections, led California legislators to explore structural changes to the model. Assembly Bill 5, introduced by Assemblywoman Lorena Gonzalez (D-San Diego), aimed to usher in employment for Uber and Lyft drivers, along with those for such food delivery apps as DoorDash and in other industries.
California legislators passed the landmark law last year, making certain categories of gig workers employees. It aimed to give them wage guarantees and health care, along with job protections against such issues as discrimination and sexual harassment.
But Uber and other gig companies disputed that the law applied to them and challenged its merits. They floated a number of arguments, including that it would cause “irreparable harm” to their business models and would limit their ability to serve certain markets and keep costs low.
The companies also argued that the majority of drivers wanted to remain independent. They say their business models rely on contractors’ flexibility, which enables the cheap fares and short wait times that make the apps convenient. Employment would require them to rewrite their business models, they said.
California’s attorney general sued Uber and Lyft in May, alleging the companies were misclassifying hundreds of thousands of workers under A.B. 5. Then in August, a San Francisco judge ruled in the state’s favor, after which an appeals court sided with the state this month. The order giving Uber and Lyft 30 days to come into compliance was expected to take effect in several months.
Uber and Lyft had previously said they were considering their appeal options, but Tuesday’s vote likely renders moot any court ruling on the subject.
“California voters agreed that instead of eliminating independent work, we should make it better,” Uber spokesman Matthew Wing said Wednesday. “Soon, drivers in California will be guaranteed a minimum earnings standard ... and will gain access to important new benefits,” he added.
DoorDash CEO Tony Xu said in a statement, “Californians sided with drivers, recognizing the importance of flexible work and the critical need to extend new benefits and protections to drivers like Dashers.”
Anthony Foxx, Lyft’s chief policy officer and the former secretary of transportation under President Barack Obama, signaled in an interview Lyft’s openness to working on a better work model overall.
“We absolutely want to engage with our friends in labor, and to figure out whether there’s a larger, even more impactful way to move forward,” he said. “Nothing would make us happier than to figure out how to get the voices of labor to lock arms with us and figure this out.”
But Foxx said the measure’s passage opens up the potential to legally codify the contract framework, and bring Prop 22’s wage and health insurance provisions, in other places.
“I think Prop 22 has now created a structure for us to discuss with leaders in other states and Washington, potentially,” he said. “We think that prop 22 has now created a model that can be replicated and can be scaled.”
Under Prop 22, workers are promised 120 percent of the minimum wage. But the figure is calculated based on a driver’s active time, meaning time either on a trip or en route, and not their time waiting to a fare, potentially adding up to hours per week unpaid. Drivers who work at least 15 hours per week are are also promised a healthcare contribution, equivalent to 50 percent of the employer-provided average under the Affordable Care Act. Those who work 25 hours per week would receive the equivalent of a 100 percent contribution. But drivers only qualify based on their active time, not the actual number of hours they spend on the app.
Quintin J. McFadden, a 32-year-old Navy veteran living in Los Angeles who has been driving for Uber since 2013, said he was persuaded to vote in favor of Prop 22 after talking to other drivers in a Facebook group and seeing a poll on TV that said most drivers support the measure.
“I can’t even watch ‘Jeopardy!’ in peace without watching a commercial about the government or propositions,” he said. For McFadden, who works full time for Target and already receives health insurance through Veterans Affairs, Prop 22’s appeal is both the flexibility and health-care contributions that kick in for drivers who work 15 hours a week.
“Who doesn’t need extra health care?” he asked. McFadden repeated a claim made by the Yes campaign that opposing Prop 22 would force drivers to work on a set schedule.
Nothing in A.B. 5 requires gig companies to establish rigid schedules for drivers. However, companies had argued that they could not adopt an employment model unless they exert more control over drivers.
Lyft driver Bruce Blood, 33, said a nightmarish ordeal exemplifying his own lack of control over his work had led him to oppose Prop 22. He said the gig economy has pushed him to the brink of eviction.
While headed to a pickup in Burbank, Calif., in mid-September, he was pinned by another vehicle at an intersection, he said. His car, which he rented through Lyft’s Express Drive program, was towed to an impound lot. He reported the incident to Lyft, which later picked up the vehicle. Still, the company has attempted to charge him $229 in rental fees on a weekly basis since the incident and had been unresponsive to his repeated requests to eliminate the charges because the car is no longer in his possession.
Blood started working for Lyft last year, he said, and has been frustrated with a lack of control over changes within the apps or his ability to make his voice heard.
He had lost $560 due to the ordeal, the two charges Lyft was able to make successfully before he blocked the app’s access to his bank account, along with his ability to rent a car and thus drive for Lyft. Lyft spokesperson Julie Wood said Monday that Lyft was working to reverse the erroneous charges. Lyft charged him a $228.85 rental fee on Tuesday, after telling The Washington Post a day earlier it was refunding him. After again being contacted by The Post, Wood said Lyft was reversing that charge as well.
“I am currently behind $2,700 in rent, risking eviction because of this,” said Blood, of West Hollywood. “I have not been able to pay for my health insurance. Lyft does not offer health insurance, so I’ve fallen behind on that. It’s hard to be able to get food.”
“I would want to be an employee. I would want to have rights to fight stuff like this,” he added.
In San Francisco’s Mission District neighborhood Tuesday, voter Chris Diaz, 53, said he decided in favor of employment for Uber and other gig economy drivers. His vote, he said, was informed by his own experience with the contract model.
“I used to be freelance and it’s really hard to line up work hours,” he said. “If there’s no work they don’t have to call you back for months. But once you’re an employee, you start to get benefits, you get health insurance, maybe. There’s just more benefits to being an employee than a contractor.”