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Uber and Lyft Stocks Soar as California Overturns Protections for Gig Workers

Proposition 22 overturns a California state law that required gig workers to be treated as employees with benefits.

An Uber driver looks up from his phone at the LAX Airport in California on August 20, 2020.

Californians handed a major loss to labor unions on Tuesday night in voting to pass Proposition 22, which allows companies like Uber and Lyft to continue classifying their drivers as independent contractors instead of employees.

Early in the night, the Associated Press called the measure. With 72 percent reporting, 58 percent of the people have voted to pass the proposition.

If the proposition hadn’t passed, the companies would have been forced to treat their drivers as employees, which would upend their entire business model. Gig workers and unions were hoping for stronger workplace protections under employee classifications. Benefits from employee classification include such measures as minimum wage and health insurance.

Uber, Lyft, Postmates, DoorDash, Instacart, and others operating on the gig worker model staged a massive effort to pass Prop 22, deploying a record number of lobbyists, sending voters misleading mailers, and spending over $200 million on their Yes on Proposition 22 campaign.

In court battles preceding the vote, Uber and Lyft threatened to leave California when a judge ordered the companies to classify their drivers as employees. They were granted a reprieve shortly afterwards although activists were skeptical that Uber and Lyft would make good on their threat given that two out of their three most profitable centers are in California.

The measure could have vast implications on how the gig economy is conducted across the country as other states and cities look to Prop 22 for how to handle this same issue. Labor advocates were hoping that upholding the workers’ classification as employees in California would lead to creating fairer conditions for gig workers across the country. As it stands now, Edward Ongweso Jr. writes for Vice, the proposition amounts to these massive tech companies “trying to steal protections from drivers.”

These protections would have been a boon for workers, especially during the global pandemic. With the threat of COVID-19, many drivers were not working due to fear of contracting the virus or were having trouble getting business at all. One man in California died from the virus, possibly having contracted it from driving for Uber to support his family in dire times. Because he wasn’t classified as an Uber employee, as the L.A. Times reports, his family’s request for worker compensation from the state was denied.

Another concern over the passing of Prop 22 among labor advocates is the demonstration of the ability of a corporation to invest heavily in a measure that benefits them.. Uber and Lyft stocks were both up Wednesday morning, and In These Times labor reporter Hamilton Nolan remarked “Uber and Lyft invested around $200 mil in a ballot measure to minimize labor costs and have gained around $8 billion in value in one day as a result. That’s how democracy works folks.”

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