Dara Khosrowshahi, chief executive officer of Uber Technologies Inc., speaks in an interview in Tokyo, Japan, on Wednesday, July 3, 2019.
Akio | Bloomberg | beautiful images
California voters decided on Tuesday that Uber and Lyft should be exempt from state labor laws to make their drivers an employee rather than a contractor, as predicted by NBC News.
Voters have called for California̵7;s Proposition 22, a voting measure that has essentially become one of Uber and Lyft’s last hopes in the state to keep operating as it is.
The proposal will allow drivers for trucking and delivery companies based on the application to be classified as independent contractors in many cases. While that would ineligible them for employee benefits, it also allows drivers to enjoy new benefits such as minimum income and car insurance.
A number of contract economy applications have backed the measure, including Uber, Lyft, DoorDash, Instacart and Postmate, which Uber is acquiring. Support from these companies has raised nearly $ 203 million in support of the measure, while competitors have raised less than $ 20 million, according to data compiled by Ballotpedia.
Democratic presidential candidate Joe Biden opposes the measure. Biden tweeted in May that Californians should vote no on the initiative and said, “The giants in the performance economy are trying to circumvent the law and make exemptions for their workers. that is not acceptable. “
While Uber and Lyft were able to raise a lot of cash from venture capitalists while privately owned and valued billions of dollars in the public market, both are not profitable. That makes the contractor-driver model particularly important for businesses, allowing them to avoid costly employment-related benefits, such as unemployment insurance.
Firms have warned that they may have to pass the increased cost of reclassifying workers to consumers. Uber estimated in a blog post earlier this year that it would have to increase ridership prices by 25% to 111% in California areas to cover costs.
The New York Times reported in August that both companies are considering a fleet-like model, similar to a traditional taxi. Under that model, companies will license their brands to operators such as franchises, according to the Times.
This proposition also holds important implications for DoorDash and Instacart, both of which are preparing to go public. Like Uber and Lyft, these companies also rely heavily on contract workers for their delivery services. If Proposition 22 does not go through, companies may worry about potentially larger costs of hiring workers as employees.
Critics such as Rep. Ro Khanna, D-Calif., Have said that there is no document in current labor laws that prevents Uber and Lyft from providing drivers with flexibility while classifying them as employees. . Companies objected that the logistics of such a model would not be guaranteed because it would be too difficult to track uptime.
Companies faced setback in August when a trial judge issued a preliminary order forcing them to reclassify their drivers as employees, although that ruling is yet to come. take effect when the case is proceeded according to legal process. The fate of the lawsuit remains unclear when the ballot measure has been passed.
Representatives from Uber, Lyft and the California attorney general’s office did not immediately respond to requests for comment
XEM: Uber, Lyft spent millions of dollars on campaigning to protect their businesses in California