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'A proxy for the future of work': California votes to exempt Uber from new state labour law

Uber and Lyft donated tens of millions of dollars to the campaign.

Image: DPA/PA Images

CALIFORNIA VOTERS YESTERDAY overwhelmingly backed a ballot proposition to exempt ride-share companies Uber and Lyft from a state law requiring drivers to be treated as employees.

Over 58% of voters in the Golden State-backed Proposition 22 with about 83% of electoral precincts reporting.

In August, a judge ruled that under the terms of a new state law passed earlier this year, Uber and Lyft must classify their drivers as employees in California where workers have filed $1.3 billion in wage claims against the company. Uber also owes the state of New Jersey over $650 million in unpaid taxes. 

Both companies lost their appeal against that judgment last month but the passing of Prop 22 yesterday means they are now exempt from those rules.

It means ride-sharing apps can continue to treat drivers in the state as independent contractors without providing access to the rights and benefits afforded to full-fledged employees.

The $200 million campaign for Prop 22 was sponsored by deep-pocketed San Francisco-based companies like Uber which donated $57.3 million while Lyft donated a further $49 million dollars. 

The biggest contributors to the No side were trade unions like the International Brotherhood of Teamsters, which donated about $1.5 million.

Under the proposition, drivers remain independent contractors but Uber and Lyft are to pay them a number of benefits including a minimum wage, a contribution to healthcare and other forms of insurance.

“The future of independent work is more secure because so many drivers like you spoke up and made your voice heard —- and voters across the state listened,” Uber chief executive Dara Khosrowshahi said in an email thanking drivers.

“We’re looking forward to bringing you these new benefits – like healthcare contributions and occupational accident insurance – as soon as possible.” 

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The proposition was being looked at “nationally and globally” for what it might mean to the future of the labour movement, according to Sonoma University political science professor David McCuan.

“Prop 22 is a proxy for how we work; the future of work,” he said.

The gig economy battle is not over though, according to McCuan, who expected court challenges to Prop 22 as well as an effort by state legislators to overturn it.

Uber and Lyft have threatened to pull out of the state altogether if their business models are upended.

© AFP 2020

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