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California Sues Uber, Lyft Saying They Mis-classified Drivers As Independent Contractors

Lawsuit sets up confrontation over new state law. California Sues Uber, Lyft Saying They Mis-classified Drivers As Independent Contractors

California sued Uber Technologies Inc. and Lyft Inc. for allegedly misclassifying their drivers as independent contractors instead of employees, a move that intensifies a battle between the ride-hailing giants and their home state.

California, which is suing the companies under authority granted by a new state law, said the decision to classify drivers as contractors has deprived them of rights such as paid sick leave and unemployment insurance.

“We believe it’s time for all workers to be treated fairly,” California Attorney General Xavier Becerra said Tuesday. “Innovation, regardless of what Uber and Lyft tell you, doesn’t require these companies to mistreat their workers.”

The state, which seeks up to millions of dollars in civil penalties and to force the companies by court order to reclassify drivers and restore what it called unpaid wages, also said Uber and Lyft haven’t contributed state payroll taxes used to fund general health welfare programs. The lawsuit was filed with the city attorneys of San Francisco, where Uber and Lyft are based, and Los Angeles and San Diego.

Uber and Lyft have maintained that their drivers are properly classified after the state passed the so-called gig economy law last year and Gov. Gavin Newsom signed it. The law codified a test companies must pass to classify their workers as independent contractors, which enables companies to avoid costly benefits such as health care. Uber and Lyft have said the law could take away flexibility for drivers and force them to work pre-scheduled shifts.

“We are looking forward to working with the Attorney General and mayors across the state to bring all the benefits of California’s innovation economy to as many workers as possible, especially during this time when the creation of good jobs with access to affordable health care and other benefits is more important than ever,” a spokeswoman for Lyft said in a statement.

An Uber spokesman said the company would contest the action in court. “At a time when California’s economy is in crisis with four million people out of work, we need to make it easier, not harder, for people to quickly start earning,” the spokesman said.

Lyft has said it has 325,000 drivers in California. Uber has said it has more than 200,000.

The legal battle comes as the coronavirus pandemic has raised an unprecedented crisis for the ride-hailing companies. Ridership has plummeted as governments have encouraged or ordered people to shelter in homes and closed nonessential businesses in a bid to stop the spread of Covid-19.

Spending on Uber and Lyft rides plunged 83% during the week of April 20 in the U.S. compared with a year ago, according to data from researcher Edison Trends.

Uber drivers have turned to the food-delivery business while ride-hailing has languished. The company has pulled its guidance ahead of reporting first-quarter financial results on Thursday.

Lyft last week announced it was cutting 17% of its workforce and instituting unpaid furloughs and salary cuts for those who remain. The company reports first-quarter results on Wednesday.

The confrontation highlights the difficulties in the pandemic for some workers on the front lines, including those making deliveries, who may not have benefits such as sick pay. A number of companies have provided paid sick leave only in the event of a positive Covid-19 diagnosis for some workers.

Many drivers have talked about the conundrum they face: Drive and risk getting sick, or stay home and don’t get paid.

“The pandemic highlights the danger of the work these essential workers are doing,” San Francisco City Attorney Dennis Herrera said Tuesday.

California Gov. Gavin Newsom said Tuesday the issue predates the coronavirus. “The letter of the law has to be applied,” he said at a daily news conference. “We want to be cooperative and collaborative, but we as a state have to do what we’re going to do.”

Of the 4.1 million people who have filed for unemployment insurance in California since March 12, 450,000 did so through a program for the self-employed, including gig workers, according to Mr. Newsom.

Uber, Lyft and several other companies have amassed more than $110 million to pass a November ballot initiative to exempt themselves from the law. Uber, along with food delivery company Postmates Inc., late last year filed a lawsuit challenging the law. It is unclear how those plans have been affected by the impact coronavirus is expected to have on elections and organizing.

Since it was passed last fall, the new California law has prompted opposition from a number of industries, including free-lance journalism and trucking. Uber and Lyft have been among the most organized opponents of the legislation.

The companies have said the law doesn’t apply to their businesses but have also warned that if they are forced to reclassify their drivers, it could force them to hire far fewer drivers and reduce the areas where they operate.

