Shares of ride hailing apps Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) shot up well over 10% on Wednesday, as the companies won bids to continue classifying their drivers as independent contractors in the state of California.
The development marks the overturn of what the BBC described as a ‘landmark labour law’, which was passed in 2019 and ruled that gig economy workers should have employee status and the requisite protections and rights that accompany that status.
Today’s measure – named Proposition 22 – was backed by ride-hailing apps, and cost companies some $205 million, the most expensive in state history. And, while some drivers backed the motion, labour groups stood in opposition, saying that employee status would guarantee rights such as minimum wage; overtime; expenses; paid sick days and leave; healthcare; and unemployment insurance.
Owing to its stance, the California Labour Federation accused Proposition 22 supporters of “attempting to buy their own law through the ballot measure process”. Having raised around $20 million to oppose the motion, labour groups were crushed by Uber, Lyft, DoorDash and Instacart, who purchased TV adverts and featured in-app ads in their services.
The ride hailing apps had also threatened to withdraw their services from California, had they been forced to start treating their drivers as fully-fledged employees.
In support of the move, the Yes on 22 campaign stated that: “California has spoken and millions of voters joined their voices with the hundreds of thousands of drivers who want independence plus benefits,”
“Prop 22 will protect drivers’ preference to be independent contractors with the flexibility to work when, where, and how long they want.”
Opposing that statement, a coalition of gig workers opposing the motion said that: “Billionaire [corporations] just hijacked the ballot measure system in CA by spending millions to mislead voters,”
“Uber, Lyft, & the other gig [companies] took a ballot measure system meant to give voice to ordinary Californians and made it benefit the richest [corporations] on the planet.”