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.

When it comes to facilitating corporate social responsibility, should businesses be required to contribute to local problems or should decisions about contribution be left to industry leaders discretion? That is the question facing San Francisco voters November 6^th.

Proposition C, a measure put together by a local non-profit, would effectively double the city’s budget to combat homelessness by raising taxes from .17% to .7% on businesses that exceed $50 million in annual revenue.

Some moguls, such as Salesforce CEO Marc Benioff, support the tax. But the unsurprising reality, even in liberal San Francisco, is that most companies are against the measure. Leaders of tech giants, including Twitter, Square, Stripe, Lyft, and Dolby Labs have collectively contributed hundreds of thousands to opposition efforts.

Some business leaders, such as Sequoia’s Michael Morris,  are frustrated with Proposition C since their companies already donate millions to social programs. Preclusive to public backlash, businesses have packaged their opposition as concern for whether the new tax is adequately supported by plans to effectively manage the influx of money. Although this apprehension may appear as a desperate distraction from obvious self-interest, San Francisco’s Mayor and various other government officials join in this opposition.

While discussing social problems in market terms is problematic, it is important to analyze the credible concerns and repercussions of solutions like Proposition C. As such, implementing a business tax may be a realistic means to combating homelessness.

However, legislation that turns social responsibility into a tax could disincentivize a corporate culture of caring. Social consciousness, or at least the fear of negative public perception, has made social responsibility a fundamental part of corporate decision making. Further, with most governance models still aligned with shareholder primacy– this change is fragile.

Companies now consider a social agenda to be part of their profit maximization model. They choose initiatives and budgets according to their margins in order to boost public image and profits – all while motivating employees and investors with their purpose. But if the local community sequesters companies to fiscally force a social agenda…what is the incentive for them to fund programs themselves? Is it better to force companies to do good or to convince them that doing good is their idea?

No Taxation without Profit Maximization- The Potential for Proposition C to Disincentivize Corporate Social Responsibility

California’s 2024 ballot not only elected our nation’s next president, 53 members of Congress, 100 state legislators and thousands of local officials–it also featured a statewide test of the state’s latest salvo in its battle against corporate-backed ballot measures: changing the ballot itself.

California lawmakers have pursued several reforms in response to a number of corporate-backed ballot measures that have undermined, stalled and even blocked progressive legislation. Their latest effort is changing the design of ballots to include more information about who is supporting and opposing ballot measures. Early results of the Legislature’s reforms appear to be mixed.

This modification continues California’s long and storied history of direct democracy. California voters amended the state constitution in 1911 to create the referendum and initiative in the state, processes that allow voters to overturn laws and directly place proposed legislation on the ballot respectively. Since then, Californians have collected signatures for over 1,600 statewide ballot measures and qualified over 300 initiatives.

The California ballot referendum and initiative processes were originally envisioned as a way for everyday Californians to check an unresponsive legislature potentially beholden to the railroad and corporate interests that dominated state politics at the time. Corporations, however, have increasingly leveraged these processes to stall or even block bills aimed at regulating industry. Corporations have paid firms to gather signatures to qualify ballot measures, made significant contributions to ballot measures’ campaign committees and even paid for campaign advertisements and mailers in support of ballot measures. The Network previously discussed Proposition 22, one of the most expensive ballot measures in California history that exempted app-based gig companies like Uber and Lyft from AB 5 and allowed them to continue classifying their drivers as independent contractors.

Even corporate-backed ballot measures that are ultimately unsuccessful can impact companies’ bottom line. In 2021 and 2022, for example, tobacco companies sponsored–and ultimately qualified–Proposition 31, a referendum seeking to overturn SB 793, a 2020 state law banning certain flavored tobacco products. California voters, however, decisively affirmed the state law when the referendum appeared before voters in the 2022 General Election. Nevertheless, the companies’ $20 million investment to qualify Proposition 31 successfully delayed the implementation of SB 793 until after the general election, allowing their flavored tobacco products to remain on store shelves for an additional two years. Similarly, California oil companies successfully delayed the implementation of a 2022 state law banning new oil wells near residential areas for two years by qualifying a referendum. The companies later withdrew the measure just before the Secretary of State finalized the 2024 General Election ballot, and the law has since taken effect as the companies challenge it in court.

