Uber is ready to take its Prop 22 victory show on the road.
The ride-hail company celebrated its stunning win in California, where voters approved Proposition 22, a ballot measure that exempts gig economy companies from having to classify their workers as employees. In an earnings call with investors, Uber also outlined its plan to push for similar legislation at the national level.
“We feel strongly that this is the right approach,” Uber CEO Dara Khosrowshahi said Thursday. “We should be adding benefits to gig work to make it better, not getting rid of it altogether in favor of an employment only system.”
Going forward, Uber plans to “loudly advocate” for more Prop-22 style legislation, and is making it a priority to “work with governments across the US and the world to make this a reality.”
Companies including Uber, Lyft, and DoorDash poured over $200 million into the “Yes on 22” campaign to exempt them from a California state law that would require them to treat their workers like employees. The companies aggressively opposed the law, arguing it would eliminate driver flexibility, while also increasing consumer prices and wait times. The law, AB5, represented an existential crisis for the companies, none of which have ever turned a profit, and have pursued costly efforts to develop autonomous technology in the hopes of eventually replacing drivers and delivery workers entirely. In response, the companies proposed a ballot measure that would keep their workers as contractors, while also providing a modicum of added benefits.
For example, Prop 22 provides drivers and other gig workers with 120 percent of the state’s minimum wage, but only for hours when they have a passenger or are en route to a pickup. Those active hours also apply to access to health insurance: gig workers who log 15 hours of active time a week are promised a health care contribution equivalent to 50 percent of the employer-provided average under the Affordable Care Act. Opponents of Prop 22 say the proposal falls short of the economic security provided by regular employment.
But the measure passed, and it’s likely permanent too. Prop 22 includes a provision that requires a seven-eighths majority of the state legislature for any modification, ensuring that it will be all but impossible to overturn.
Now these Prop 22 victors are interested in exporting its model to the rest of the country. “Now, we’re looking ahead and across the country, ready to champion new benefits structures that are portable, proportional and flexible,” said DoorDash CEO Tony Xu shortly after the ballot measure passed. Lyft’s head of policy, former Transportation Secretary Anthony Foxx, said the company “stands ready to work with all interested parties, including drivers, labor unions and policymakers, to build a stronger safety net for gig workers in the US.”
But among the gig economy companies, Uber has been the most forceful about taking its vision for the future of work to the national stage. The company has long advocated for a “third way” to classify gig workers. During the spring, in the midst of rising COVID-19 infections, Khosrowshahi penned a letter to President Trump advocating for federal legislation that would provide drivers with certain financial benefits while still classifying them as independent contractors. And the company has been lobbying for Prop 22-like legislative action in multiple states across the country.
Uber’s appeal to the Trump administration for legal support isn’t surprising given the federal government’s endorsement of Uber’s worker classification. Last year, the US Department of Labor issued an opinion stating that gig workers like Uber drivers are contractors, ineligible for minimum wages and overtime pay. A federal judge ruled basically the same way in 2018 in what is said to be the first classification of Uber drivers under federal law. And more recently, the federal labor board’s general counsel said that Uber drivers are independent contractors, not employees of the ride-hailing company.
But so far, federal lawmakers have failed to take Uber up on its offer. Some appear to be trending in the opposite direction, signaling a willingness to add new layers of regulation for companies that utilize independent contractors. In September, a coalition of top Democratic officials introduced a bill that would tighten the federal test for classifying workers as independent contractors.
“As corporations continue to find new ways to evade labor laws, it’s clear we need to update the rules,” Sen. Patty Murray (D-WA), a co-sponsor of the bill, said in a statement. “This legislation will close the loopholes that have allowed corporations to skirt their responsibility to ensure basic workplace rights, and hold them accountable for violating the law.”
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