Los Angeles, California – It was a $200m victory in the making – app-based ride-hailing and delivery giants have successfully lobbied California voters to pass a law that lets them keep classifying their drivers as independent contractors, dodging state requirements for labour protections and saving themselves from providing benefits those workers would normally receive as employees.
While ballots are still being counted in California, the pro-Prop 22 campaign is significantly ahead with 58 percent of the vote, marking the beginning of the end of the most expensive and closely watched ballot operation in California’s history.
This is a proverbial California earthquake in terms of how the law was passed – and what it means for app-based companies and gig workers in the state and the rest of the country.
we were running against a $200m campaign so we knew it would be difficult
Big money, big results
The Prop 22 campaign was unique because it saw big tech companies with deep pockets literally create a new law and circumvent the traditional legislative route.
Uber, Lyft, DoorDash, Postmates and Instacart outspent the “No on Prop 22” campaign 10 to one, taking the fight directly to consumers with enormous TV advertisement blitzes and direct marketing to voters in their apps.
“California voters have spoken, and they stood with more than a million drivers who clearly said they want independence plus benefits,” Anthony Foxx, Lyft’s chief policy officer, told Al Jazeera in a statement. “Prop 22 is now the first law in the nation requiring health, disability and earnings benefits for gig workers.”
California voters have spoken, and they stood with more than a million drivers who clearly said they want independence plus benefits
Prop 22 creates a new “independence + benefits” framework, according to Lyft, for people who work in the gig economy. The law provides app-based drivers with benefits like an earnings guarantee of 120 percent of the local minimum wage, subsidies for health insurance coverage, some mileage reimbursement and some disability coverage.
But critics say the Prop 22 benefits do not go far enough to protect workers, who will miss out on standard employee benefits set by the state like overtime pay, being part of a trade union, full expense reimbursement and workers compensation and unemployment benefits.
Opponents of Prop 22 also say that drivers only earn wages while actually engaged in a ride and must bear the cost of the time they spend waiting for fares which is about 30 percent of their total time on the road. In addition, the law’s partial healthcare subsidy only begins after a driver clocks 15 hours of driving per week.
“It’s a setback,” Cherri Murphy, a former full-time Lyft driver who advocated against Prop 22, told Al Jazeera of Tuesday’s vote.
“This one stings in so many ways. There were deceptive messages to passengers in the apps and a strategy of smokescreens,” she added. “But we were running against a $200m campaign so we knew it would be difficult.”
Prop 22 is just the latest part of the ongoing battle between rideshare and delivery companies and the state of California over how to classify their workers and what benefits drivers should be entitled to.
Last month, a California appeals court judge upheld previous rulings against Uber and Lyft enforcing employee classification for their drivers.
Even though Prop 22 goes into effect in December, the judge may still hold the companies responsible for back pay and penalties stemming from when they failed to reclassify their drivers in 2020.
Uber and Lyft have a history of regulatory disruption. I’d be surprised if this ended in California
Prop 22 could also be the beginning of a broader shift in how gig companies view their workers – and what rights and protections those workers are able to demand.
Tia Koonse, a gig labour researcher at UCLA Labor Center, sees the passage of Prop 22 as a defeat for gig workers’ rights, but also an important first step in their fight for recognition.
“It shows Uber and Lyft know the status quo was unsustainable and unreasonable. They had to make some concessions,” Koonse told Al Jazeera.
But – she said – the fact that the rideshare and delivery companies basically wrote their own law rather than playing by the existing rules sets a dangerous precedent.
“The downside is that even though this applies to only two occupations – ride-share drivers and delivery services – it shows you companies can purchase an exemption,” Koonse added. “Uber and Lyft have a history of regulatory disruption. I’d be surprised if this ended in California.”
The Prop 22 fight also has valuable lessons for labour organisers and gig workers going forward, experts say.
Maria Figueroa, the director of labour and policy research at Cornell University’s Worker Institute, said the pro-Prop 22 campaign effectively told its story about drivers wanting more flexibility and fearing job losses or customer losses due to higher fares.
“This was clearly an unequal fight, as the platform companies invested hundreds of millions of dollars in the campaign,” Figueroa told Al Jazeera. “Nonetheless, the experience is rich with lessons for platform worker advocates in California and far beyond. Like any campaign, victory goes to the one who is able to capture the hearts and minds of the voters.”
This was clearly an unequal fight, as the platform companies invested hundreds of millions of dollars in the campaign
Figueroa believes going forward, worker advocates will have to focus more on grassroots lobbying with drivers and the public rather than just policy or legal efforts.
“The public and drivers should be educated about ways to address costs derived from employee status,” Figueroa explained. “These costs involve social protections that are now shifted entirely to the workers. This is the cornerstone of the platforms’ business model and why they fight employee status so hard.”
Both sides anticipate the Prop 22 results will have an effect beyond the California state line, driving labour policies for gig workers elsewhere. DoorDash’s CEO, Tony Xu, said as much in a statement following the Prop 22 vote.
“Now, we’re looking ahead and across the country, ready to champion new benefits structures that are portable, proportional, and flexible,” Xu said in the statement. “We look forward to partnering with workers, policymakers, community groups, and more to make this a reality.”
But for those who fought against Prop 22, the battle has also only just begun. Murphy, now a social justice minister, is also looking ahead in her fight for labour protections.
“We will continue to organise to stop the creation of a generation of underclass workers,” Murphy said. “We’ll keep fighting until all workers are treated with the dignity and respect we deserve.”