Uber Technologies Inc. (NYSE:UBER), Lyft Inc. (NASDAQ:LYFT) drivers, and workers of gig economy companies in California will continue to be treated as independent contractors after voters approved Proposition 22. This is a ballot measure allowing companies not to be treated as employees, which voters reportedly passed by 58%.
Gig economy workers to continue as independent contractors
The ride-sharing companies and DoorDash backed the proposal campaigning against AB5 legislation that wanted drivers and gig economy workers to be considered as employees. The companies had designed the measure to exempt them from a law requiring them to offer employees unemployed insurance, pay health care, and other benefits.
The voting in favor of Proposition 22 is hard to say if it was at the interest of drivers or the voters’ interest. According to the driver advocacy group, Gig Workers Rising, this is a loss for democracy and could open the door for corporations to write their laws.
With the vote, one of the fiercest regulatory battles that Lyft and Uber have faced has been resolved, and this opens the path for other companies to redefine labor laws across the country. State lawmakers and fight pit labor groups against delivery start-ups and ride-hailing companies have spent around $200 million in support of the measure.
Uber CEO lauds Prop 22 victory
The ride-sharing companies had previously said that they would increases prices, and drivers will have less flexibility if they were to abide by AB5 laws. Gig Workers Rising saw this as a tactic meant to swing the vote in their favor. AB5 had proposed that workers working within the regular business of a firm should be classified as employees, but under Prop 22, the drivers of the companies will be exempt from the rule and will operate as independent contractors.
Uber CEO Dara Khosrowshahi thanked drivers for the victor, and in a let night, email said that the future of independent work is secure because of the voice of many drivers. He said the company will avail of benefits promised by Prop 22 soon.