Although the companies have said their workers are properly classified, they see their ballot initiative as a potential legal shield for lawsuits. The initiative, if passed in November, would promise benefits such as health care for drivers who work a certain amount of hours a week but also seeks to eliminate any lawsuits in the past year.

A group representing the companies in March said more than one million signatures had been collected, nearly double the number required to qualify for the November ballot.

Uber is “pushing to raise the standard of independent work for drivers in California, including with guaranteed minimum earnings and new benefits,” the Uber spokesman said.

Updated: 8-20-2020

Lyft, Uber Get More Time as They Fight California Order

Ride-hailing companies can continue operating while they challenge order to reclassify drivers.

Uber Technologies Inc. and Lyft Inc. will be able to continue conducting business as usual in California for now, after a state appeals court on Thursday paused a lower-court ruling that required the ride-hailing companies to reclassify their drivers as employees.

The reprieve means both companies can continue operating while they fight a high-stakes legal battle with their home state.

The court’s decision followed a flurry of public messaging by the companies earlier Thursday, capping a week of threats that they would shutter their services in California if the courts compelled them to reclassify their workers.

Lyft posted an announcement on its website Thursday morning saying it would halt its business there as of midnight. Uber put up what appeared to be a placeholder post on its site, with the heading, “Important Information About California Ridesharing Shutdown,’’ which it later removed.

Lyft confirmed it no longer plans to halt ride-hailing service in the state.

A state judge last week gave Uber and Lyft until Friday to reclassify their drivers as employees, after California sued the companies in May alleging they were violating a new state law.

California’s so-called gig-worker law that went into effect on Jan. 1 requires companies to treat workers as employees rather than independent contractors if they are controlled by their employer and contribute to its usual course of business, among other things. As employees, drivers would be eligible for sick days and other benefits, issues that have become more pressing during the coronavirus pandemic.

Uber and Lyft, both based in San Francisco, have argued they are technology platforms that connect riders with drivers, not transportation companies, so the drivers aren’t part of their usual course of business.

California’s Department of Justice, which is suing the companies, said in a statement Thursday, “We’re confident in the facts of our case and we look forward to continuing our fight to defend the rights of workers across the state.”

While Thursday’s stay opens the door for Uber and Lyft to continue operating in a key market—California accounted for 16% of Lyft’s rides in this year’s second quarter and 9% of Uber’s gross bookings before the pandemic—the prospect of reclassifying drivers in the future would undermine the economics of ride-hailing at a time the companies are already struggling to turn a profit.

After the lower court ruling, Uber and Lyft bargained for more time in legal filings to the appeals court that granted the stay. Uber said, for instance, that it would take several months to build a framework to reclassify drivers, including a system to monitor their meals and rest breaks, and would need additional staff to oversee day-to-day operations. Lyft, too, said it lacked the infrastructure necessary to upend its business “at the flip of a switch.”

The companies have their sights on a November ballot initiative, in which voters in California can decide whether to exempt them from the state law at the heart of the dispute. The outcome of the vote would supersede any pending litigation.

The court gave Uber and Lyft’s chief executives until Sept. 4 to submit sworn testimony saying they had developed the infrastructure needed for such a reclassification should their ballot measure and appeal fail.

Uber and Lyft have said reclassifying drivers would require them to work prescheduled shifts, robbing them of flexibility. For the reclassification to be economically viable, the companies say they would be forced to consolidate their fleet to fewer drivers who work 40 hours a week, the standard for full-time employees; drastically reduce their footprint in cities where demand is spotty; and raise prices for rides to offset the new costs associated with managing driver operations.

Uber, for instance, said it would be able to hire just a quarter of its more than 200,000 drivers in California and raise prices for rides as much as 120% to account for the millions of dollars it would need to invest to manage drivers as employees.

Bruce Schaller, a former deputy commissioner at the New York City Department of Transportation, said the California law doesn’t require drivers to work fixed hours or full time. “Many people work as part-time employees and still have flexibility,” he said. “It’s ludicrous for them to hide behind that argument when they have leeway to structure this the way they want.”

He also said the companies were exaggerating the potential costs and fare increases as a way to rally public support for their cause. “They already do those things. Are they saying they don’t have a computer system with drivers’ names in it, or a team to onboard and check backgrounds, or that they don’t process payments to drivers or track their movements? They do everything and more.”

