Last week’s election produced a crisp result in at least one high-stakes contest: California voters approved a ballot measure that exempts companies like Uber and Lyft from having to treat workers as employees.
The measure freed the companies from a 2019 state law that entitled workers to protections like overtime pay, sick leave and unemployment benefits and could have upended the gig economy business model. As a result, Uber, Lyft and other similar businesses appeared to be on the ascent. The two companies’ stock market value increased by roughly $20 billion in the week after the election, and executives indicated that they would seek to replicate their political gains elsewhere.
“Going forward, you’ll see us more loudly advocate for new laws like Prop. 22,” Uber’s chief executive, Dara Khosrowshahi, said on a call with financial analysts last week, referring to the successful ballot measure, which also granted workers health care subsidies and a minimum pay rate.
But the question of gig workers’ labor status remains largely unresolved nationally — with a series of pitched battles likely to ensue between gig companies and labor in Washington and in state capitals, and even among unions that disagree over the importance of employee status.
Those battles may well begin in California. In the days since the election, several worker groups have scrutinized the ballot measure, which is likely to take effect in December, for weaknesses that they could use to challenge it in court.
“A lot of smart lawyers are looking at it,” said Brian Chen, a lawyer at the National Employment Law Project, which advocates on behalf of gig workers and other low-wage workers.
Chen’s group has been discussing the measure’s constitutionality with other progressive groups, some of whom may bring a court challenge. He cited its requirement that any future change must pass the Legislature with a seven-eighths majority as legally dubious because it may overly restrict the state’s ability to regulate collective bargaining, though other ballot measures have included similar restrictions.
In addition, Uber and Lyft continue to face a lawsuit brought in May by the state attorney general and three city attorneys, contending that the companies illegally classified drivers as contractors, and two similar lawsuits brought against Uber and Lyft by the state’s labor commissioner in August.
Representatives for agencies involved in the cases said that the ballot measure doesn’t eliminate the companies’ liability for how they treated workers before it takes effect. Assemblywoman Lorena Gonzalez, author of the state law that the companies are accused of violating, echoed that view.
“I do believe they are on the hook for years of past wage theft to the drivers,” Gonzalez said. “Sure, Prop. 22 was enacted, but before that, they were breaking the law.”
All of this has tempered the celebration over an otherwise clear win among the gig companies, according to one company official involved in the ballot measure who was not authorized to speak on the record.
John Zimmer, president and co-founder of Lyft, said in an interview that he hoped to resume negotiations with labor unions. Last year, his company and Uber had discussions with unions about a deal that would give gig workers benefits like paid time off and bargaining rights but would stop short of full employment benefits — traditional unemployment insurance and overtime pay likely among them.
“We believe we should communicate with labor leaders and policymakers and stop the sparring back-and-forth,” he said. “Nobody wins in that situation.”
In other states where labor groups have significant sway, workers and unions have said they intend to continue pressing for significant concessions from the companies.
Regulators or courts in New York, Illinois and New Jersey have found that at least some drivers must be considered employees for the purposes of eligibility for unemployment insurance. The attorney general of Massachusetts sued the companies this summer for misclassifying drivers under a state law that is similar to the law that Uber and Lyft fought in California.
Uber and Lyft have held discussions with labor groups in New York, where Gov. Andrew Cuomo has suggested a compromise in which gig companies that granted bargaining rights to drivers could be exempted from classifying them as employees. But the pandemic stalled those discussions for several months. Since then, New York drivers have won a federal court ruling requiring the state to pay them the unemployment benefits accorded to employees.
“Tens of thousands of drivers in New York state, who as independent contractors were getting hundreds of dollars less, as employees are entitled to up to $504 a week,” said Bhairavi Desai, executive director of the New York Taxi Workers Alliance, which helped bring the lawsuit. “The state would have to roll back a right that people have already enjoyed.”
The victory of President-elect Joe Biden also appears to have given labor additional leverage. The National Labor Relations Board under President Donald Trump has deemed gig workers to be contractors, which denied them a federally protected right to organize. The Labor Department has taken a similar approach, suggesting in an opinion letter that some gig workers were not protected under federal minimum wage and overtime laws. In September, the department proposed a regulation that would codify and expand that finding.
But under Biden, who has long-standing ties to labor unions and who opposed Proposition 22, the labor board and the Labor Department are likely to back away from these positions. The president-elect has also come out in favor of the Pro Act, a proposal that would make it harder for companies to misclassify workers as contractors and effectively make gig workers employees under federal labor law.
The situation in Washington is not entirely clear-cut, however. Some advisers to Biden and Vice President-elect Kamala Harris also have ties to the gig companies or have written favorably about a compromise. Harris’ brother-in-law is Uber’s chief legal officer. Some labor activists worry that the Biden administration could be amenable to a deal with gig companies.
“We are trying to lead the way in California, but it is necessary to deal with misclassification on a national level,” said Gonzalez, the assemblywoman. “I am hopeful that Joe Biden will do what his platform said and address these issues.”
The ultimate outcome in this fight could hinge on a sometimes-bitter debate on the left: Is it essential for gig workers to enjoy the status of employees and the benefits and protections that guarantees? Or can gig workers win a living wage and favorable working conditions if they aren’t employees but have collective bargaining rights that allow them to demand these things from the gig companies?
Brendan Sexton, executive director of the Independent Drivers Guild, an organization affiliated with the International Association of Machinists that has received funding from Uber and Lyft, has argued in testimony before the New York Legislature that “collective bargaining rights is the only way to stop the exploitation.”
Prominent labor experts have echoed this point, and it appears to have gained traction among unions in California, where a split within labor torpedoed a possible deal on gig work last year.
At the time, the state’s powerful building trades union opposed a compromise that California affiliates of the Teamsters and Service Employees International Union had discussed with the companies. Earlier this week, however, the president of the state building trades council, Robbie Hunter, confirmed through a spokesperson that he is open to such a compromise if the Teamsters sign on.
But other activists and union officials remain deeply skeptical of settling for anything less than full employment rights, including Sean McGarvey, president of the North America’s Building Trades Unions. McGarvey called gig work “a breeding ground for the underground economy” in an email.
Cherri Murphy, a Lyft driver and organizer with Gig Workers Rising, a group that opposed Proposition 22, said, “Drivers in California are riled up to ensure we get our fundamental rights met in a Prop. 22 world and that we keep fighting for protections equal to those granted to other workers.”
Some labor leaders and activists argue that in a world with bargaining rights but not employee status, workers would spend all their time negotiating to win the basic protections that the law already grants employees. The point of a union, they say, is to win additional benefits.
“A labor organization in this context is not going to get you to where a union normally gets workers,” Desai said. “If the new role of a labor organization is to get workers to just minimum wage, then, you know, what good are they?”