California likely to pass proposition to treat Uber drivers as contractors

Platform News: US ride-hailing services Lyft and Uber

Voters in California backed a ballot proposal by Uber and its allies who cements app-based food delivery and ride-hail motorists’ status as independent contractors, not employees, according to a projection by Edison Research.

The measure, known as Proposition 22, marked the culmination of years of legal and legislative wrangling over a business model that introduced millions of people to the convenience of ordering food or a ride with the push of a button.

Investors on Tuesday appeared hopeful the measure would pass, with Lyft shares closing the day up 7% and Uber up 2.8%. The last voter poll from October the 26th showed a small lead in support for the proposition.

Uber, Lyft, Doordash, Instacart and Postmates, some of whom threatened to shut down in California if they lost, poured more than $205 million into what became the most expensive ballot campaign in state history.

In a last-minute attempt to sway voters, Uber in a Monday night email urged California customers to vote yes on the proposal, capping off months of intense campaigning that included billboards, frequent text messages and in-app push notifications.

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“I’m so, so happy. I know it’s right for the drivers, and I know it’s ideal for the people who use the services,” said retiree Jan Krueger, 62, who drives part-time for Lyft in Sacramento and got a “Mom Lyft” tattoo on her shoulder.

“Everybody is super concerned about (the companies) leaving or increasing prices rather than being available in remote places,” Krueger said of her passengers and driver friends.

The proposition was the app makers’ answer to a new California law that requires companies that control how employees do their tasks to classify those workers as employees.

The app companies contended the law didn’t apply to them since they are technology platforms, not hiring entities, and that their drivers control how they work.

Companies warned that they could cut 80% of drivers, double prices and even abandon California, if they had been forced to pay benefits such as minimum wage, unemployment insurance, healthcare and workers’ compensation.

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Uber, Lyft, DoorDash, Instacart and Postmates challenged the new law in court, but judges so far have ruled against them. Uber and Lyft recently lost an appeal, which would have narrowed their options if Prop 22 failed.

California represents 9%, roughly $1.63 billion, of Uber’s 2019 global rides and food delivery gross bookings, and some 16% of Lyft’s total rides.

Prop 22 leaves gig workers as contractors and provides them more modest benefits than are required under state law, including minimum pay while riders are in their cars, healthcare subsidies and accident insurance.

Company-sponsored surveys found that more than 70% of current gig workers do not want to be employees, but labor groups questioned those polls, saying drivers are divided.

Los Angeles Uber driver Christine Tringali said the companies’ actions were shameful.

“How can someone fight so hard to avoid paying people a living wage and giving them job security? We work just as hard as anyone else,” Tringali said.

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First-time voter and faculty student Jonah Cervantes’ mail-in ballot included a”yes” on Prop 22. He hopes to start driving for Uber or Lyft in a few months.

“It would be a lot harder for people to simply hop on” as new drivers without Prop 22, said Cervantes.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Tina Bellon in New York and Lisa Baertlein in Los Angeles. Additional reporting by Lucy Nicholson in Los Angeles. Editing by Peter Henderson, Lisa Shumaker and Gerry Doyle.

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