California legislators have increasingly taken aim at corporate-backed ballot measures, targeting multiple stages of the initiative process. The most visible change to California voters is on their ballots.

AB 1416 adjusted the layout on the ballot for each statewide proposition to include 15-word lists of businesses, non-profits and individuals supporting and opposing each measure. AB 1416 proponents believe printing a list of supporters and opponents on the ballot will increase transparency about who is supporting ballot measures, and provide voters with that information “right on the ballot itself.” Proponents argue the information will help voters make informed choices about whether to support a measure, similar to how listing candidates’ party affiliation and occupation designations on the ballot help voters decide which candidates to support.

AB 1416 also extends the requirement for printing lists of supporters and opponents on the ballot to local ballot measures but permits counties, which administer local elections, to opt out. Some Bay Area counties, including Marin, Sonoma, Napa and Contra Costa, have opted out of AB 1416’s local ballot measure requirements for at least the 2024 election cycle.

It remains to be seen, however, if political actors will try to leverage this new, state-mandated space on the ballot to influence voters. Journalists have documented how candidates have long used their occupation-designation space on the ballot to try to influence voters. The California Senate Election and Constitutional Amendments Committee’s analysis of AB 1416 identified the “potential for chicanery,” noting that while there are protections against listing sham organizations on the ballot, political actors could still “game” AB 1416’s rules to confuse voters.

AB 1416 represents only part of the Legislature’s efforts to crack down on corporate-backed ballot measures. SB 1360 took aim at paid-signature gathering practices commonly used by corporations to qualify ballot measures, requiring that a ballot measure committee’s top three funders be listed on each page of petitions used to gather signatures to qualify the measure and modifying the campaign finance disclosure requirements for campaign ads. AB 421, which took effect last year, attempted to build on AB 1416 by further clarifying language on the ballot for referenda to ask voters to “overturn” or “keep” state law; earlier versions of the bill also targeted the signature gathering process by requiring ballot measure signature-gatherers to disclose if they are being paid for gathering signatures and strengthen penalties for signature-gatherers who violate state disclosure requirements.

It’s unclear whether California’s latest reforms have increased voter information or changed how voters respond to potentially misleading corporate-backed ballot measures as the legislature intended. In last year’s election, California voters narrowly approved Proposition 34, a measure heavily funded by the California Apartment Association and other real estate interest groups. The measure enacted new restrictions opponents claim are aimed effectively at a single healthcare provider, the AIDS Healthcare Foundation, requiring them to spend 98 percent of revenue from a federal drug discount program on direct patient care. The AIDS Healthcare Foundation, which derives most of its revenue from the federal drug discount program, has spent over $150 million to sponsor multiple statewide ballot measures to allow local governments to expand rent control. Despite the state’s new reforms, the real-estate industry-backed Proposition 34 received voter approval to prohibit the state’s leading rent control advocate from using its primary source of revenue for political activity.

The California legislature has reconvened for its 2025-2026 legislative session. Time will tell what additional reforms to the state’s ballot measure process, if any, will emerge from this session and affect the way businesses engage with direct democracy in California.

Following twelve months of significant financial losses, Uber is now facing serious regulatory challenges across Europe that threaten to significantly increase its operating costs. The company’s future viability may now depend on the extent to which it can dominate in markets outside the continent.

In a landmark decision last month, the Supreme Court of the United Kingdom ruled that Uber must consider its drivers as “workers” entitled to minimum wage and vacation time. The court unanimously dismissed Uber’s claim of being a booking agent that hires self-employed contractors. Instead, the justices found that drivers are subordinate and dependent, because Uber unilaterally sets contract terms and conditions, dictates how much drivers earn by setting fares, and is free to terminate the relationship if passengers consistently rate driver performance too low. Most dramatically, the court ruled that Uber must consider its drivers as “workers” from the minute they log on to the app, until they log off.

