OAKLAND, Calif. — Drivers and other workers for so-called gig economy companies in California will not become their employees.
California voters carried Uber and Lyft to victory, overwhelmingly approving Proposition 22, a ballot measure that allows gig economy companies to continue treating drivers as independent contractors.
Uber, Lyft and the delivery service DoorDash designed the measure to exempt the companies from a state labor law that would have forced them to employ drivers and pay for health care, unemployment insurance and other benefits. As a concession to labor advocates, the initiative offers a wage floor and limited benefits to drivers.
The Associated Press projected early Wednesday that Prop. 22 had carried 58% of the vote. Prop. 22 faced the strongest opposition in San Francisco, where Uber and Lyft have their headquarters, with more than a 19-point deficit.
The vote resolves the fiercest regulatory battle that Uber and Lyft have faced and opens a path for the companies to remake labor laws throughout the country. The fight pitted labor groups and state lawmakers against ride-hailing and delivery startups that spent $200 million in support of the measure.
In voting to support Uber and Lyft, Californians rejected the principles outlined in a 2018 state Supreme Court ruling and enshrined in a 2019 state law that said workers who performed tasks within a company’s regular business — and were controlled by the company and did not operate their own firms — must be treated as employees.
Under Prop. 22, gig workers are exempted from these rules and can continue to work independently.
The Yes on Prop. 22 campaign, backed by Uber, Lyft and DoorDash, celebrated the victory.
“California has spoken,” Geoff Vetter, a spokesperson for the campaign, said in a news release. “Prop. 22 represents the future of work in an increasingly technologically-driven economy.”
Uber’s stock jumped almost 15% Wednesday. Lyft shares were up 11%.
Uber’s chief executive, Dara Khosrowshahi, thanked drivers for the win in a late-night email.
“The future of independent work is more secure because so many drivers like you spoke up,” he wrote. He said Uber would make the new benefits promised by Prop. 22 available “as soon as possible.”
Emboldened by the election, Uber and other gig economy players are likely to pursue federal legislation to enshrine gig work in the nation’s labor laws.
The passage of Prop. 22 is a bitter loss for state and local officials who have long seen the ride-hailing companies as obstinate upstarts that shrugged off any effort to make them follow the rules.
Many local officials believed California was too gentle for too long when it came to regulating Uber and Lyft and naïve about how powerful and influential the companies would quickly become.
“For all too long, Uber and Lyft banked on the timidity of public officials throughout the country,” said Dennis Herrera, the city attorney of San Francisco.
“They said, ‘We’re not going to ask permission. We’ll sort of ask for forgiveness after the fact, once the horse has left the barn,’” he said.
Herrera has sued Uber and Lyft in an attempt to force them to employ their drivers, and the litigation continues.
Supporters applauded the outcome, saying drivers would be able to maintain their independence while accessing new benefits such as a guaranteed minimum wage and health care subsidies.
Don Pruitt, an accountant in Stockton, was relieved by Proposition 22’s passage because it will allow him to continue to drive for both Lyft and Uber, as well as handle deliveries for Postmates and Instacart, as he has been during the past three years whenever he isn’t busy filing taxes for his clients.
“If Prop. 22 had lost, I wouldn’t have been able to keep doing that to make extra money. I couldn’t work for all of them if I had to be an employee,” Pruitt said.
James Patterson, a Sacramento retiree who drove four years for Lyft but now does deliveries for DoorDash and Postmates, prefers the freedom of being able to make his own schedule.
“You can just work when you want and stop whenever you want,” he said. “And as someone who is retired, it’s nice to get a little supplemental income whenever you need it.”
Others viewed the development as a major setback for gig workers.
“It should be a good wake-up call for us all, across the country, if these companies think they can buy their way out of having to comply with basic labor laws,” said Shannon Liss-Riordan, a labor attorney who has been fighting for employment protections for app-based workers. “I’m worried about what these companies may try to pull off on a national basis.”
The Independent Drivers Guild, which represents more than 200,000 drivers in New York, New Jersey and Connecticut, called on state legislatures to quickly empower gig workers with collective bargaining rights.
“Proposition 22 leaves California’s gig workers with no representation, no collective bargaining rights, no path to negotiate a livable wage, and no ability to have a real voice in their pay and benefits,” said Brendan Sexton, the group’s executive director.
Edan Alva, a former Lyft driver, stopped driving during the pandemic because he was shelling out for disinfectant, risking his health and barely making money. He was hoping the proposition would fail, leading to better working conditions so he could consider driving again.
“Labor rights are human rights, and the fact that Lyft and Uber managed to basically trump human rights doesn’t mean everyone should give in,” he said.
Reporting by The Associated Press is included in this story.