Californians passed proposition to let Uber treat drivers as contractors

A report by Reuters has revealed that projections from data collected by Edison Research suggest that Californains have backed a proposal by Uber and its allies to keep their drivers as independent contractors and not as employees.

State legislators had been keen to turn them into employees, however firms like Uber and Lyft were against the proposals, known as Proposition 22. They were so against the idea, that they had actually threatened to leave the state if they had lost.

The business model has been subject of a huge legal battle for a number of years, however it seems it has the backing from the majority of the Californian public. The companies had previously argued that it would ensure the flexibility for a new generation of workers who want to choose what shifts they do and when they do them, thus providing an opportunity to create a healthy work-life balance.

Opponents, though, saw this argument as a way for the companies involved to avoid paying out around $400 million in employee-related costs as they felt it was a way to exploit the workers that were hired; something many workers will likely feel as well.

Uber, Lyft, DoorDash, Instacart and Postmates all poured over $205 million into the campaign to fight their battle, with some of those having threatened to shut down their operations in California if they had lost their argument.

According to the Edison Research, figures had shown that 58% were in favour of the proposition to treat drivers as independent contractors, whilst 95% of precincts in the state had shown some reporting.

This proposition all stemmed from the fact that Californian lawmakers wanted to bring into law a rule that required companies to control how workers do their jobs and to classify them as employees of the company.

However, the likes of Uber and Lyft complained and rejected the law as they said it should not apply to them as they are technology platforms, not hiring entities and that their drivers control how they work. A number of threats were made, with examples being cutting 80% of their drivers, doubling prices or leaving the state altogether. Bettors could also do this if betting operators were to make decisions before customers can take advantage of the free bets they may have been offered.

If passed, the ruling would mean these companies would have to fork out millions of dollars on things such as paying employees minimum wage, unemployment insurance, health care and workers’ compensation.

California is thought to represent 9% of their total rides in 2019 – working out to around $1.63 billion – whilst Lyft’s percentage was closer to 16%.

However, the Sunny state is not the only battleground for these ride-hailing companies to be concerned about, as they face stiff opposition from the east coast as well.

Both Massachusetts and New York are challenging gig companies’ labor policies as well, whilst they lost a case in Europe as they were told they would need to be regulated like a taxi service and not a technology service.