The Supreme Court’s ruling comes after nearly five years of legal battles between Uber and a small group of former drivers. James Farrar and Yaseen Aslam first took the company to an employment tribunal back in 2016 and successfully argued that they “worked” for Uber. The company appealed, but the Employment Appeal Tribunal upheld the ruling. In 2018 the company took the case to the Court of Appeals but lost again. Friday’s ruling was Uber’s final appeal. Although the decision initially affects only the 25 drivers who brought cases, the ruling is expected to set precedent for the remaining 60,000 drivers across the UK.

Although Uber is no stranger to legal problems in the UK, having been twice banned from London over safety concerns, experts say this ruling could be a “nightmare” for the company. Uber is still not profitable, and Covid has strained their finances further; in 2020 the company reported a net loss of $6.8 billion. Increased labor costs in a top five market could push profitability even farther away. The ruling might also revive discussions about whether Uber should now be classified as a transport provider in the U.K. (rather than as a booking agent), and thus be liable for 20% VAT (Value Added Tax) on fares. Moreover, now that drivers become workers upon logging into the app, Uber will need to adjust its systems to avoid oversupplying markets with too many idle vehicles. The market certainly seems nervous; Uber’s share price dipped 1.6% after the ruling.

The UK Supreme Court decision is not an anomaly. Recently, countries across Europe have been moving towards protecting and strengthening workers’ rights in the gig economy. Last year, France’s top court ruled that an Uber driver did not qualify as self-employed, and earlier this year judges in the Netherlands and Spain ruled that some of their cycle couriers and food delivery riders are employees. Last month Uber released a white paper urging Europe to adopt a Proposition 22-style “third way”, where drivers remain contractors but have access to benefits funds. So far, the European Union isn’t listening. At the end of February, the European Commission began a six-week public consultation period seeking feedback from trade unions and employer groups on how to better protect gig-worker rights. The EU is even said to be considering relaxing its competition laws to allow gig workers to collectively bargain. Increasingly, some companies do not believe that the freelance model is sustainable in Europe. Dutch food delivery company Just Eat Takeaway stopped using gig workers on the continent, but will continue to do so in the U.S.

Back in the U.K., Uber is seeking to narrow the Supreme Court’s ruling, arguing that it has made a number of changes to its business since 2016, and that the ruling should not apply to all drivers. However, it is more likely that the decision will have very broad implications, challenging similar gig economy companies across the country to make changes to their business models before drivers and couriers bring suit. Will Uber stay in the U.K.? Departure is unlikely; Uber dominates the country’s rideshare market. More likely, the company will alter its business model, possibly passing higher operational costs onto customers. Regardless, last month’s ruling will certainly strengthen and accelerate Uber’s pre-emptive efforts to protect itself from regulatory risks in markets outside Europe.

The Uffizi Galleries in Florence, Italy, are suing French fashion label Jean Paul Gaultier for “unauthorized use” of imagery from The Birth of Venus, a 15th-century painting by the famous early renaissance artist Sandro Boticelli. “Le Musée,” the capsule collection at the center of the lawsuit, was intended to be Jean Paul Gaultier’s tribute to the art world. 

Art and fashion have always been intimately intertwined worlds of creative expression, one often borrowing inspiration and ideas from the other. The earliest known “collaboration” was between Spanish surrealist artist Salvador Dali and Italian couturier Elsa Schiaparelli. 

In 1938, Schiaparelli used a print specially designed by her friend Dali to produce the iconic. While the terms of this collaboration were mutually agreed upon, it would have been an unrealistic proposition if one of the parties had died many years before. This was the case for Yves Saint Laurent who, for his autumn-winter collection in 1965, launched the iconic “Mondrian” dress, for which he candidly and publicly drew inspiration from a painting by the then deceased Dutch painter and famous pioneer of modern art, Piet Mondrian. The modernist style of Saint Laurent’s dress revolutionized high fashion, with its short length, minimalistic silhouette, and unique pattern. It is unknown whether the designer asked Mondrian’s estate for permission, but if the dress was available today, authorized use would likely be immediately raised by Saint Laurent’s legal team. 