California Assemblywoman Lorena Gonzalez, who wrote the law at the heart of the dispute, tweeted: “Uber & Lyft can quit crying now & work on reclassifying their drivers as employees…. Shame on them with their scare tactics!”

If the November ballot succeeds, the companies say they will guarantee new protections for workers, such as giving drivers 30 cents a mile driven to account for gas and other vehicle costs, health-care subsidies for drivers who work 15 hours or more a week and occupational-accident insurance coverage while on the job.

Critics say those protections fall short compared with the benefits awarded to employees. For instance, the standard Internal Revenue Service mileage rate that employers typically use to reimburse employees is 57.5 cents a mile.

Updated: 8-21-2020

Lyft, Uber Get More Time As They Fight California Order

Ride-hailing companies can continue operating while they challenge order to reclassify drivers.

Uber Technologies Inc. UBER -1.62% and Lyft Inc. LYFT -2.64% will be able to continue conducting business as usual in California for now, after a state appeals court on Thursday paused a lower-court ruling that required the ride-hailing companies to reclassify their drivers as employees.

The reprieve means both companies can continue operating while they fight a high-stakes legal battle with their home state.

The court’s decision followed a flurry of public messaging by the companies earlier Thursday, capping a week of threats that they would shutter their services in California if the courts compelled them to reclassify their workers.

Lyft posted an announcement on its website Thursday morning saying it would halt its business there as of midnight. Uber put up what appeared to be a placeholder post on its site, with the heading, “Important Information About California Ridesharing Shutdown,’’ which it later removed.

Lyft confirmed it no longer plans to halt ride-hailing service in the state.

A state judge last week gave Uber and Lyft until Friday to reclassify their drivers as employees, after California sued the companies in May alleging they were violating a new state law.

California’s so-called gig-worker law that went into effect on Jan. 1 requires companies to treat workers as employees rather than independent contractors if they are controlled by their employer and contribute to its usual course of business, among other things.

As employees, drivers would be eligible for sick days and other benefits, issues that have become more pressing during the coronavirus pandemic.

Uber and Lyft, both based in San Francisco, have argued they are technology platforms that connect riders with drivers, not transportation companies, so the drivers aren’t part of their usual course of business.

California’s Department of Justice, which is suing the companies, said in a statement Thursday, “We’re confident in the facts of our case and we look forward to continuing our fight to defend the rights of workers across the state.”

While Thursday’s stay opens the door for Uber and Lyft to continue operating in a key market—California accounted for 16% of Lyft’s rides in this year’s second quarter and 9% of Uber’s gross bookings before the pandemic—the prospect of reclassifying drivers in the future would undermine the economics of ride-hailing at a time the companies are already struggling to turn a profit.

After the lower court ruling, Uber and Lyft bargained for more time in legal filings to the appeals court that granted the stay. Uber said, for instance, that it would take several months to build a framework to reclassify drivers, including a system to monitor their meals and rest breaks, and would need additional staff to oversee day-to-day operations.

Lyft, too, said it lacked the infrastructure necessary to upend its business “at the flip of a switch.”

The companies have their sights on a November ballot initiative, in which voters in California can decide whether to exempt them from the state law at the heart of the dispute. The outcome of the vote would supersede any pending litigation.

The court gave Uber and Lyft’s chief executives until Sept. 4 to submit sworn testimony saying they had developed the infrastructure needed for such a reclassification should their ballot measure and appeal fail.

Uber and Lyft have said reclassifying drivers would require them to work prescheduled shifts, robbing them of flexibility.

For the reclassification to be economically viable, the companies say they would be forced to consolidate their fleet to fewer drivers who work 40 hours a week, the standard for full-time employees; drastically reduce their footprint in cities where demand is spotty; and raise prices for rides to offset the new costs associated with managing driver operations.

Uber, for instance, said it would be able to hire just a quarter of its more than 200,000 drivers in California and raise prices for rides as much as 120% to account for the millions of dollars it would need to invest to manage drivers as employees.

