Proposition 22: What Has Changed, What Has Not
Proposition 22 passed in California on Tuesday. Uber, Lyft, and other gig economy companies spent more than $200 million on the ballot measure, which will allow them to classify drivers as independent contractors rather than employees.
Here’s what has changed:
- Gig economy workers in California will be classified as independent contractors. In October, a California court ordered Uber and Lyft to hire their workers as employees under a new state labor law. The ballot measure that passed Tuesday allows Uber and Lyft to continue classifying drivers as independent contractors regardless.
- Gig economy workers will get some benefits. Though meager compared to protections granted to employees, Prop 22 grants gig workers some protections, such as a pay floor.
- A path to union rights for gig economy workers got tougher. Back in 2015, Seattle’s city council granted Uber and Lyft drivers the right to unionize, despite being independent contractors (the U.S. Chamber of Commerce promptly sued the city, arguing the ordinance violated anti-trust law). Prop 22 seems to preempt such a strategy in California, stating that “Any statute that authorizes any entity or organization to represent the interests of app-based drivers in connection with drivers’ contractual relationships with network companies, or drivers’ compensation, benefits, or working conditions, constitutes an amendment of this chapter,” which would mean it would need a ⅞ vote — the threshold required to change anything in the ballot measure — in order to pass.
What has not changed:
- Other states may pass laws forcing gig economy companies to classify drivers as employees. California’s new labor law, which made gig economy drivers employees, could be used as a blueprint for labor laws in other states. New York and New Jersey, for instance, have already made moves toward such laws.
- Uber and Lyft are in trouble with California. When ordered to make their drivers employees in October, the companies continued to treat them as contractors. California will still seek penalties for the period between January (when the new state labor law went into effect) and the election, in which the companies did not comply with the law.
- Uber and Lyft are in trouble financially. Both Uber and Lyft, which have never been profitable, have seen drastic dips in ridership and revenue during the pandemic. Though both companies’ share prices jumped on the news of a Prop 22 victory, the ballot measure will more or less keep their business model the same — not improve it.