Risk & Compliance

Gig Companies Win Victory With Prop 22 in California

The push to exempt gig workers from state labor laws was the most expensive ballot-measure campaign in state history.
Lauren MuskettNovember 4, 2020
Gig Companies Win Victory With Prop 22 in California

Gig economy companies won a battle to pass Proposition 22 in California, which classifies app-based drivers as independent contractors and not employees.

“With the passage of Prop 22, app-based ride-share and delivery drivers across the state will be able to maintain their independence, plus have access to historic new benefits, like a minimum earnings guarantee and health care,” the Yes on 22 campaign said in a statement.

Gig economy companies Uber, Lyft, Postmates, and DoorDash spent more than $200 million to push for passage of the proposition. Labor groups and some Democratic nominees raised $20 million to fight the proposition.

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Shares of Uber were up more than 12.5% on the news. Lyft’s shares were up nearly 11%.

Uber and Lyft have not achieved profitability despite multi-billion dollar market valuations. In August, the New York Times reported the companies were considering a model similar to traditional taxis under which they would license their brands to operators.

“The obscene amount of money these multi-billion dollar corporations spent misleading the public doesn’t absolve them of their duty to pay drivers a living wage, provide [personal protective equipment] to protect workers as the pandemic deepens, or repay taxpayers for the nearly half a billion these companies have cheated from our state unemployment fund,” Art Pulaski, executive secretary-treasurer of the California Labor Federation, said.

In August, San Francisco Superior Court Judge Ethan Schulman granted a request by the state to block Lyft and Uber from classifying employees as independent contractors.

At the time, Uber chief executive officer Dara Khosrowshahi said states should require companies to fund health benefits and paid-time-off benefits for gig workers.

Democratic Presidential candidate Joe Biden has said he would expand the National Labor Relations Act to include gig workers, making it easier for them to unionize.

Josh Edelson/AFP via Getty Images