Bruce Schaller, a former deputy commissioner at the New York City Department of Transportation, said the California law doesn’t require drivers to work fixed hours or full time. “Many people work as part-time employees and still have flexibility,” he said. “It’s ludicrous for them to hide behind that argument when they have leeway to structure this the way they want.”

He also said the companies were exaggerating the potential costs and fare increases as a way to rally public support for their cause. “They already do those things. Are they saying they don’t have a computer system with drivers’ names in it, or a team to onboard and check backgrounds, or that they don’t process payments to drivers or track their movements? They do everything and more.”

California Assemblywoman Lorena Gonzalez, who wrote the law at the heart of the dispute, tweeted: “Uber & Lyft can quit crying now & work on reclassifying their drivers as employees…. Shame on them with their scare tactics!”

If the November ballot succeeds, the companies say they will guarantee new protections for workers, such as giving drivers 30 cents a mile driven to account for gas and other vehicle costs, health-care subsidies for drivers who work 15 hours or more a week and occupational-accident insurance coverage while on the job.

Critics say those protections fall short compared with the benefits awarded to employees. For instance, the standard Internal Revenue Service mileage rate that employers typically use to reimburse employees is 57.5 cents a mile.

Updated: 9-12-2020

A California Law Was Supposed To Give Uber Drivers New Protections. Instead, Comedians Lost Work

While companies like Uber, Lyft and DoorDash have fought AB-5 in court, the law has ensnared other freelance workers.

Early this year, the organizers of a small Bay Area theater told Alicia Dattner they wouldn’t be able to pay her for an upcoming comedy act. The reason: A new California law that reclassified gig-economy workers, such as Uber drivers, as employees meant it would be too expensive to hire her.

Ms. Dattner was confused. Why was a law aimed at Uber and Lyft affecting comedians?

“It makes no sense,” said Ms. Dattner, who also teaches comedy and public speaking workshops.

When California legislators passed the high-profile labor law last year, they said it would increase protections for drivers for ride-hailing and delivery companies such as Uber Technologies Inc., Lyft Inc. and DoorDash Inc.

By classifying these workers as employees, instead of independent contractors, the law, known as AB-5, would make these workers eligible for health insurance, paid time off and other benefits—if their roles included tasks that are part of the normal course of a company’s business, among other requirements.

It hasn’t worked out that way. The Silicon Valley companies have defied the lawmakers’ intentions, leaving their drivers’ status unchanged while they fight the law in the courts and wage a costly campaign to hold a statewide popular vote this November on a measure that would exempt them from the law.

Meanwhile, magicians, freelance journalists and interpreters have found themselves losing work: Many small businesses say such measures would be too costly to implement, and have instead opted to cut back on their use of independent workers.

Besieged with complaints, the California legislature earlier this month amended the law to exempt workers in industries from comedy to youth sports. While a huge array of groups with objections—including interpreters and journalists–were mollified, concerns about the law’s effects still linger among employers and workers alike, including small theaters, fast-food franchises and even some mall Santas.

The ride-sharing and delivery companies’ legal and political push against AB-5 is “such a frustrating example of the way you can buy your way into a regulatory environment that suits you,” said Veena Dubal, a professor who studies employment law at University of California, Hastings, and has been a vocal critic of the companies. “They have been defying the order since Jan. 1. Meanwhile, a yoga studio doesn’t have that luxury.”

Uber and Lyft have said they believe their drivers are still independent contractors under the law, in part because they describe themselves as digital-app companies that match drivers with riders, not transportation providers. The law doesn’t specifically mention ride-hailing or food delivery.

If forced to reclassify their drivers as employees, the companies say their businesses—already unprofitable—would be completely upended. They would need to pay workers hourly wages for scheduled shifts, dropping the flexibility many drivers enjoy. They would need to raise fares, decrease service and even stop operating in some areas, they say.

Uber estimated in a court filing that at least 150,000 of its 210,000 active drivers in California would no longer be able to work for the company, while fares would go up between 20% and 120% across the state. They have presented petitions signed by thousands of drivers opposing the law.

The companies are currently seeking to have California voters weigh in on the matter using the state’s ballot-measure process, which allows laws to be passed, overturned or amended by popular vote instead of by the legislature.

