Tag: Lyft

What is proposition 22? The ballot measure that could determine the future of Uber and Lyft in California

The ballot measure, known as Proposition 22, would establish drivers as an independent class of workers with access to limited job benefits, along with wage and worker protections they’ve so far lacked under the gig economy model. Labor groups and many of driver advocates say the companies’ efforts, however, do not go far enough to protect workers and are merely an attempt, cloaked in friendly marketing materials, to quash a new law that would guarantee drivers access to the minimum wage, employer-provided health care and bargaining rights.

Drawing on a more than $186 million campaign war chest that Uber, Lyft, food delivery app DoorDash and other tech companies have raised, they are seeking to convince California voters that the ballot initiative reflects the will of drivers. They’ve cited limited survey data saying the vast majority of drivers want to remain contractors.

But critics see the measure as a last-ditch effort to strong-arm a tough law.

The gig companies are following a long history in California of powerful groups “manipulating the way the public understands propositions,” said Veena Dubal, an associate professor at the University of California Hastings College of the Law, who focuses on the gig economy and is an advocate for classifying drivers as employees in California. “They are working to trick the public … into voting in favor of this. And they’re getting traction.”

The heated battle could well result in major implications for gig workers not just in California, but across the country.

Here’s what you need to know.

What is the current status of drivers?

In most of the country, drivers are independent contractors who are able to work for Uber, Lyft, DoorDash, Instacart and others on demand. That comes with pros such as flexibility. But it also means there are no guaranteed hours or health care.

The companies have thrived on their ability to rapidly scale up their services by contracting as many workers as possible for maximum convenience, connecting an Uber passenger with a driver around the corner, for example. But they also avoid major expenses associated with an established employee base.

In California, lawmakers and a major court ruling have now classified drivers as employees. (The ruling has been appealed and a stay has been granted in the meantime, allowing Uber and Lyft to keep operating as usual.)

The gig companies have argued that the new state law known as AB5 mandating them to convert drivers to employees would harm their business models and limit access to their services. And in Uber’s case, it has argued the law should not apply at all because as a technology firm it merely connects those in search of work with opportunities.

Their combined effort to oppose driver employment is the most expensive such proposition in history, the Los Angeles Times has said.

What is Prop 22?

California Proposition 22, the App-Based Drivers as Contractors and Labor Policies Initiative, is a measure that would classify drivers as independent contractors under California state law.

It would provide workers

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Uber, Lyft spend big in California to oppose even costlier gig-worker law

By Tina Bellon

(Reuters) – Uber Technologies Inc and Lyft Inc together are spending nearly $100 million on a November California ballot initiative to overturn a state law that would compel them to classify drivers as employees.

That sum looks less huge, however, than the potential costs of complying with the existing law, according to a Reuters analysis.

The two ride-hailing companies would each face more than $392 million in annual payroll taxes and workers’ compensation costs even if they drastically cut the number of drivers on their platforms, a Reuters calculation showed.

For a graphic on potential price hikes click here: https://tmsnrt.rs/3isaZ1q

Using a recently published Cornell University driver pay study in Seattle as a basis, Reuters calculated that each full-time driver would cost the company, on average, an additional $7,700. That includes roughly $4,560 in annual employer-based California and federal payroll taxes and some $3,140 in annual workers’ compensation insurance, which is mandated in California.

The companies say they would need to significantly hike prices to offset at least some of those additional costs, which in turn would likely cause a decrease in consumer demand, but cushion the blow of the added costs to the bottom line.

Uber and Lyft have also said they could abandon the California market – an economy that would rank fifth in the world if the state were a sovereign nation. Other U.S. states have said they plan to follow California’s lead and pass similar laws.

A “yes” vote on California’s Proposition 22 gives Uber and Lyft what they seek, which is to overturn the state’s gig-worker law, known as AB5, which took effect in January. Uber and Lyft have insisted the law does not apply to them, sparking a legal battle.

The tussle over classification of workers highlights the political and business risks facing Uber, Lyft, DoorDash and other companies that have built businesses on workers who are not classified as employees eligible for health coverage, unemployment insurance or other benefits.

Under the company-sponsored ballot measure, so-called gig workers would receive some benefits, including minimum pay, healthcare subsidies and accident insurance, but remain independent contractors not entitled to more substantial employee benefits.

POLITICAL FIGHT

The question of whether gig workers should be treated as employees has become a national issue in U.S. politics.

U.S. Democratic presidential candidate Joe Biden and his running mate, Senator Kamala Harris, have both voiced their strong support for California’s labor law and directly called on voters to reject the companies’ ballot proposal that would weaken it.

The campaign of U.S. President Donald Trump has not directly weighed in on the ballot measure, but the administration’s Labor Department in September published proposed rules that would standardize legal definitions across the country and provide more room for companies to maintain independent contractors. U.S. Labor Secretary Eugene Scalia criticized AB5 in an opinion piece published on Sept. 22.

