Uber, Lyft Win California Vote To Prevent Drivers From Becoming Employees

Uber, Lyft, and other app-based ride-hail and delivery services spent $ 200 million (around Rs 1,500) on a successful bet trying to bypass California lawmakers and courts and preserve their business model by preventing it Drivers become employees who are entitled to occupational safety benefits.

The titans of what is known as the gig economy funded the most expensive electoral measure in state history, which 58 percent of more than 11 million voters decided on Tuesday to classify drivers as independent contractors who can set their own hours.

Both companies’ stocks rose 11 to 13 percent ahead of the opening bell on Wednesday after the big win.

The result was a defeat for the unions, who had been pushing for a state law aimed directly at Uber and Lyft that gave drivers protection such as minimum wages, overtime, health insurance and reimbursement of expenses.

Proposition 22 proponents said the result showed that voters wanted to keep the flexibility of the current system. Opponents said the companies bought their own law and vowed to continue fighting for drivers’ rights.

San Francisco-based Uber and Lyft had threatened to withdraw from California if they lost. They received additional support in the battle from DoorDash, Instacart, and Postmates, who could all have turned their businesses upside down if it had failed.

Work-friendly Democrats in the Legislature last year passed the landmark law known as AB5 to augment a 2018 California Supreme Court ruling that prevented companies from designating certain workers as independent contractors.

The companies filed for an exemption and led their battle with a campaign to voters that included television commercials, mailers and news that appeared on their app for both customers and drivers.

Opponents said the companies are exploiting drivers to keep profits high and that the election would deprive workers of rights such as overtime pay and compensation.

Proponents said the move would allow drivers to keep their chosen working hours free, and provide other benefits.

Bill French, 62, a former high school baseball coach who voted for the measure in Huntington Beach, said he retired early to supplement his Uber driver salary and work when he wants.

“I don’t need them to control myself and tell me when to go to work and not to work,” said French.

More than $ 225 million (approximately rupees 1,700) was spent on the race, of which the unions raised approximately $ 20 million (approximately rupees 150 million).

“The obscene amount of money these billion dollar companies have spent misleading the public does not absolve them from their duty to pay drivers a living wage,” California Labor Federation’s Art Pulaski said in a statement. “The end of this campaign is just the beginning of the struggle to ensure that gig workers receive fair wages, sick pay and care if they are injured at work.”

The spend, which Uber Eats and other services offered to customers to promote their brands didn’t account for in vouchers of $ 30 (roughly rupees 2,200), is likely to encourage election funding for steroids in the future, the political scientist said Professor David McCuan from Sonoma State University.

“What Prop. 22 does is add to the tide of all electoral action,” McCuan said. “It sets records that will simply be over next time. … It turns the parallel path of direct democracy into a playground that is measured into billions in just a few (election) cycles. “

The measure had almost nationwide support, except in the San Francisco Bay Area and part of the coastal areas to the north.

Although drivers would remain independent contractors, exempt from such mandates as sick leave and reimbursement, they would receive some “alternative benefits”, including guaranteed minimum wage and health insurance subsidies, if they worked an average of 25 hours a week.

Dara Khosrowshahi, CEO of Uber, sent a letter to drivers late Tuesday thanking them for their support and promising details over the coming weeks on how to sign up for benefits such as accident insurance.

The will of voters could undermine a recent Court of Appeal ruling, on the side of Attorney General Xavier Becerra, who sued the companies for misrepresenting drivers as contractors in violation of AB5.

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