A Lyft spokeswoman said: “If the legislature had done its job and made policy that actually protected drivers, the ballot initiative wouldn’t have been necessary.”

Uber, Lyft, DoorDash and others have thus far spent $180 million to support Proposition 22, as the initiative is known, on the ballot Nov. 3, making it one of the most expensive ballot measures in California history. It dwarfs the more than $6 million being spent by labor groups opposed to the measure, which aims to classify the ride-hail and delivery companies’ drivers as independent contractors, exempting them from AB-5.

The AB-5 legislation grew out of a California Supreme Court decision in 2018 that implied a huge swath of professions should be classifying contract workers as employees, eligible for stronger labor protections such as workers’ compensation.

To clarify the issue, lawmakers in Sacramento decided to push legislation that would put broad new restrictions on when a company was able to rely on an independent contractor instead of an employee.

Debate over the bill quickly ballooned into a referendum on Uber, Lyft and the gig economy overall, with labor groups and most state lawmakers pushing to reclassify drivers and other contractors they contended were only nominally independent.

Initially the ride-hailing and food-delivery companies said the legislation would be disastrous, adding costs and robbing drivers of their flexibility.

Then, around the time the bill passed a year ago, the companies adopted a new argument, saying their drivers clearly didn’t qualify as employees under the law at all, in part because their main products were mobile apps, not transportation services.

Lawsuits followed, and a judge in San Francisco state court recently ruled against Uber and Lyft, saying companies had engaged in a “a prolonged and brazen refusal to comply with California law.” Still, the companies don’t have to change their operations until after the ballot measure in November.

Those who say they have lost work because of the law have been left bitter.

Mario Moncada, a Santa Monica, Calif., physical therapist, had long worked on a freelance basis, getting jobs through a home-health agency. He liked the flexibility and built up a subcontracting business of his own, sending work to other physical therapists. As a result of the law, his subcontracting business vanished and he had to become an employee of the agency, following a more rigid schedule. The shift cost him tens of thousands of dollars a year, he said.

“I now have to move out of my place of residence,” he said as he was packing up his house to leave for Louisiana.

The follow-up bill that was signed into law last week appears to offer a fix for physical therapists in similar situations, according to a trade group.

Lorena Gonzalez, the California assemblywoman who wrote both AB-5 and the follow-up measure, said she spent a good part of the year hearing concerns about the law, and tried to exempt groups on which it was having unintended effects.

Ms. Gonzalez, a San Diego Democrat, said that even with the recent exemptions, the law would still mean countless workers at nail salons and janitorial companies will now be treated as employees eligible for benefits like paid time off. Such workers have long deserved better protections, she said, while she remains upset about the ride-hail companies.

“We should all be outraged that they continue to not follow the law,” she said.

Some affected groups aren’t pleased.

Franchisees may qualify as employees, meaning a chain like 7-Eleven may need to employ people who lease and operate stores. Currently such franchisees pay a fee to the chain’s owner. Matthew Haller, a vice president at the International Franchise Association, said that some brands have halted expansion plans in California as a result of the law.

Small theater groups—which often paid musicians, actors and crew members as independent contractors—are particularly frustrated. Gail Gordon, founding director of the one-year-old Numi Opera in Los Angeles, said after the law passed, she realized how much higher her costs would be and in February canceled plans for a performance to be held in May.

“It would have put 30-plus percent on top of my budget—which was already well strapped,” she said. As it turned out, the performance of “Violanta,” an opera by a 20th-century Austrian composer, would have been canceled as a result of Covid-19, but she remains uncertain what the future holds for another she has scheduled for fall of next year.

“I don’t know what’s going to happen,” she said.

Updated: 10-20-2020

Uber Weighs California Overhaul If Ballot Measure On Workers Fails

Ride-sharing service says prices for riders will rise if company isn’t exempted from state law reclassifying drivers as employees.

Uber Technologies Inc. UBER 6.11% is considering an overhaul of its business in California if voters reject a ballot measure that would prevent the ride-hailing company’s drivers from being classified as employees.

“We are looking at all our options,” Uber Chief Executive Dara Khosrowshahi said, without elaborating, during The Wall Street Journal’s annual Tech Live conference, held remotely on Tuesday. “We will do our best to operate in California…Where in California we will operate is a question mark, and the size and scale of business will be a big question mark,” he said.

