“Going forward, you’ll see us more loudly advocating for …. laws like Prop 22,” Uber CEO Dara Khosrowshahi said, adding later: “We were the first to come forward with this [independent contractor]-plus model, the idea that drivers deserve flexibility plus benefits. We want to have a dialogue with governments [in] other states.”
Prop 22, which was approved by 58 percent of voters, makes drivers independent contractors with promises of 120 percent of the minimum wage and a health-care contribution, equivalent to either half or 100 percent of the employer-provided average under the Affordable Care Act. Unlike full employment, however, benefits are calculated based on a driver’s active time, negating the potential hours per week they spend waiting for a fare while logged onto the apps.
Labor advocates fiercely opposed Prop 22, saying it was a transparent attempt to snatch newly enshrined employment rights from workers.
Companies such as Uber, DoorDash and Instacart, which contributed to the $200 million campaign war chest in support of it, said they needed to maintain their contract models to keep the flexibility that allow short wait times and low fares within their apps.
But steep costs also come with employment. Uber and Lyft’s stocks have rallied this week, logging percentage gains in the double digits as investors reacted to the news that they would not have to make drivers employees.
Still, the more limited benefits instated by Prop 22 will cost Uber.
“It will result in probably a five percent increase to cover the incremental [costs],” including benefits, said Uber chief financial officer Nelson Chai. “We do believe that it’ll be manageable.”
Uber reported a $1.1 billion quarterly loss in the period that ended in September, 6 percent less than the figure reported in the same quarter a year ago. The company has not been profitable since debuting on the stock market in May 2019.
Anthony Foxx, Lyft’s chief policy officer and the former secretary of transportation under President Barack Obama, said in an interview Wednesday that the company would also look to expand the Prop 22 model across the country.
“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.”