Uber, Lyft Win in California: Drivers to Remain Contractors

Matt Posky
by Matt Posky
uber lyft win in california drivers to remain contractors

Uber and Lyft stocks saw a bump this week after California passed a ballot measure that will exempt them (and similar businesses) from a state law requiring contracted drivers to be reclassified as employees.

App-based work platforms bent over backward and expended millions to ensure Proposition 22 passed in November, with many suggesting it was the only way to continue operations in the state. It seems those efforts weren’t for nothing. With over 80 percent of votes counted this morning, the California Secretary of State’s Office announced that 58 percent of voters supported the measure with 42 percent against. Ride-hailing platforms will be legally exempt from California’s Assembly Bill 5 and drivers will remain contracted employees.

Despite having spent a literal fortune ($200 million) on getting Prop 22 passed, the victory ensures firms like Uber, Lyft, Postmates, Instacart, and DoorDash will save millions in the state by nature of not having to issue the kinds of benefits to drivers. Previous estimates placed Uber alone saving nearly 80 million annually by not having to classify more California-based employees as … well, employees.

On the upside, those firms had been planning major staffing cuts had Prop 22 failed. Some outfits even suggested they’d have to abandon the state if they were forced to pay benefits e.g. unemployment insurance, minimum wage, healthcare, and workers’ compensation. But contractors are supposed to become eligible for smaller healthcare allowances and a minimum stipend based on hours worked under AB5, even with Prop 22 passing.

[Image: Jonathan Weiss/Shutterstock]

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  • RHD RHD on Nov 04, 2020

    The drivers got screwed. As "independent contractors", they pay 15.3% Social Security and Medicare off the top. They don't get compensation for driving to wherever their fare is waiting for them. They aren't independent of driving private taxis, because they desperately need the income to get by. All the Uber and Lyft drivers that I have spoken with make around the minimum wage, and all-too-often less than that. Uber and Lyft now can avoid paying worker's comp insurance and unemployment insurance. Why do they deserve those tax breaks? When someone gets badly injured driving, their insurance will have to foot the bill... and the driver's (and your and my) rates will go up. Too bad Uber and Lyft couldn't have spent that 200 million on making life just a bit easier for the workers who actually do the heavy lifting. When there's a ridiculous amount of money being spent on political advertising, the best thing to do is to vote against it. The manipulation is there to protect the interests of the wealthy, against the interests of the vast majority of the populace.

    • See 2 previous
    • Arthur Dailey Arthur Dailey on Nov 05, 2020

      @bullnuke And those who went to work in the match factories, or coal mines or asbestos mines, or uranium mines before employment laws were enacted to protect them also 'had a choice'. People take bad jobs because they need to. Employment laws are meant to protect those at the lowest rungs of society. Employment laws set 'floors' of minimum protections not ceilings. This 'proposition' removes many of those protections. And rewards companies that opened up and operated without any regard to existing regulations or rules. There is no 'freedom of choice' when competition is limited by globalization, access to capital and elected officials protecting the large corporations that help to fund their campaigns and retirements.

  • Cicero Cicero on Nov 04, 2020

    I'm betting that Singaporean rubber wasn't the OEM tire for that sled.

  • Inside Looking Out Inside Looking Out on Nov 04, 2020

    To those who are unhappy about passing prop.22. California is the most liberal state in USA. What are you unhappy about? Do you want California to be a communist dictatorship? Left wing liberalism is not good enough?

    • SD 328I SD 328I on Nov 08, 2020

      California is the most blue state, but their recent voting record on these propositions could be a who's who of a conservative vote. It's a state that overwhelmingly voted for Biden, most ethnically diverse, yet they stopped a prop that would have brought back affirmative action, prevented additional property taxes to businesses and sided with business in regards to worker benefits status. It's a blue state, but not quite left wing liberal, at least based on their most recent proposition results.

  • Inside Looking Out Inside Looking Out on Nov 04, 2020

    BTW we also killed prop.16: "Repeals a constitutional provision that made it unlawful for California's state and local governments to discriminate against or grant preferential treatment to people based on race, ethnicity, national origin or sex." Are you mad?

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    • -Nate -Nate on Nov 10, 2020

      @SD 328I I keep telling you this but the mouth breathers only want another place to hate, not truth, reality nor facts . -Nate