California voters decide employment fate of state’s app-based drivers

(Getty Images)

California voters are behind the wheel as they navigate the employment future for Uber, Lyft and other app-based delivery drivers in the most expensive ballot measure in state history.

The $220 million question in Tuesday’s election could override lawmakers and the courts and determine whether the titans of the so-called gig economy will be able to keep drivers classified as independent contractors or have to treat them as employees eligible for benefits and job protections.

Proposition 22 was bankrolled largely by Uber and Lyft and aims to create an exemption to a labor-friendly law passed by the Legislature last year.

RELATED: The benefits and drawbacks of California Prop. 22

Opponents say the companies exploit drivers to keep profits high and the ballot measure would deprive workers of other rights.

Supporters say the measure would allow drivers to maintain the freedom to work hours they choose and would provide other benefits. Uber and Lyft, both based in San Francisco, have threatened to pull out of California if the proposition fails.

The gig economy powerhouses — with help from DoorDash, Postmates and Instacart — have collectively spent about $200 million on Proposition 22 vs. labor’s $20 million.

The spending, which doesn’t even account for $30 coupons Uber Eats and other services have been offering customers to promote their brands, will likely put future ballot measure spending on steroids, said political science professor David McCuan of Sonoma State University.

"What Prop. 22 does is it raises the tide of all ballot measures,” McCuan said. “It sets records that are just going to be blown past the next time. ... It makes the parallel route of direct democracy a playground that will be measured in the billions in a few (election) cycles."

If more than 50% of votes are in favor of the measure, drivers would remain independent contractors exempt from mandates for overtime, sick leave and expense reimbursement. Drivers would receive some “alternative benefits,” including a guaranteed minimum wage and subsidies for health insurance if they average 25 hours of work a week.

If the measure fails, drivers would be subject to the same labor laws as other workers covered by the landmark state labor law known as AB5, which was aimed at Uber and Lyft and provides job protections and benefits.

State Attorney General Xavier Becerra took the companies to court, claiming they were misclassifying their drivers as contractors in violation of the law. A state appeals court recently sided with a San Francisco Superior Court judge who said the new employment standards apply to the app-based companies.

Uber and Lyft argued in court that their drivers meet the criteria to be independent contractors, not employees. They also said the law didn’t apply to them because they are technology companies, not transportation companies, and drivers are not a core part of their business.

That ruling could be undone by the outcome of the vote, though further litigation is likely, and the companies said they might appeal the earlier rulings to the California Supreme Court.

Some Uber drivers recently sued the company for sending ads supporting Proposition 22 in the app they use, claiming they were subject to political coercion. But another San Francisco judge rejected a request to block the ads, saying such a move would infringe on the company’s First Amendment rights.

A nonpartisan poll released Oct. 26 indicated the race was tightening, with 46% of voters who were surveyed saying they had or intended to vote in favor of the measure and 42% planning to or voting no. An additional 12% were undecided.

The poll by the Institute of Governmental Studies at the University of California, Berkeley, had asked likely voters the same question in mid-September, with 39% saying they supported the measure, 36% opposed and 25% undecided.

McCuan said the polling tightened as the companies poured more money into the race.

"It shows how cost prohibitive or how expensive a vote is,” he said. “If it passes, it’s going to barely pass. It might be cheaper to send everybody a couple 20s in the mail along with their Uber Eats credit."

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