The companies have built up massive fleets of workers over the years by treating them as independent contractors, who are paid on a gig-by-gig basis. But a new law which went into effect this year in California, threw a wrench into the model.
Richert, who is based in Southern California, said that, while he hasn’t driven since the onset of the pandemic for fear of contracting the coronavirus, he frequently checks the apps when there’s messaging about the importance of passing Proposition 22, or Prop 22 as it’s commonly called. When he flips on the television, he sees ads sponsored by the campaign touting the flexibility of the job, a perk which is popular with workers and the companies claim is contingent on maintaining their independent contractor status.
“This is an all-out battle royale to make sure they are ultimately victorious,” Daniel Ives, an analyst at Wedbush Securities, told CNN Business. “If it falls by the wayside, there are going to be serious business model changes to the gig economy.”
If the ballot measure fails to pass, the market for ride hail and delivery drivers could drastically change, according to Yes campaign spokesperson Geoff Vetter to CNN Business by email. It could mean their services would become more expensive for consumers and that the companies would employ just a fraction of the drivers who are on the road today, Vetter said. Those workers would have stricter schedules and wouldn’t be able to just turn on their apps and work whenever they want, according to the Yes campaign.
“Do you believe for one second that these companies are spending $180 million on a ballot measure that’s going to benefit drivers more than it benefits Uber-Lyft-DoorDash’s bottom line?” he said.
Veena Dubal, a labor law professor at University of California, Hastings, and a vocal advocate for labor rights, told CNN Business that the implications for labor could be much broader than the drivers covered by Prop 22. “There is a strong likelihood that if [Prop 22] passes, it would create lower labor standards across the board for the delivery and logistics industry.”
What will Prop 22 do
The law has proven to be a thorn in the side of gig companies.
In May, the California Attorney General and a coalition of city attorneys sued the best-known companies — Uber and Lyft — accusing them of misclassifying drivers as independent contractors and depriving them of protections they would be entitled to as employees.
A Lyft spokesperson said it is “looking forward to working with the Attorney General and mayors across the state to bring all the benefits of California’s innovation economy to as many workers as possible.”
It also includes a health care contribution from the company for certain qualifying workers, also based on “engaged time.” In lieu of worker’s compensation, it offers capped benefits for medical and disability in cases of on-the-job injuries.
Critics of Prop 22 argue it undermines the spirit of AB-5, which is intended to ensure workers aren’t exploited by gig companies. Notably, for its concessions, Prop 22 does not offer explicit protections such as workers’ compensation, unemployment insurance, family leave, or sick leave, or allow workers to unionize.
“Here we are in a pandemic and the drivers — who have by definition exposure to the public — are being denied sick pay,” said William Gould IV, a law professor at Stanford University and former chairman of the National Labor Relations Board. “To me, it is scandalous.”
What about flexibility?
“Uber’s incentive as an employer, then, would be to limit the number of employed drivers, hiring fewer drivers to each do more trips, and requiring them to work a certain number of hours (but likely preventing them from working overtime),” Stein wrote.
In a statement, Lyft spokesperson Julie Wood said the company is “fighting to provide drivers independence plus benefits with Prop. 22 in California.”
Instacart and DoorDash referred requests for comment to the Yes on 22 campaign. Uber and Postmates declined to comment for this story.
Expect a fight: ‘It’s a nailbiter’
So far, the impact of the aggressive campaign on both sides remains unclear.
“It’s a nail biter; and that’s why they’re aggressively going after this from a resource perspective,” Wedbush’s Ives said of the Yes campaign.
In a press release, the No campaign said the spot “drives home for voters how the deceptive Prop 22 was written by Uber, Lyft and DoorDash to deny their drivers benefits.”
Tim Rosales, a California-based political strategist, said that “money does not always equal success” when it comes to ballot initiatives.
“David can absolutely beat Goliath,” he said, adding that “passing an initiative is always much more difficult than opposing an initiative.”
According to Rosales, a ‘Yes’ vote typically requires a full buy-in on the issue being raised, whereas highlighting one red flag in a proposition can get someone to oppose an initiative. “A ‘No’ side can do a lot with much less money in order to defeat an initiative.”