Threatened with regulation, multibillion-dollar gig economy employers convinced California voters this week to pass a ballot initiative that exempts app-base rideshare and delivery services from state wage and hour laws.
Uber and Lyft, ridesharing services, and DoorDash, a meal delivery service, among others, raised more than $200 million to conduct a supposed voter initiative called Proposition 22, which is believed to be the most expensive voter initiative in American history.
By approving Prop. 22, California voters permitted app-based employers to classify their drivers under state law as “independent contractors” who are ineligible for minimum wage, overtime, health insurance and reimbursement for expenses.
The gig employers’ $200 million purse bought a comprehensive media campaign but another factor may be even more critical to the campaign’s success – the gig employers were able to use their apps to warn actual customers and drivers of a “parade of horribles” (i.e. higher prices) that might ensue if their drivers were classified as employees instead of independent consequences.
Moreover, they worded the actual ballot measure in an “artful” manner. Voters were told that failure to approve the measure would result in drivers having “less choice about when, where, and how much to work .”
Bottom line – the gig employers used a tool meant to be used by voters – not big business – to evade a law that was passed by voters’ elected representatives in California’s General Assembly for the purpose of protecting workers in California.
The American model of free speech works best when there is some equivalency between the conflicting sides. It is obviously not equivalent if one side has a megaphone and other does not.
Steven Smith, a spokesperson for the California Labor Federation (CLF), said Thursday that Proposition 22 opponents, mainly unions, managed to raise only about $20 million to make the case for extending labor benefits to gig workers – a 10% of the cash stockpiled by backers of Proposition 22.
So what happens now that California voters have approved Prop. 22?
Smith says that gig economy employers hope to use their California “playbook” in other states that are considering classifying drivers as employees.
Geoff Vetter, a spokesman for the Prop. 22 campaign, said in a news release that “Prop. 22 represents the future of work in an increasingly technologically-driven economy.”
According to Smith, the CLF plans to contest aspects of Prop. 22 but is also exploring other options, such as using the Fair Labor Standards Act (FLSA), which mandates payment of a minimum wage, and the National Labor Relations Act (NLRB), which protects the rights of workers to unionize.
Smith said the outcome of the current Presidential election could be key to future efforts to force gig employers to provide protection and benefits to workers. He said Democrats favor classifying a00-based drivers as employees.
Specifically, Prop. 22 exempted gig economy employers from AB5, a California law that was based upon a 2018 ruling by the California Supreme Court, Dynamex Operations West, Inc. v. Superior Court.
California’s high court said employers had the burden of showing that workers are not employees and enumerated three factors that determine whether workers are employees. Among other things, the employer must show the worker is free from the control and direction of the hirer and performs work that is outside the usual course of the hiring entity’s business.
Lyft and Uber argued, without effect, their workers were properly categorized as independent contractors. They also claimed AB5 didn’t apply to them because they are technology companies, not transportation companies. A San Francisco Superior Court judge ruled the drivers are employees, prompting the companies to file an appeal, which now appears to be moot.