A Blow for Labor Rights in California

A Blow for Labor Rights in California

Gig workers were barely scraping by even before companies like Uber spent $200 million on the successful campaign to pass Proposition 22. Now, two paths lie ahead: one paved by corporate cash, and the other blazed by the workers behind the wheel.

The “gig economy” has long operated at the outer limits of the labor force, but in California—where Silicon Valley’s work platforms loom large—gig work is front and center on the political stage. On Tuesday, after weeks of media coverage, California voters approved Proposition 22, a ballot initiative that effectively hands massive rideshare and delivery companies the power to strip away labor rights from their drivers.

Labor advocates see the measure as a sharp blow to recent progress made in enshrining legal protections for gig workers—including not only rideshare drivers but various freelancers like writers and musicians. Prop 22 asked voters to exempt rideshare and delivery drivers from a recently enacted landmark law, AB 5, which raised the bar for determining whether a worker is an employee of a company, or just an independent contractor—a pioneering attempt to prevent worker misclassification by applying a stricter test of the extent to which employers exert control over workers’ labor conditions. The ballot initiative comes in a year of economic devastation for Uber and Lyft drivers who have seen business dry up due to the pandemic and statewide lockdowns.

Last week, Nicole Moore, a part-time rideshare driver and activist with the advocacy group Rideshare Drivers United (RDU), was hopeful that Prop 22 would be defeated. She told me, “We’re banking that when people . . . see that Prop 22 exempts companies like Uber and Lyft from basic labor rights, that they will vote no, because people will know at this point, as much as we love the service of Uber and Lyft, they’re not treating their drivers right.”

After Prop 22 won with 58 percent of the vote, Moore said, “we will absolutely fight it. We will fight it in the courts. We will fight it with new laws. We will fight it the way drivers have been most successful, which is with shoe leather and picket signs. We will continue to have a ground fight.”

Drawing on an earlier court ruling in a labor rights case known as Dynamex, AB 5’s “ABC test” undermined the basic profit structure of app-based gig companies. The law would force gig companies to treat drivers as employees, with basic benefits like minimum wage and overtime, unemployment insurance, and social security and other payroll taxes. Prop 22 undermines AB 5 by deeming rideshare and delivery drivers independent contractors, while offering some limited regulations—but well short of what state labor law would offer.

AB 5 sent the gig giants into a panic. In August 2019, weeks before Governor Gavin Newsom signed it into law, a coalition of apps—DoorDash, Lyft, and Uber—plunked $30 million each into a ballot initiative campaign to repeal and replace the legislation. While warning that AB 5 would kill their business, the companies’ main argument for Prop 22 was the notion of “flexibility”—the supposed ability of drivers to choose when and where to work. What this leaves out is that many drivers work extremely long hours with no benefits and barely scrape by thanks to low, and in many cases declining, earnings per ride or delivery.

Prop 22 offers “a net earnings floor based on 120 percent of the minimum wage,” and partial subsidies of healthcare insurance premiums based on the number of hours worked. However, many of these benefits would be pegged to the driver’s “engaged time”—the time spent picking up and shuttling a passenger or completing a delivery. That leaves out a huge chunk of typical drivers’ work time, ignoring routine tasks like pumping gas, waiting for a ride request to pop up on their phones, or wiping vomit from the backseat after dropping off a drunk passenger who didn’t tip.

The main purpose of the initiative is to establish explicitly that gig drivers are, as independent contractors as opposed to employees, unprotected by standard labor laws.

Under the current system, Moore said, “Drivers are still living on life’s edge, having to be late on payments for rent, having to skimp on whatever food they have to feed their family. We’re not getting the rides that we need, we’re not getting the money that we need. It’s not even minimum wage after we pay our expenses.” She said Prop 22 would make drivers’ lives even more precarious. “What [Uber and Lyft] have codified is actually worse than what they are currently paying us and is certainly worse than basic labor law, which is honestly a very low bar.”

RDU estimates that Prop 22’s rules for benefits and wages would leave drivers earning as little as $5.64 an hour—less than half the state’s minimum wage—after factoring in waiting time and related expenses, maintenance costs that the driver must shoulder on their own, and unpaid payroll taxes and employee benefits.

Another twist of the knife for labor is that, once Prop 22 is on the books, a direct repeal is virtually impossible, requiring a vote by seven-eighths of the state legislature.

The gig companies’ victory on Prop 22 is especially stunning in the wake of a recent court injunction in California that effectively ordered Lyft and Uber to reclassify their drivers as employees. (On the other hand, the General Counsel of Trump’s National Labor Relations Board and federal Department of Labor have both sided with the gig platforms, asserting that their workers are contractors and thereby exempt from federal labor and employment regulations.)

The gig companies invested a record-smashing $200 million into selling the measure to voters—a small price to pay to preserve their global business model. Though the opposition campaign was backed by a coalition of unions, community organizations, and federal and state elected officials, it was outspent by about ten to one, and its social media and phone-banking messages were easily eclipsed by the “Yes” advertising blitzkrieg (spending on Facebook ads alone topped what either major-party presidential campaign had spent in the state). Drivers were bombarded with advertisements on their own platforms; this messaging, which relentlessly promised that Prop 22 would protect “flexibility” and independence, triggered an unsuccessful legal challenge from aggrieved workers.

Moore believes voters were misled by the Yes campaign’s propaganda: “Uber and Lyft painted Prop 22 as a civil rights and working people’s law . . . People voted thinking they were doing the right thing . . . it’s the costume that Lyft and Uber put around Prop 22.”

Following a longstanding pattern of rideshare companies lobbying fiercely against state regulations, Uber has boasted that it plans to spread the Prop 22 model nationwide. But across the country, there is mounting grassroots pressure from drivers and their advocates for policies to force gig companies to pay their fair share of wages, benefits, and taxes. Since the pandemic sent rideshare revenues plummeting earlier this year, RDU has been pressing Uber and Lyft to pay drivers unemployment benefits, which they are claiming despite their disputed legal status. Labor groups and officials have launched numerous lawsuits against rideshare companies with mixed success. New York City and, just recently, Seattle have attempted to curb rideshare platforms’ expansion by setting minimum-wage standards specifically for app-based drivers. Consumers, lawmakers, and drivers now face two diverging paths forward: one paved with corporate cash, and the other blazed by the workers behind the wheel.

“We are clear that drivers cannot be second-class workers,” Moore said. “If we’re going to succeed in the future of work, we’re going to succeed because we have basic labor standards as a country—unless you’re a legitimate independent contractor, those rules apply to you—and that we are raising that bar together. . . . These are basic safety net benefits that other countries have figured out and are just expected. We’re still struggling for those things.”

Michelle Chen is a member of Dissent’s editorial board and co-host of its Belabored podcast.