Uber Lyft Protest against Proposition 22, gig companies wrote new labor

All States should think about California

The gig firms wrote new, nearly difficult to amend labor laws.

This week, Uber, Lyft and other gig economy businesses congratulated themselves on winning an expensive struggle to reverse laws in California that would have caused them to treat their contract workers as employers with fixed salaries and benefits as a lifeline for unemployment.

The businesses called Prop 22 's passage a victory for employees, but it can be perceived as a cynical circumvention of the democratic process and a $200 million warning to those who oppose it. Almost inevitably, gig firms vowed to replicate the legislation in other states.

Protesters protested against Proposition 22 at Uber's San Francisco offices
Protesters protested against Proposition 22 at Uber's San Francisco offices

While California lawmakers passed laws in 2019 reclassifying gig jobs as employees, businesses — like Instacart, Postmates, and DoorDash — defied the rule. Unhappy with the statute that could reform their business model, the gig companies banded together to write a ballot initiative that dominated their business interests and weakened proper democratic procedure, especially by a clause requiring changes to pass with a seven-eighths supermajority of the Legislature.

Legislatures and voters should watch. Prop 22 codified a scheme that refuses maximum compensation to employees, real minimum wage protections, and stability — guarantees that are increasingly important during the coronavirus pandemic. Gig companies in California saturated voters and commuters with persistent and sometimes disingenuous ads, text messages, push alerts, newsletters and even fliers along with their food deliveries venturing the benefits of the measure, while spending their opponents more than 10 to one.

"Prop 22 is perfect for employers, but it's a big disappointment for employees," said Robert Reich, California University, Berkeley, Professor of Public Policy and former U.S. Labor Secretary. "It would allow other businesses to reclassify their workers as private contractors, and if they do so, over a century of labour rights will disappear overnight."

The very basis of the gig economy is based on a contract labor pool that can never attain permanent job status but whose function is vital to transporting food, ferrying passengers, and picking up food. In this model, businesses take a share of tariffs but assume no cost of vehicle repairs, health care or other costs such as petrol.

From their early days, the businesses have worked to ensure that they retain their employees' arm length while retaining essential restrictions on them, such as which routes they take, how much they allow fares and which vehicles they drive. Maintaining employees as independent contractors is important for businesses because the option could increase labour rates by at least 20 percent and make companies potentially responsible for a larger variety of actions by their workers.

Leave from the new legislation is a lifeline for employees if gig employment declines or businesses close down access to their applications. That was no accident: from 2014 to 2019, Lyft and Uber saved more than $400 million by not paying into California's unemployment fund. As the pandemic struck, gig employees had to focus on one-time federal stimulus checks.

Prop 22 guarantees employees hourly pay above the prevailing minimum, but only after they have agreed a fare for a ride. Waiting time adds up, and most employees will take home just below the minimum wage.

Voting initiative advocates argued that a job model, such as the state legislation it repealed, would endanger the flexibility of employees, but that's a smoke screen. Mr. Reich and others note that gig companies could design a scheme enabling both direct work and flexible hours.

After their win on Tuesday, Uber, Lyft and DoorDash both promised to partner with city officials to obtain benefits close to Prop 22's in other states and at federal level, but politicians outside California should be careful. After years of battling to maintain a contractor scheme with practically no incentives, gig firms only saw the light on a "third path" to work after California legislation turned unfavorable.

Any workplace incentives are better than zero, but policymakers in New York , New Jersey and elsewhere have the potential to draft smart legislation that expands substantive rights to contract employees while ensuring versatility and a route to the security the job offers.

Jobs deserve more protection than Prop 22 does, and people should be able to believe the deep-pocketed companies won't skirt the political process.