- Proposition 22 is a November voting measure aimed at freeing ride-sharing and food-supply companies from AB5, a Gig legislature in California that forces Uber and Lyft to classify their drivers as employees.
- Prop 22 was made and funded by Uber, Lyft, Doordash, Postmates, and Instacart as a way to rock AB5. Uber, Lyft, and DoorDash have given $ 30 million to support the measure.
- If Californians vote the measure into effect in November, Uber and Lyft will get exactly what they want and they will be able to continue saving costs by paying payers as self-employed contractors.
- Visit the Business Insider website for more stories.
A California court on Thursday gave Uber and Lyft a stay in their appeal of a court ruling that drivers should be classified as employees, not as contractors.
If they did not get the extra time, the companies threatened to close their business in California. And if the companies had shut down, riders would have been cut off from the convenience of booking rides on the apps – which likely would have encouraged Californians to return Theorem 22, a measure that will appear on the ballot in the November elections.
Prop 22 aims to exempt ride-sharing and food-supply companies from the Assembly Bill 5 gig labor law passed in September 2019, which means Uber and Lyft can continue to classify – and pay – drivers as contractors, not employees, without benefits. Uber and Lyft have therefore built their business models, reserving full-time employee status for company roles to keep costs low. Uber, Lyft, Doordash, Postmates, and Instacart have provided a total of $ 110 million in support of the measure, according to the San Francisco Chronicle.
Why some prop 22 support or oppose
Uber and Lyft said the measure could allow drivers to continue working if they want to, which is why some drivers also report Prop 22. Companies also want to keep costs low – upgrading drivers to employee status could add up to 30% to labor costs for them, according to the San Francisco Chronicle.
Uber CEO Dara Khosrowshahi has said the company and other gig-based companies should form a so-called “benefit fund” to cover expenses, such as health care costs, and to maintain flexibility for drivers to work.
“Our current employment system is outdated and unfair,” Khosrowshahi wrote in a recent New York Times op-ed. “It forces every worker to choose between being an employee with more benefits but less flexibility, or an independent contractor with more flexibility but almost no safety net.”
President Trump’s campaign has expressed support for the companies and for Prop 22, calling AB5 a “violent attack on workers” that could lead to job losses, according to the Washington Post.
Managers, however, would technically not yet be considered legitimate employees under state law with Prop 22, which is one of the factors that drives critics to oppose the measure.
Prop 22 will not be voted on until November, but the stay that goes out Thursday will last until a court hearing in October. This raises the question of what the companies will do in the time after the stay of the residence, but before they get an answer to Prop 22.
Drivers and labor attorneys have long argued that Uber and Lyft companies are harmful to workers because they pay their lower wages and provide fewer benefits, such as unemployment and health insurance.
“Our state and workers would not have to add to the bill if large corporations try to scratch over their responsibilities,” said Xavier Becerra, the attorney general behind a May lawsuit against the companies, according to Cal Matters. “We will continue to work to ensure that Uber and Lyft play by the rules.”
Axel Springer, the parent company of Insider Inc., is an investor in Uber.