The lawyers at Jean Paul Gaultier’s atelier failed to consider the “authorized use” question before the very public and costly release of a full collection featuring Botticelli’s masterpiece, not only on items of clothing but also widely circulated publicity materials. The Uffizi claimed that it sent Jean Paul Gaultier a letter of formal notice in April requesting that the brand remove these items of clothing from the market, or respond with plans to make a commercial agreement that would “remedy the abuse committed.” The museum claims that it was forced to take legal action after the letter was ignored. The fashion house could argue that the Boticelli image was painted during the 1480s, which places it in the public domain, making it free from copyright protections. However, the Uffizi’s claim finds support in Italy’s Codice dei beni culturali e del paesaggio, the Italian Code of Cultural Heritage of 2004. The code, which is entirely independent of copyright law, intends to protect “objects with a ‘cultural interest,’” i.e., those with “artistic, historical, archaeological and ethno-anthropological interest.” The code takes precedence over copyright law and remains in force even when a painting with the vintage of Botticelli’s Birth of Venus has fallen into the public domain. 

Damages will be a contentious issue in future stages of this lawsuit. How much will Jean Paul Gaultier have to pay for the alleged unfair use and its lack of response to notice from Uffizi? According to Ella Schmidt, director of the Uffizi Galleries, fees can range anywhere between a few thousand to tens of thousands of euros, depending also on how many garments the image appears on. Gaultier’s use of the image on an entire collection of clothes might set the company back by more than €100,000. 

This lawsuit raises many interesting questions about the cost of “inspiration” in the fashion industry. It also highlights the increasingly strict policies museums and artists’ estates are adopting vis-a-vis licensing, fair use and compensation. A couple of years ago, the Wall Street Journal explored the ethics of fashion’s voracious, somewhat crass, and profit-driven attempts at (over)licensing famous works by deceased artists. This raises a policy question about what limits the law should set to balance the protection of cultural heritage and the rights of individuals and companies to profit from authorized works deriving from creative freedom and inspiration.

Art and fashion collaborations quickly achieve the status of high fashion from the day they drop and continue to enjoy their high worth as rare vintage items on resale websites throughout their lifetime. Takashi Murakami x Louis Vuitton, Coach x Jean-Michel Basquiat and Raf Simons x Robert Mapplethorpe are just some examples of successful ventures. Some fashion “collaborations,” however, have not gone down well in the public eye. Marc Jacobs, for example, was sued by Nirvana in 2019 for using images resembling the grunge band’s classic black-and-yellow iconography in its Redux Grunge collection. Roberto Cavalli faced similar allegations from street artists in San Francisco’s Mission District for using designs of their murals without permission. The latest to join the list of accused infringers is the Chinese clothing company Shein, which already suffers from a murky reputation and allegations of questionable ethical practices. British oil painter Vanessa Bowman accused the multi-billion dollar enterprise of unauthorized use of her images on their product, but thus far hesitates to get involved in time-intensive and expensive litigation. 

Allegations of infringement are not good for any fashion brand and a nuisance for artists. The increasing number of cases in this area indicates a mismatched sense of “fair use” on both sides and the need for frontloading collaborations with more robust transactional terms and safeguards.  Collaborations that achieve the highest levels of commercial success and cultural acceptance seem to be collaborations in the true sense: based on mutually agreed upon terms, clear communication about image use and predetermined models of profit-sharing. If the designer in question is knowingly using imagery from another artist’s work, the best recourse to avoid costly litigation and potential payment of damages would be to communicate with the artist themselves (or their estate, in case of a decedent), acquire relevant permissions and, ideally, draw up an arrangement for mutually benefitting from sales. 

