CA Ballot Measure: Gig Workers Remain Independent Contractors

Companies like Uber, Lyft, Instacart, and DoorDash, the primary financial supporters of California’s Proposition 22, are poised to achieve their objective. The proposition, designed to maintain the classification of gig workers as independent contractors, is anticipated to be approved. The Associated Press projected the outcome with 67% of precincts reporting partial results.

Update 11/4 10:34 a.m. PT: With 99% of precincts partially reporting, 58.4% of voters – exceeding 6.7 million individuals – supported Prop 22, while 41.6% of voters – approximately 4.8 million individuals – opposed it.

This ballot measure establishes a minimum earnings guarantee of at least 120% of the state minimum wage during active work periods, along with 30 cents per mile driven for expense reimbursement, a healthcare allowance, occupational accident insurance coverage for injuries sustained while working, safeguards against discrimination and sexual harassment, and auto accident and liability insurance. It is important to understand that these earnings guarantees and expense reimbursements apply solely to a driver’s time spent actively engaged in work, and do not include time spent waiting for rides or deliveries.

Supporters of Prop 22 announced their projected victory late Tuesday evening as approximately 57% of the votes were tallied. Uber CEO Dara Khosrowshahi informed drivers of the news via email.

“This vote provides drivers and delivery personnel with what many of you have requested: access to benefits and protections, while preserving the flexibility and independence you value,” Khosrowshahi stated. “The future of independent work is now more secure because so many drivers voiced their opinions, and voters throughout the state responded.”

Uber indicated that it will provide further information in the coming weeks regarding enrollment procedures for the new benefits, such as occupational accident insurance and healthcare subsidies. Simultaneously, certain opponents of the measure acknowledged the results.

“We are disappointed with tonight’s outcome, particularly as this campaign’s success relies on misleading statements and the instilling of fear,” the Gig Workers Collective expressed in a blog post. “Companies should not be permitted to purchase election results. However, we remain committed to our cause and prepared to continue our efforts.”

Representatives from Gig Workers Rising also conveyed that the struggle is not yet concluded.

“This contest represents only one step in our ongoing pursuit of securing rights, benefits, and respectful working conditions for gig workers,” Gig Workers Rising declared in a statement.

Prop 22 received substantial financial backing from Uber, Lyft, DoorDash, and Postmates. Last week, DoorDash contributed an additional $3.75 million to the Yes on 22 campaign, as reported in a recent contribution filing. Subsequently, on Monday, Uber added a further $1 million. This influx of funds raised the total contributions to the Yes on 22 campaign to around $205 million, making Proposition 22 the most costly ballot measure in California since 1999.

Conversely, significant donors opposing Prop 22 included the Service Employees International Union, United Food & Commercial Workers, and the International Brotherhood of Teamsters.

“The truth is that this establishes a risky precedent by allowing companies to draft their own labor regulations,” Vanessa Bain, a gig worker and organizer with Gig Workers Collective, recently explained to TechCrunch. “This policy was designed to exclusively benefit companies at the expense of workers.”

The development of Prop 22 was a direct response to the enactment of AB 5, legislation concerning gig workers that makes it more challenging for companies like Uber, Lyft, DoorDash, and others in the gig economy to classify their workers as 1099 independent contractors.

AB 5 aims to ensure that gig economy workers are entitled to minimum wage, workers’ compensation, and other benefits by requiring employers to adhere to the ABC test. The ABC test stipulates that, to legally classify a worker as an independent contractor, a hiring entity must demonstrate that the worker is free from the control and direction of the entity, performs work outside the entity’s core business operations, and is regularly engaged in work of an independently established trade or similar business.

Currently, Uber and Lyft are involved in a lawsuit concerning AB 5, initiated in May by California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego, and San Francisco. They contend that Uber and Lyft gain an unfair competitive advantage by incorrectly classifying workers as independent contractors. In June, the plaintiffs filed a preliminary injunction requesting the court to mandate that Uber and Lyft reclassify their drivers.

In August, a judge granted the preliminary injunction. Uber and Lyft appealed the ruling, but the appeals court last month upheld the lower court’s decision. However, the decision will be delayed for 30 days following the court’s issuance of the remittitur, which has not yet occurred. In the meantime, both Uber and Lyft previously stated they were exploring their appeal options.

Throughout the legal proceedings, Uber and Lyft have argued that reclassifying their drivers as employees would inflict significant damage on the companies. The judge’s ruling last month indicated that neither company would experience any “serious or irreparable harm” by being prohibited from violating the law, and that their financial challenges “do not reach the level of irreparable harm.”

However, with Prop 22 projected to pass, this lawsuit has diminished legal validity. Uber has also previously indicated its intention to pursue similar legislation in other states.

The California Secretary of State commenced releasing preliminary election results from the state’s 58 counties at 8 p.m. PT. However, a final count is not expected tonight or even tomorrow. This is partly due to California’s acceptance of absentee ballots postmarked no later than November 3, 2020. County election officials also have until December 1, 2020, to submit final results.