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Uber and Lyft keep their eyes on other states

A driver and passenger wear a mask as Uber and Lyft drivers together with Rideshare Drivers United and the American Association of Transportation Workers conduct a ‘caravan rally’ outside the California Labor Commissioner’s office amid the coronavirus pandemic April 16, 2020 in Los Angeles, California.

Mario Tama | beautiful images

Uber and Lyft have headed to California, with voters backing their Prop 22 ballot measure.

Prop 22 would exempt these and other “performing economy”

; companies from a law that required them to treat drivers and delivery staff as employees. Instead, they will be able to continue to treat them like independent contractors, helping the company save money on employee costs like sick day pay, unemployment insurance and health care. .

Shares in both Uber and Lyft jumped more than 10% on Wednesday following an expected win.

Now, companies and labor advocates will turn their attention to other states with similar changes in labor law.

Uber CEO Dara Khosrowshahi even urged President Donald Trump and US lawmakers to consider a “third way” to classify drivers, similar to what Prop 22 offers but at an inter-level. state. This proposition allows companies to provide drivers with partial benefits, such as a minimum base wage that is higher than the federal minimum wage and a health care allowance for some dependent drivers. on the average number of hours they spend driving or delivering each week.

Both companies, along with delivery companies DoorDash, Instacart and Postmate, which Uber plans to acquire, have poured millions into an effort to support $ 203 million, breaking records for an initiative. The only campaign in the state. The opposition has raised only about $ 20 million, despite drawing support from Democratic presidential candidate Joe Biden.

Critics point out that ride-hailing and food delivery companies’ spending is a sign of the company’s excessive influence. The companies claim they are advocating an approach many of their own drivers and delivery staff support.

Now that voters have considered, much of the attention will turn to policymakers looking at labor reform or with their own AB5-style laws on the book, like New York and Massachusetts.

Proposition 22 does what and why it wins

Prop 22 countered a recent California labor law called AB5, which codified a three-part test to see if an employee should be considered a contractor or employee.

Lawmakers pro-AB5 hope it will make contract economy firms like Uber and Lyft classify drivers as employees, which will require them to pay for things like benefits and unemployment insurance.

Uber and Lyft made changes before the law went into effect to provide drivers with more flexibility, which they claim will make them comply. But California’s attorney general sued the companies, alleging that they weren’t doing enough to pass the new labor test. A trial judge issued a preliminary order requiring companies to comply with employee classification, although it did not go into effect until after the election. He also called Uber’s logic for calculating drivers’ jobs outside of their regular business processes as “a classic example of circular inference.”

That lawsuit is hardly a problem now that Prop 22 has passed, allowing companies to continue operating as they are.

Seth Berenzweig, founder and managing partner of the business law firm Berenzweig Leonard outside of Washington, said passing Prop 22 is a huge win for businesses, especially those with operations. important in California.

“In fact, some drivers will be disappointed with this. But on balance, it’s a reasonably modern compromise. And it will likely serve as a new blueprint for other states as well.” , Berenzweig said.

Berenzweig believes that one reason Prop 22 has gained widespread support in California is that “the people like independence. They don’t like the government putting the answers down their throats.” What is more important, he said, is that the companies have a clear understanding of the middleware.

The new Proposition 22 base hourly compensation is approximately $ 16.80, which is higher than the minimum wage under fair labor standards, terms and regulations. That salary has helped companies with the pitch.

Berenzweig said it would be smart to provide some payments to help maintain state insurance contributions. “It helps to provide the emergence of some sort of intermediary rather than doing what the state did. The state just makes one extreme decision and puts everyone and everything in one lane.”

Critics of the voting measure say it’s not so simple. For example, riders for Uber and Lyft spend a lot of time waiting for another driver to turn on their phone for a pick up or drive to a nearby stop without paying. Drivers like Nicole Moore, an activist for Rideshare Drivers United, said that waiting time should also be considered work. Since the benefits will be based on the number of hours companies consider they have worked, they can also make short changes there, according to Moore.

“When we can get our message across, our messages work,” Moore said.

Independent surveys seem to support companies’ claims that drivers want independence. But Moore and labor law experts like Professor Erin Hatton of the University of Buffalo say drivers don’t always get the full picture from contract firms.

“They’re selling them your dream of being your own boss, working whenever you want, controlling your working hours,” Hatton said. “But they’re doing all of this to cut down on the financial security they can get from this work.”

Uber did not comment on this article or on Prop 22. A Lyft spokesperson pointed to a statement on the proposal highlighting the long-standing battle for ballot metrics and gains. benefits it will provide, such as income security.

The war starts here

Companies that have supported Propositon 22 want similar measures elsewhere.

Lyft’s chief policy officer, Anthony Foxx, said in a statement that the company is “willing to work with all interested parties, including drivers, labor unions and policymakers, to building a stronger safety net for US contract workers “

DoorDash CEO Tony Xu said: “Now, we are looking forward and across the country, ready to support new benefit structures that are portable, proportional and flexible. “.

They will likely face the same opposition in New York and Massachusetts as they did in California. But Hatton said she believes the ballot measure could be “precedent”.

“California is a very big and influential state,” she said. “These tech companies, many of whom have their roots, are seen as the vanguards of the entire industry. And they’re literally rewriting the employment laws, and not just for themselves. them, which I think a lot of other companies will see this and try to follow. “

Chris Gerace, who drives for Uber and Lyft in upstate New York and writes for the blog The Rideshare Guy, noted the changes the companies have made to fit California’s AB5. While he says he favors allowing drivers to become independent workers, he wants to see some of the more flexible features Uber offers to drivers in California expand. nationwide.

For example, he says allowing drivers to set their own prices can compensate drivers for not being paid for the time they wait or travel between trips.

“I don’t want AB5. I don’t want a role model,” Gerace said. But he also hopes that drivers, not just companies, will participate in making laws in his home state.

“The companies themselves shouldn’t write the law or propose it,” says Gerace.

On the California side, Moore said she and other activists were not ready to stop fighting and were ready to pursue action through courts and policy makers.

While legal options in California are shrinking, Hatton says drivers can still try to get back payments from companies by claiming they owe their paychecks while AB5 in effect completely.

Moore isn’t sure if she’s going back to driving for Lyft or other applications. She stopped accepting riders in March as a preventive measure for health during a pandemic. But even at the time, she said, she felt that her salary was “close to worthless”.

VIEW: California’s Prop 22 could mean for tech companies in other states

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