Californians are being asked decide if Uber, Lyft and other app-based drivers should remain independent contractors or be eligible for the benefits that come with being company employees.
The battle between the powerhouses of the so-called gig economy and labor unions including the International Brotherhood of Teamsters could become the most expensive ballot measure in state history. Voters are weighing whether to create an exemption to a new state law aimed at providing wage and benefit protections to drivers.
Uber and Lyft have fought a losing battle in the Legislature and courts, so now — with help from app-based food delivery companies DoorDash, Postmates and Instacart — they are spending more than $180 million to take their fight directly to voters in the Nov. 3 election.
Early voting in California starts Monday. Uber and Lyft, both headquartered in San Francisco, have said they may leave the state if the measure fails.
The landmark labor law known known as AB5 threatens to upend the app-based business model, which offers great flexibility to drivers who can work whenever they choose. But they forego protections like minimum wage, overtime, health insurance and reimbursement for expenses.
“What’s at stake is the future of labor, the nature of work, how conditions are changing for households amidst the pandemic and recession,” said David McCuan, chair of California’s Sonoma State University political science department.
Labor-friendly Democrats in the Legislature passed the law last year to expand upon a 2018 ruling by the California Supreme Court that limited businesses from classifying workers as independent contractors.
Uber and Lyft have maintained that their drivers meet the criteria to be independent contractors, not employees. They also have argued the law didn’t apply to them because they are technology companies, not transportation companies, and drivers are not a core part of their business.
Attorney General Xavier Becerra took the companies to court, and a San Francisco Superior Court judge ruled the companies are subject to the new employment standards. But that ruling has been put on hold while the companies appeal.
Any ruling could be undone by the outcome of the vote, though further litigation is likely.
If Proposition 22 passes, it would exempt app-based transportation and delivery companies from the labor law and drivers would remain independent contractors exempt from mandates for overtime, sick leave and expense reimbursement.