California represents 9% – or roughly $1.63 billion in all of 2019 – of Uber’s global rides and food delivery

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Uber, Lyft spend big in California to oppose even costlier gig worker law

By Tina Bellon



a close up of a sign: A sign marks a rendezvous location for Lyft and Uber users at San Diego State University in San Diego


© Reuters/Mike Blake
A sign marks a rendezvous location for Lyft and Uber users at San Diego State University in San Diego

(Reuters) – Uber Technologies Inc and Lyft Inc together are spending nearly $100 million on a November California ballot initiative to overturn a state law that would compel them to classify drivers as employees.

That sum looks less huge, however, than the potential costs of complying with the existing law, according to a Reuters analysis.

The two ride-hailing companies would each face more than $392 million in annual payroll taxes and workers’ compensation costs even if they drastically cut the number of drivers on their platforms, a Reuters calculation showed.

Using a recently published Cornell University driver pay study in Seattle as a basis, Reuters calculated that each full-time driver would cost the company, on average, an additional $7,700. That includes roughly $4,560 in annual employer-based California and federal payroll taxes and some $3,140 in annual workers’ compensation insurance, which is mandated in California.

The companies say they would need to significantly hike prices to offset at least some of those additional costs, which in turn would likely cause a decrease in consumer demand, but cushion the blow of the added costs to the bottom line.

Uber and Lyft have also said they could abandon the California market – an economy that would rank fifth in the world if the state were a sovereign nation. Other U.S. states have said they plan to follow California’s lead and pass similar laws.

A “yes” vote on California’s Proposition 22 gives Uber and Lyft what they seek, which is to overturn the state’s gig worker law, known as AB5, which took effect in January. Uber and Lyft have insisted the law does not apply to them, sparking a legal battle.

The tussle over classification of workers highlights the political and business risks facing Uber, Lyft, DoorDash and numerous other companies that have built businesses on workers who are not classified as employees eligible for health coverage, unemployment insurance or other benefits.

Under the company-sponsored ballot measure, gig workers would receive some benefits, including minimum pay, healthcare subsidies and accident insurance, but remain independent contractors not entitled to more substantial employee benefits.

POLITICAL FIGHT

The question of whether so-called gig workers should be treated as employees has become a national issue in U.S. politics.

U.S. Democratic presidential candidate Joe Biden and his running mate, Senator Kamala Harris, have both voiced their strong support for California’s labor law and directly called on voters to reject the companies’ ballot proposal that would weaken it.

The campaign of U.S. President Donald Trump has not directly weighed in on the ballot measure, but the administration’s Labor Department in September published proposed rules that would standardize legal definitions across the country and provide more room for companies to maintain independent contractors. U.S. Labor Secretary Eugene Scalia criticized AB5 in an opinion piece published on Sept. 22.

California represents 9% – or roughly $1.63 billion

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Uber, Lyft look to kill California law on app-based drivers

FILE - In this Oct. 29, 2019, file photo, Carla Shrive, right, who drives for various gig companies, joined other drivers to support a proposed ballot initiative challenging a recently signed law that makes it harder for companies to label workers as independent contractors, in Sacramento, Calif. A battle between the powerhouses of the so-called gig economy and big labor could become the most expensive ballot measure on Nov. 3, 2020, in California history. Voters are being asked to decide via Proposition 22 whether to create an exemption to a new state law aimed at providing wage and benefit protections to Uber, Lyft and other app-based drivers.

FILE – In this Oct. 29, 2019, file photo, Carla Shrive, right, who drives for various gig companies, joined other drivers to support a proposed ballot initiative challenging a recently signed law that makes it harder for companies to label workers as independent contractors, in Sacramento, Calif. A battle between the powerhouses of the so-called gig economy and big labor could become the most expensive ballot measure on Nov. 3, 2020, in California history. Voters are being asked to decide via Proposition 22 whether to create an exemption to a new state law aimed at providing wage and benefit protections to Uber, Lyft and other app-based drivers.

AP

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.

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Uber, Lyft Look to Kill California Law on App-Based Drivers | Business News

By BRIAN MELLEY, Associated Press

LOS ANGELES (AP) — 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.

But it also would put in place policies that require those companies to provide “alternative benefits,” including a guaranteed minimum wage and subsidies for health insurance if they average 25 hours of work a week.

Supporters say drivers enjoy the independence and flexibility of the current model.

“If I want to work four hours and say, ‘I’m done,’ I can do that,” said Doug Mead, a Palm Springs retiree who delivers meals for Uber Eats and Postmates and estimates he makes about $24 an hour. “Where is there an employer on the planet where I can do that?”

Opponents say the companies exploit

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