Mark Zuckerberg recently gave a speech at Georgetown University defending Facebook’s policy that allows political ads with inaccurate or baseless information to remain on its site. Zuckerberg stated that the policy promotes “free expression” by giving users the “power to express themselves.” In support of this proposition, Zuckerberg referenced the First Amendment, Martin Luther King, Jr., and emphasized the corporation’s commitment to the United States’ long-standing values of free speech.

Facebook’s policy came under scrutiny when the Trump campaign circulated a “30-second video ad that falsely claimed [Joe] Biden committed corrupt acts in Ukraine” – an allegation for which Trump is being investigated. Biden’s campaign requested that Facebook take down the ad, but it refused, citing the same free speech concerns echoed by Zuckerberg.

Since Facebook adopted this policy, several high-profile individuals have stressed the dangers associated with allowing political candidates – mainly the Trump campaign – to pay for the digital dissemination of blatantly false information. For example, Marc Benioff, the CEO of Salesforce, has been vocal in his disapproval of Facebook’s policy, demanding Congress enact legislation barring false advertisements on social media.

Recently, Elizabeth Warren took more drastic measures and purchased a fake ad that claims Mark Zuckerberg endorses Donald Trump for re-election. In response to Facebook’s acceptance of the ad, Warren tweeted that “Facebook [is throwing] its hand up to battling misinformation in the public discourse, because when profit comes up against protecting democracy, Facebook chooses profit.”

Moreover, Bernice King, Martin Luther King, Jr.’s daughter, publicly addressed Zuckerberg’s reference to her father in his recent speech, tweeting that the “disinformation campaigns launched by politicians . . . created an atmosphere for [MLK’s] assassination.” She further stated that “King knew that democracy . . . requires a deep foundation of truth, or it is a house upon sand.”

Facebook has remained steadfast in its position of promoting free expression on its social platform and still refuses to remove any erroneous political ads. With that said, the widespread discontentment with Facebook’s policy may give rise to possible changes in federal legislation. Specifically, 47 U.S.C. § 230 – which limits many social platforms’ liability for unconstitutional speech because these companies are not considered “publishers” of user information – may be called into question. Perhaps Congress will respond to the barrage of false political advertisements by reducing the standard of liability for platforms that have less control over the content generated on their sites.

Facebook’s Political Ad Policy- Getting Paid for “Free” Speech

On January 9, Jeff and MacKenzie Bezos announced their divorce on Twitter. The next day, the National Enquirer published a story detailing the Amazon CEO’s extramarital affair with Lauren Sánchez. On February 6, the National Enquirer then sent an email to Mr. Bezos, allegedly extorting him by threatening to publish several private photographs they had acquired if Mr. Bezos did not publicly state that he had “no knowledge or basis for suggesting that AMI’s coverage was politically motivated or influenced by political forces.” In an astonishing move, Mr. Bezos then revealed both the existence of the photos and the alleged extortion in a personal blog post, discrediting AMI’s value proposition that investors would question Bezos’ judgment as a result of the photos’ existence.

Prosecutors are currently investigating the alleged extortion, which complicates matters for American Media, Inc., which owns the National Enquirer and is owned by David Pecker. During the 2016 election cycle, Pecker became infamous for using “catch and kill” techniques to buy and bury stories alleging everything from sexual misconduct to illicit affairs between President Trump and a number of women, at least once at the direction of Michael Cohen.

After determining that such payments by AMI violated campaign finance regulations, Federal Prosecutors for the Southern District of New York and AMI reached a non-prosecution agreement this past September, which required AMI to admit that it had made the payments to “influence the election” in exchange for non-prosecution so long as AMI committed “no crimes whatsoever” for three years.

The question now is whether the Federal Prosecutors for the Southern District of New York require ongoing cooperation from AMI, or if they have enough already that they are willing to pursue prosecution. If so, instead of Jeff Bezos and Amazon, it may be David Pecker and the Enquirer who have to answer to investors for poor judgment.

AMI’s Alleged Extortion of Amazon’s Jeff Bezos