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California voters say ‘yes’ on Prop 22
Uber, Lyft and DoorDash spent $200 million to pass Prop 22. The law it overrode, forced them and many other employers to hire most freelancers, independent contractors and gig workers as full-on employees with pay and benefits.
KTVU - Proposition 22, which allows Uber, Lyft, Instacart and other companies to keep classifying its drivers as independent contractors, passed on Tuesday.
App-based drivers, who under the previously voter-approved labor law known as AB5, would have retained scheduling flexibility, will no longer be reclassified as employees while app companies will maintain their business models. The proposal was the most well-funded ballot in California history, with $188.9 million raised by Uber, Lyft and Doordash.
Drivers will now be legally fixed as “gig workers”, which means that those working during the pandemic will do so without guaranteed sick leave. The companies that funded the proposition will not be legally required to provide healthcare, unemployment insurance or worker’s compensation for drivers. By Uber CEO Dara Khosrowshahi’s admission, the costs of following AB5 might have rendered their company inoperable in California.
“I think that the company is pushing drivers into risky situations without taking care of their wellbeing,” said Edan Alva, a former Lyft driver and current Gig Workers Rising organizer who stopped driving in April due to safety concerns. “And that is really what it's always done--only it's much clearer here since the start of the pandemic.”
Gig workers can't get unemployment benefits in California because when companies like Uber classify all workers as independent contractors, they don’t pay into the state's unemployment fund. However, during the pandemic, workers are temporarily able to access benefits through a special program called Pandemic Unemployment Assistance.
Carlos Ramos, a Lyft driver and organizer with Gig Workers Rising, stopped driving due to safety concerns during the pandemic, and said that he is saddened that Californians would elect to not give workers sick time during a pandemic. But he’s also not surprised, as the flurry of marketing from “Yes on 22” made it seem like Prop 22 was providing benefits, not skirting a law that provides more robust ones.
“People were leaving their polling place thinking that they were helping drivers,” Ramos said.
Davis White, an Uber spokesperson, sent a company statement in an email which said that, “Soon, drivers in California will be guaranteed a minimum earnings standard of 120% of minimum wage and will gain access to important new benefits like healthcare, accident insurance, and more.”
“Yes on 22” ran an aggressive marketing campaign, which included push alerts for Uber app users threatening to leave the state if the proposition fails. Vice reported that Instacart workers were also instructed to place “Yes on 22” stickers on orders from a Berkeley Grocery store.
The proposition offers a modest healthcare subsidy, which is not equivalent to healthcare that the state requires companies provide employees, accident insurance and accidental death insurance if a worker dies on the job. It also provides a minimum earnings standard of 120% of the minimum wage based on the driver’s “engaged time”, which strictly includes the time between when drivers start and complete requests and doesn't include waiting time in-between rides.
Labor law under AB5 does not require rigid scheduling, and drivers interviewed said that Proposition 22 does not materially impact driver flexibility. In a recent email to Uber drivers, Khosrowshahi said, "With this vote, drivers and delivery people will get what so many of you have been asking for: access to benefits and protections, while maintaining the flexibility and independence you want and deserve."
The UC Berkeley Labor Center published a report which found that based on the specific stipulations of Proposition 22, workers will only be guaranteed $5.64 an hour. Loopholes in the proposition include that driver waiting time is not counted as work time, workers will have to pay both the employer and employees share of payroll taxes and driving expenses are vastly underpaid.
Many Uber drivers report making below minimum wage, and when people cannot get full-time work, they are sometimes pushed into gig work as the only available option. Especially during the pandemic, as millions across the state lose their jobs, unemployed people, or those who cannot access unemployment, turn to Doordash or Instacart.
“When you are starving, and you need to make money to pay rent, and to exist, you don't have flexibility, you work as much as you can,” Alva said. “And when you don't work, you sleep. That's it. And that is the life of many, many drivers, and they still end up living in their cars.”