On November 3rd, over 58% of California voters passed one of the most expensive ballot measures in California’s history. Giants like Uber, Lyft, and Doordash spent over $200 million defending Proposition 22, which exempts gig economy companies from Assembly Bill 5 (AB 5). The bill, which the companies unsuccessfully challenged in court, would require gig economy companies to reclassify their workers as employees.
With the passage of Prop 22, however, drivers will continue to be classified as independent contractors, which prevents them from access to the protections and benefits AB 5 mandates, such as overtime pay, unemployment insurance, family leave, sick leave, personal protective equipment (PPE) during the COVID-19 pandemic, and unionization. A UC Santa Cruz study found that 37% of survey respondents had lost 100% of their income due to COVID-19, and 57% of workers completely rely on gig work for their monthly income.
The ballot measure does guarantee some limited benefits and protections that drivers were not previously entitled to: a wage floor, reimbursement, and benefit standards. Drivers who work over 15 hours per week of engaged driving time, for example, will receive a health care stipend, and companies will offer occupational accident insurance for medical expenses. The initiative also stated that drivers will receive a guaranteed pay equal to 120% of the minimum wage (in 2021, this would be $15.60). A recent UC Berkeley Labor Center study disputed this claim, and stated that this guaranteed pay for Uber and Lyft drivers will be the equivalent of $5.64 after accounting for various costs, such as unpaid waiting time.
Prop 22’s passing has produced mixed responses. Uber CEO Dara Khosrowshahi said, “Going forward, you will see us more loudly advocate for new laws like Prop 22, which we believe strike the balance between preserving the flexibility that drivers value so much, while adding protections that all gig workers deserve.” Lyft co-founder and president, John Zimmer, echoed a similar sentiment about taking its ballot win beyond California stating, “We look forward to continuing our conversations with policymakers across the country.” Uber and Lyft gained $13 billion in combined market value after the ballet measure was approved, with Uber shares soaring to as much as 18% and Lyft shares up 22%. While companies are satisfied with their pricey win, Human Rights Watch and Amnesty International released a joint statement affirming their deep concern for the initiative and how its passage “will undermine the rights of workers for app-based companies in the state and set a dangerous precedent across the United States and globally.”
Prop 22 has now become one of the most difficult statutes for the legislature to alter because of its 7/8ths provision. Amending the proposition would require 87.5% vote in each chamber of the California State Legislature and the government’s signature. With Joe Biden and Kamala Harris set to take office soon, it is unclear what the future holds for gig companies, as both stood against Prop 22. For now, Uber, Lyft, and others celebrate a major ballot measure victory that could have longstanding ramifications for workers.