Enlarge / Uber signs are seen August 20, 2020 at Los Angeles International Airport in Los Angeles, California. – Rideshare service rivals Uber and Lyft were given a temporary reprieve on August 20 from having to reclassify drivers as employees in their home state of California by August 21. (Photo by Robyn Beck / AFP) (Photo by ROBYN BECK/AFP via Getty Images)

Robyn Beck | Getty Images

California voters’ decision to let Uber and other gig economy companies continue to treat their workers as independent contractors has dealt a crushing blow to campaigners and legislators and paved the way for the companies to remake labour laws across the US.

Voters in the state overwhelmingly approved Proposition 22 on Tuesday, exempting the companies from a new employment law passed last year. As a result, drivers in the state will not be classed as employees but can draw upon limited healthcare provisions and will earn a minimum rate of pay.

The victory paves the way for similar legislation to be put in place across the US where, according to research from the investment bank Cowen, as many as 17 states are considering how to regulate the gig economy.

“California will certainly embolden them to try this kind of gambit as a way of protecting their business model,” said Professor David Weil, dean of the Heller School for Social Policy and Management at Brandeis University. “I think it’s clear that they have chosen to try different instruments of public policy to allow themselves to continue to be exempted from employer responsibilities.”

California’s verdict came after months of fiery campaigning, with gig companies able to outspend the opposition by a ratio of about $10 to $1.

“My heart is heavy,” said Cherri Murphy, a rideshare driver and activist from Gig Workers Rising, in a video response posted on Twitter on Wednesday. “These corporations spent over $200m on a corporate misinformation, deceptive campaign to rig our democratic process and to continue their exploitation of working people. It is a blasphemy and a sin.”

Other opponents of the gig companies, who have mobilized in key markets across the US, admitted a painful defeat but held out hope that the labour movement would be re-energised if there is a change of power in Washington.

“It was always going to be a long fight,” said William Fitzgerald, a former Google worker turned campaign co-ordinator for gig worker groups. “Three years ago, people said you couldn’t organise gig workers. Now you’ve got a broad-based coalition. The whole top of the Democratic ticket all stood with gig workers.”

The group said it would hold a debrief on Thursday to discuss next steps.

In California, though, the immediate battle is mostly over: the office of California’s state attorney-general said it was still “reviewing” the result to determine how to proceed in its ongoing worker classification lawsuit against Uber and Lyft, in which, had Prop 22 failed, the state was almost certainly going to win.

There remain a number of cases that will continue despite the setback.

In Massachusetts, the state’s attorney-general has sued Uber and Lyft over worker classification—a case that will be unaffected by California’s decision. Other measures could come into play in New York, Oregon, Washington state, New Jersey and Illinois.

In response, the companies have tried to strike a conciliatory tone with unions, following a highly divisive Prop 22 campaign that was marred by vicious online sparring and accusations of foul play.

“We’re ready to work with labour leaders and others to continue to build a stronger safety net for workers,” said John Zimmer, Lyft’s president, speaking to the Associated Press.

Tony Xu, DoorDash’s chief executive, said his company was “looking ahead and across the country.”

Dara Khosrowshahi, Uber’s chief executive, told the Financial Times prior to the vote that Prop 22’s passing would begin a process of Uber proactively working with states, seeking to avoid the prolonged court battles it has seen in California. “I’d like to spend less time in court if I can help it,” he said. “I think we are going to use this as an outline for a dialogue that we have on a local basis.”

Prof. Weil, a former labour department official, said the fight could now hinge on national legislation. The Fair Labor Standards Act, which offers its own definition of what entails an employee-employer relationship, could override state laws, for example. A week ago, Uber pushed to carve out exemptions related to its business. A Joe Biden administration, suggested Prof. Weil, might be less amiable to the suggested changes.

“The Act could still be something that would subject Uber and Lyft, and those kinds of platforms, to obligations as an employer,” Prof. Weil said. “That could certainly happen, and I’m sure that’s not lost on those companies.”

But Moira Muntz, from the New York City-based Independent Drivers Guild, said she believed workers would perhaps now be best served by focusing attention on matters of representation rather than employment status—at least until such time when a broader reform of the law in the US is enacted.

“We would encourage state legislators all over the country to take notice of what happened in California, and take steps now to give gig workers the right to bargain for a labour contract,” she said. “State legislatures have the power to create a right to unionise, the right to collectively bargain for gig workers. We are urging them to do so and to do so quickly.”

The guild, part of the influential Machinists Union, was able to negotiate rideshare drivers a tipping option within the apps and later a $27.86 an hour minimum wage, $17.22 after expenses.

In contrast, Prop 22’s promise of a $15.61 minimum could, according to one Uber-disputed study, come out as low as $5.61 an hour, after factoring in expenses and waiting periods, which are unpaid.

Such calculations will move from theory to reality for hundreds of thousands of rideshare drivers across California in the coming weeks. Those new conditions, critics say, may provide the most powerful campaigning tool yet. “We’re eager to see the receipts at the end of the month,” Mr. Fitzgerald said.

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