Uber, Lyft eager to take California labor win nationwide

Uber and Lyft are celebrating a major ballot measure victory in California, and they’re looking to notch similar wins nationwide that could formalize labor classifications for gig workers.

Passage of Proposition 22 in California effectively exempts gig companies from a state law aimed at providing gig workers with the same kind of benefits for employees: minimum wage, health care and the right to organize.

Top executives at Uber and Lyft are signaling a desire to replicate those exemptions in other states.

“Going forward, you will see us more loudly advocate for new laws like Prop 22, which we believe strike the balance between preserving the flexibility that drivers value so much, while adding protections that all gig workers deserve,” Uber CEO Dara Khosrowshahi said during an investor call Thursday.

“We want to have a dialogue with governments [in] other states,” he added.

Anthony Foxx, secretary of Transportation in the Obama administration who’s now chief policy officer at Lyft, expressed a similar desire to export the ballot measure.

“Ideally, now that this issue has been resolved in California we can have a broader conversation about how to replicate something like Prop 22,” he said Wednesday in an interview with The Hill.

The ballot measure was a last ditch effort by gig companies — DoorDash, Postmates, Instacart and the ridesharing giants — to avoid having to classify their drivers as employees and subsequently extend worker benefits.

The companies spent more than $200 million in support of Proposition 22 and won with 58 percent of voters backing the measure.

The ballot measure was a response to a state law that sets standards for when workers can be considered independent contractors, the classification preferred by Uber and Lyft for their drivers.

The companies initially balked at compliance, arguing that their core business model is technology rather than ride-hailing. California Attorney General Xavier Becerra (D) later won a court ruling compelling Uber and Lyft to comply with the law. Both companies threatened to suspend all operations in California before winning a brief reprieve.

That court case is now functionally moot, although legal experts who spoke to The Hill noted that Uber and Lyft may still be liable for back wages before the ballot measure takes effect.

Proposition 22 promises drivers 120 percent of the minimum wage and a health care contribution equivalent to either 50 or 100 percent of the employer-provided average under the Affordable Care Act. Benefits will be calculated based on a driver’s active time, meaning compensation will still be below what they would have received under the state law.

Despite those concessions, opponents argue that the ballot measure establishes a sub-employee level that will hurt drivers.

“The second class status is from some ‘Neverland’ between having established labor rights and being an independent contractor,” said Nicole Moore, a Lyft driver and organizer with the 20,000-strong Rideshare Drivers United.

Others have criticized the effect of corporate influence on labor laws.

“The fact that employers can spend so much money to change the employment law so that they are exempted from it is simply remarkable,” University of Buffalo professor Erin Hatton told The Hill.

The first focus of the gig companies in their effort to enshrine wins like Proposition 22 is likely to be at the state level.

New York has been weighing legislation that would similarly compel gig workers to be classified as full employees, but momentum on that legislation was derailed by the coronavirus pandemic. Officials in the state may shy away from pushing that again after witnessing the success of Proposition 22, but doing so would likely face opposition from gig companies.

Uber and Lyft have refused to comply with a labor law in Massachusetts that’s similar to the one in California they successfully sidestepped. They could decide to advocate for exemptions just like they did in California if a pending legal challenge goes against them.

Gig companies could also try to push legislation at the federal level.

Khosrowshahi earlier this year sent a letter to President Trump urging him to push a “third way” worker classification that could let Uber maintain the flexibility of having independent contractors while adding some basic worker protections.

That request never materialized into a federal measure, and a Biden administration is unlikely to be receptive.

Democratic nominee Joe Biden and his running mate, Sen. Kamala Harris (D-Calif.), both came out against Proposition 22, siding with organized labor groups.

“Vice President Biden has alluded to wanting to build back better and protect workers … having a strong antitrust competition policy and labor law. All of this is part of that equitable economic recovery,” said Morgan Harper, senior adviser at the American Economic Liberties Project, an advocacy group focused on fighting monopolies and corporate power.

Labor legislation passed by the Democratic-controlled House earlier this year could also pose a challenge to gig companies. The PRO Act would have set a similar employee test to the California law at the federal level.

That bill could be reintroduced next Congress, but it would still face slim odds of passing Congress if Republicans keep their majority in the Senate.

Debates over independent worker classification have been around for decades, and the passage of California’s ballot measure could encourage more industries to experiment with contractors.

Stanford University law professor emeritus William Gould, a labor lawyer whose research focuses on the gig economy, said “any number of industries where companies have in the past misclassified workers” like construction, nursing or trucking could be emboldened to push for similar exemptions.

“This will only promote this kind of process,” he told The Hill. 

Regardless of where gig companies try to go next with their employment model, they are sure to face opposition from organized labor.

“Drivers are absolutely committed to continue this fight: employment rights are non-negotiable,” Moore said.