The state implemented a law on Jan. 1 that seeks to reclassify ride-share and food-delivery drivers as employees, making them eligible for minimum wage, sick days and health insurance.

Uber, Lyft Inc., DoorDash Inc. and others have collectively raised around $200 million to promote a ballot measure—the most expensive in California’s history—on Election Day that asks voters exempt them from the law.

Uber and its peers have said that the law would force them to make drivers work pre-scheduled shifts, robbing them of the flexibility they currently enjoy. Uber has said it would be able to hire just a fraction of its more than 200,000 drivers. Mr. Khosrowshahi on Tuesday said prices for consumers would rise between 25% and 100%.

“These are not made-up estimates,” he added.

Uber’s core ride-hailing service has been battered during the pandemic, while its smaller food-delivery business has soared. Global rides volume was down 50% year-over-year last month, Mr. Khosrowshahi said, with Hong Kong leading its recovery.

Uber’s food-delivery bookings more than doubled in the second quarter of the year, and Mr. Khosrowshahi said the business continues to see growth “well over 100%.”

Uber reports third-quarter results on Nov. 5, days after the election.

Updated: 10-29-2020

California Prop 22 Vote Heralds Judgment Day For Uber, DoorDash

The initiative would exempt app-based companies from having to classify contractors as employees.

The gig economy is preparing for a reckoning. California voters are set to pick sides during the Nov. 3 elections in one of the most fraught debates of today’s labor market: Are flexible working arrangements worth the trade-offs of weaker job security and fewer benefits?

A state ballot measure, known as Proposition 22, would exclude app-based companies from California’s new gig economy law, which makes it tougher for companies to classify workers as contractors rather than employees.

If voters reject the proposition, the companies would have to start treating drivers as staff who are eligible for benefits such as guaranteed minimum wages, paid sick days, and other standard protections.

Ride-hailing apps Uber and Lyft and food delivery services DoorDash, Instacart, and Postmates sponsored the initiative, pouring a record $200 million into the campaign to convince voters that app-based drivers want to preserve their freedom and that an employee-based model would raise costs for customers.

The outcome—while legally binding only in California—could have ramifications across the U.S., potentially influencing states looking to tighten regulation of the gig economy, which has thrived in the era of app-based work. Lawmakers from New York to Illinois who are also rethinking labor laws for gig and freelance workers may take a cue from California’s handling of Prop 22.

App-based companies have propelled “this longer-term trend away from stable full-time employment,” says Juliet Schor, a professor at Boston College who studies gig workers. “The dangerous thing about it is, the bigger this gig economy is and the more it undermines protections for workers, the more likely you see the reduction of those stable, secure jobs.”

The stakes are high in California, where the gig economy has been a driver of economic growth and an often-mimicked business model for many technology companies based in Silicon Valley. A study by the U.S. Bureau of Labor Statistics estimates 10% of American workers now take part in “alternative work arrangements.”

These include temp agency and on-call workers, though most economists can’t even agree on a formal definition of gig work, let alone on the size of its contribution to the workforce. The Federal Reserve says 31% of adults age 18 and older participate in the gig economy, at least for supplemental income.

In academia, researchers at the sister institutions University of California at Riverside and UC Berkeley are feuding via papers and rebuttals over how to calculate hourly earnings: Should the time in which drivers are waiting for rides count, or not?

The ballot measure promises to be a nail-biter. While an early August poll from London-based consulting firm Redfield & Wilton Strategies showed “yes” leading “no” 41% to 26%, 34% of voters were still undecided. In a survey by UC Berkeley released on Oct. 26, the “yes” and “no” sides were close, at 46% and 42%, respectively, with the rest of respondents saying they’re unsure.

Gig platforms are highlighting worker freedoms that they argue come with contractor status. They say Prop 22 will allow workers to keep their flexibility, while also introducing extra measures such as health insurance stipends and regular background checks and safety courses for drivers.

Most important, it will maintain a way for hard-up workers to get quick cash during a job-crushing pandemic. Uber Technologies Inc. Chief Executive Officer Dara Khosrowshahi describes Prop 22 as the “best of two worlds.”

