California residents approved Proposition 22, which lets delivery and ride-share companies continue to classify their workers in the state as independent contractors rather than employees. The closely watched voter measure exempts companies like Uber and Lyft from having to provide unemployment protections, minimum wage, sick leave, and other benefits to California gig workers. Any changes to the new law will require a seven-eighths majority in the California Legislature.
Prop 22 partially overturns Assembly Bill 5, a 2019 California law that requires companies to reclassify their independent contractors as full employees. Uber, Lyft, Instacart, DoorDash, and other similar companies have resisted complying with AB 5, arguing that it limits the freedom that independent contractors have to work whenever and however much they want to. The law would also have cost these companies, which would have had to give workers salaries and benefits, hundreds of millions of dollars per year. A San Francisco Superior Court judge ruled in August that Uber and Lyft had to start playing by AB 5’s rules, so Prop 22 was essentially a last-ditch effort to escape the law. Both companies threatened to cut down on the number of California drivers or even leave the state if Prop 22 didn’t pass. The companies also promised, though, to guarantee drivers a 30-cent-per-mile rate and health care subsidies for those who work more than 15 hours a week if the proposition passes. Some businesses that hire writers, photographers, artists, and other workers in creative fields on a contract basis did reportedly end up severing ties with their California freelancers, causing an uproar. In response, California Gov. Gavin Newsom ended up signing AB 2257 in order to create more exemptions for these types of workers.*
Uber, Lyft, and a number of other gig-economy companies teamed up and poured more than $200 million into a bid to get this proposition passed, making this the most expensive ballot measure in California since at least 1999. The group spent more than $6 million just to collect enough signatures for Prop 22 to appear on the ballot, which means they shelled out roughly $10 per signature. More than $82 million went to TV and radio ads. Uber and Lyft also sent messages to its users via their apps to push them to vote for the proposition.
Critics of Prop 22 have argued that gig work is becoming more and more precarious, particularly given the coronavirus pandemic and wildfires that ravaged California, and that the law will only serve to codify the unpredictability of contractors’ incomes. They also point out that nearly 75 percent of gig contractors already work at least 30 hours per week, which effectively means they are full-time employees who aren’t afforded the usual benefits. Drivers also spend more than a third of their time waiting for fares, which they aren’t paid for and won’t contribute toward the minimum time per week they have to spend working before receiving health benefits under Prop 22. Those opposing the proposition, however, were only able to raise about $19 million during this election cycle, most of which came from labor unions. More than $11 million of that went to ads.
The impact of Prop 22’s passage will extend beyond California’s borders as other states like Massachusetts, and even other countries like the U.K., are in the midst of similar battles over the employment status of gig workers. A defeat of the proposal would have emboldened other localities to approach the issue in the same way that California had, while its victory is likely to entrench the status quo.
Correction, Nov. 4, 2020: This post originally misspelled Gov. Gavin Newsom’s last name.