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.
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]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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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.
I'm betting that Singaporean rubber wasn't the OEM tire for that sled.
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?
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?