Uber estimates that redefining workers as employees could double the price of rides and may force the company to reduce its driver base in California. That’s assuming the companies stay—Uber and its rival Lyft Inc. have previously threatened to shut down in California, or parts of it, if they’re forced to change.

Drivers and labor advocates on the “no” side, which has raised only $20 million to promote its views, say the ballot initiative is a way for well-funded tech companies to buy themselves favorable legislation and fend off related lawsuits.

They argue that Prop 22’s pledged benefits are tied to driving time, which doesn’t account for the hours drivers spend waiting for a ping, shuttling to and from more lucrative cities to work, and disinfecting their cars.

The companies get an advantage from drivers who are waiting to pick up passengers so that the service can be deemed “on-demand,” says Kurt Nelson, an Uber engineer who wrote an op-ed against Prop 22 in October—disagreeing with his employer’s view. “Workers are subsidizing the product with their free labor,” he wrote.

If those workers had to be paid for waiting time, it would limit the number of drivers on the road at any given moment.

“Why Would You Kill An Industry That Employs So Many Individuals?”

If California voters reject the measure, “the company will have a powerful economic interest to put as much of the work hours into the fewest number of drivers possible because payroll taxes are per head, not per income,” says Bill Hamm, an economics consultant with Berkeley Research Group.

The barrage of “Yes on 22” messages from gig platforms has become more frenzied as the election nears. Uber’s in-app map shows little “Yes on 22” bubbles hovering over the car icon, and DoorDash Inc. said in a filing that it spent $100,000 distributing takeout paper bags adorned with “Yes on 22” to restaurants that use its service. “I choose to be an independent contractor.

It provides the flexibility I need in my life,” an Instacart Inc. worker wrote in a marketing email to customers. A group of “no” proponents in late October dropped banners over four busy freeway overpasses in Sacramento, the state capital.

In Los Angeles, a group of clergy rallied at City Hall to support the proposition on Oct. 22. Reverend K.W. Tulloss, one of the participants, says the measure will help protect drivers, especially minorities and poor people who may rely on gig work.

He acknowledges that the same rationale could be used to argue against Prop 22 and for increased benefits, but he stands by his position: “If drivers want to remain independent, why can’t we hear their voices?” Tulloss says he drove for Uber for three months a couple of years ago when he was between jobs:

“I knew what I was signing up for. Why would you kill an industry that employs so many individuals? Especially now, when people are being laid off from their jobs.”

Gig economy workers are split on whether they’re satisfied with the flexibility—largely based on whether the work is their primary source of income, says Boston College’s Schor. She found that occasional workers tend to earn more per hour and get benefits from another job or a spouse.

Those who were working full time and dependent on gig income felt more trapped. Over the past few years, the latter group has become a bigger slice of the workforce, she says. As the pandemic has crushed jobs in retail, restaurants, and other service industries, even more people are turning to gig work. But the crisis has also shone a bright light on the precarious nature of a job that has few guarantees, like paid sick days.

Prop 22 was born out of a California bill known as AB5 that was passed into law last year and took effect in January, which sets higher standards for workers to be classified as independent contractors. The proposition, if passed, would become nearly untouchable. State lawmakers could make tweaks to it, but any attempt to overturn or drastically change it would have to be approved by voters in another election.

If the ballot measure fails, Uber, Lyft, and others aren’t likely to give up. “They could just keep trying to write another bill that would carve them out of the law,” says Veena Dubal, a law professor at UC Hastings.

The companies have already been shaping how workers and voters view labor force regulations, Dubal says. “The idea that flexibility is tied to independent contractors’ status is cultural work the companies have done,” she says.

Vivian Marlene Dunbar, a 72-year-old retiree, is a Lyft driver in San Ysidro, Calif. She says she’s “totally dependent” on her gig work to cover rent and make ends meet. Even then, she’s not interested in benefits that might help ease her financial worries.

She’s supporting Prop 22. Job flexibility is “invaluable” to her, she says. “If I want to go out there and get a regular wage job with wonderful benefits, I would be at Costco or Sam’s Club, like other seniors,” she says. “But this is our choice. If I want to go sit under the apple tree and wait for a ride, I can do that.”

 

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