California sides with Uber, Lyft, DoorDash, and others on Prop 22, exempting the companies from having to reclassify workers as employees

Bloomberg 2020-11-05 Ellen Huet

Context & Ripple Effects

The vote closes a two-year fight that began when AB5 pushed driver groups to launch their own ballot measure to preserve contractor status, and that Uber, Lyft, DoorDash, and Postmates answered with a roughly $200M campaign on behalf of Prop 22. The result means California — the largest gig market in the country and the state where reclassification pressure was most advanced — has now ratified the contractors model at the ballot box.

First-order effects

Uber, Lyft, DoorDash, and Postmates keep classifying their California drivers as independent contractors, avoiding the insurance, benefits, and payroll costs that employee status under AB5 would have imposed.
Drivers who had been positioned for employee benefits and minimum-pay guarantees stay on the contractor terms Prop 22 defines instead, with the exemption written into state law by voter approval.

Second-order effects

Labor groups that lost at the ballot are pushed toward court challenges and legislative fixes, a path that ran through years of litigation before the state Supreme Court ultimately upheld Prop 22.
Gig platforms in other states gain a proven playbook — outspend a reclassification threat with a ballot initiative — making Prop 22 the template for every future state-level contractor fight.

Third-order effects

If the pattern holds, US labor classification stops being a binary employee-or-contractor question decided by regulators and becomes one settled by platform-funded ballot measures creating bespoke third categories.
A durable precedent emerges that a company can legally purchase an exemption from state labor law, raising the stakes for how states like California write and defend worker-protection statutes going forward.

The trend: Platform companies are increasingly bypassing legislatures and regulators with voter-approved carve-outs that codify contractor status as a permanent third category of work.

Discussion

@lhfang Lee Fang on x
Uber & Lyft won Prop 22 in a landslide not only by paying the California NAACP President for an endorsement that appeared in TV ads aimed at Democratic leaning voters, but paid off Latino and Asian civil rights orgs for hyper targeted outreach across the state.
@nabeel Nabeel Hyatt on x
CA voters did not side with big tech companies, they don't care. Voters sided with drivers, who overwhelmingly wanted flexibility of work over an overly prescriptive AB5 bill. Gig work is not 1099 or full time, it needs different protections. Hopefully other states get there. htt…
@carnage4life Dare Obasanjo on x
California's #AB5 has been a case study in bad lawmaking. Intended to target Uber & Lyft, it ended up penalizing all freelance work. Various industries then lobbied for exemptions and now Uber & Lyft exempted as well via ballot initiative. What a 🤡 show. https://www.bloomberg.com…
@nytimes @nytimes on x
California voters overwhelmingly approved Proposition 22, a ballot measure that allows gig economy companies like Uber and Lyft to keep treating drivers as independent contractors rather than employees. The victory could help remake U.S. labor laws. https://www.nytimes.com/...
@molly_knight Molly Knight on x
These companies lied in their ads and made it seem like a YES vote was FOR labor and against corporations. So many people cast votes thinking they were protecting workers. https://twitter.com/...
@briebriejoy BJG on x
We need to have an accountability moment with Black political leadership. It's long overdue. https://twitter.com/...
@mattdpearce Matt Pearce on x
$200 million bucks to rewrite some labor laws is a modest investment in the grand scheme of things. https://twitter.com/...
@jason_koebler Jason Koebler on x
Disastrously unprofitable, inhumane companies bought a disastrous law in California https://www.vice.com/...
@random_walker Arvind Narayanan on x
Uber, Lyft, etc. now exempt from treating workers as employees. Regardless of merits, the campaign was full of dark patterns & worker coercion. An amazing perversion of democracy and a reminder that tech platforms are the most powerful entities in the U.S. https://www.kqed.org/..…
@matthewstoller Matt Stoller on x
Demographics is destiny or something https://twitter.com/...
@mikeisaac Rat King on x
For Uber, Lyft and Doordash, a $200 million advertising blitz well spent. The contractor model they popularized is here to stay. @kateconger with the details on why if you live in CA, your mailbox has been stuffed with “yes on 22” flyers for weeks https://www.nytimes.com/...
@zephyrteachout Zephyr Teachout on x
The biggest antitrust issue on the ballot in the country is Prop 22. Uber/Lyft Monopolists want full rights to drive drivers into the ground, extract all the profits, push them past their limits, refuse to acknowledge them, deny healthcare. No on 22. NO ON 22.
@sreekyshooter Sreekar on x
It's not shocking but prop 22 likely passing is still a brutal punch to the gut. I can't overestimate what a horrific precedent it is that we let Uber and Lyft buy their own labor laws with $200 million worth of blatantly misleading advertising
@karpmj @karpmj on x
The tech companies spent more money on Prop 22 in California than Bernie raised in the entire 2020 cycle, nationally https://twitter.com/...
@bigblackjacobin @bigblackjacobin on x
Prop 22 is a huge victory for gig companies IN CALIFORNIA. It does nothing to fix a doomed business, the myriad of serious legal challenges across the world, or the social unrest caused by gig company platforms and their exploitation. https://www.vice.com/...
@techwontsaveus @techwontsaveus on x
A huge win for companies whose whole business model is premised on decimating workers' rights. A massive loss for Uber drivers, Instacart shoppers, food couriers, and other gig workers. Now we have to stop #Prop22 from being replicated in other jurisdictions. https://twitter.com/…
@alexnpress Alex Press on x
Prop 22 results are the real nightmare tonight
@nitashatiku Nitasha Tiku on x
58% in favor of Prop 22 Shares of Uber & Lyft jumped 15-18% at open Jerome Gage, a volunteer spox for No on 22: It's misleading to refer to gig companies as “supporters” of the ballot initiative. “They are the authors. They decided what was in it.” https://www.washingtonpost.com/…
@nycjim Jim Roberts on x
Uber and Lyft Drivers in California Will Remain Independent ... which means that the company won't have to pay for health care, unemployment insurance and other benefits. https://www.nytimes.com/...
@squawkcnbc Squawk Box on x
“The idea preventing people from being their own contractor, setting their own times, doing all that, rather than having the state do it, is nuts,” says Barry Diller on Prop 22 in California. “We can't overregulate these things.” $LYFT $UBER https://twitter.com/...
@eppman Mike Eppel on x
Tech stocks are surging this AM on election results on potentially reduced taxation risks. Apple up 3%. Uber and Lyft both up 14% on California ballot initiative to keep drivers as contractors.
@jason_kint Jason Kint on x
California's new privacy ballot passes. Funds new privacy enforcement division, closes some loopholes on the major data collectors (Google, Facebook) and makes it very hard for them to weaken in the future. Enforcement in 2023. https://twitter.com/...
@joewestby Joe Westby on x
Big blow for labour rights of gig workers. The fact these companies could throw big $$$ funding a campaign to exempt themselves from law is shocking - corporate lobbying on steroids. https://twitter.com/...
@seanzevran Sean Zevran on x
I didn't hear a single worker defend this, and I've spoken with numerous. https://twitter.com/...
@andrew4mk Andrew Pakes on x
Okay. Lots going on in America. But this is significant. At huge expense big tech has just bought its way to weaker employment rights & standards for gig workers in California https://twitter.com/...
@byjacobward Jacob Ward on x
A coalition backed by Uber, Lyft, DoorDash, Instacart and PostMates spent $200M to reverse a law that classified their workers as employees. That law, AB5, went into effect not even a year ago, and tonight they won exemption through a ballot proposition. https://www.cnbc.com/...
@aloudonline Aloud on x
So disappointing. A real blow to workers. This is all part of a larger erosion of labor protections that we should all be incredibly worried about. -J https://twitter.com/...
@rbreich Robert Reich on x
Uber, Lyft, and DoorDash have spent over $186,000,000 on Prop 22 in California — a ballot measure that leaves drivers without guaranteed sick leave, health care, bargaining rights, or a minimum wage. Vote NO on 22. Please spread the word. https://twitter.com/...
@danpriceseattle Dan Price on x
Uber and Lyft spent $200 million to convince people it couldn't afford to pay employees. It worked. When you're a big corporation, you don't have to play by the rules of everyone else https://www.motherjones.com/ ...
@bgurley Bill Gurley on x
I would restate this. CA recognized that AB5 was simply money buying legislation in Sacramento. @LorenaSGonzalez trying to help her donor the @SEIU The editorial groups of all major papers called this out. & Willie Brown. A great light shown on an ugly political process. https://…
@pattersonnbc Steve Patterson on x
In a brief aside for all my Californians... this is a big deal with a big price tag. It will have immediate ramifications on the well-being of the people that fuel what is essentially our form of reliable/widespread pseudo public transportation in many areas. https://twitter.com/…
@mirandacgreen Miranda Green on x
With more than half of the state reporting, the prop is winning by nearly 58%. The fight by tech giants to pass it has lead to most expensive ballot race in California's history https://twitter.com/...

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