Sharing Economy

California's Proposition 22 Would Save Jobs and Help Consumers. Legislators Won't Listen.

State lawmakers want Uber and Lyft to classify their drivers as employees. A majority of drivers disagree.

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A California appeals court ruled last week that Uber and Lyft must classify their drivers as employees instead of contractors, intensifying the pressure to pass a ballot measure that would allow them to keep the flexible business model that a majority of their workers say they prefer. That measure—Proposition 22—would exempt ride-hailing companies from A.B. 5, the legislation that strongarmed companies into transitioning gig-economy workers from freelance to employee status.

The latter comes with a slate of benefits, including health care, paid time off, compensation for expenses, and a minimum wage, among other perks. But A.B. 5 gave companies an incentive to lay off contractors, sparking a backlash among freelancers. Restrictions put in place for content creators, for instance, led to mass layoffs in journalism and marketing.

Those "were never good jobs," insisted Assemblywoman Lorena Gonzalez (D–San Diego), the legislator behind A.B. 5. Workers pushed back on that. "The reality is it still falls primarily on women to be the caretakers and caregivers of their families, and freelancing allows women to be stay-at-home mothers or to care for an aging parent," Alisha Grauso, an entertainment journalist and co-leader of California Freelance Writers United, told me last December. "Being made employees kills their flexibility and ability to be home when needed. I cannot stress enough how anti-women this bill is."

Such workers were eventually granted an exemption from the law. A.B. 5 also had to exempt a slew of other professions, including hairstylists, real estate agents, insurance agents, lawyers, accountants, doctors, and dentists. (That list is not exhaustive.) If Proposition 22 passes, ride-share drivers will be in good company.

A.B. 5 was crafted as a response to Dynamex Operations West, Inc. v. Superior Court of Los Angeles, a court decision that established a rigorous test for labeling a worker as a freelancer instead of an employee. That case specifically addressed truckers, who, ironically, have since been exempted from the legislation. With its laundry list of exceptions, A.B. 5 now almost exclusively targets Uber and Lyft—a cronyistic approach that creates more problems than it solves. (So far, the two companies have staved off the changes by appealing the rules in the courts.)

"Uber and Lyft have been fighting tooth and nail for years to cheat their drivers out of the basic workplace protections and benefits they have been legally entitled to," said Gonzalez in August. What the assemblywoman omits is that the majority of ride-share drivers want to keep the gig economy model as is. Out of California drivers, about 60 percent approve of Proposition 22, according to a poll conducted on behalf of the publication Rideshare Guy; 23.6 percent are against, and 16.2 percent are undecided.

That shouldn't be a surprise when considering the immediate implications of A.B. 5. First, there are the job losses caused by the increase in labor costs: A study conducted by Beacon Economics LLC found that, by its most conservative estimate, Lyft would have to lay off 219,547 drivers in the Golden State. Mandated employee status would also usher in the demise of the flexible work-when-you-want business model—something oft cited by drivers as a major pro to working for Uber and Lyft—with operators instead scheduled in shifts. Consumers should expect to see a 20 to 30 percent increase in prices, something that will alienate lower-income riders.

A.B. 5 hurts the intended beneficiaries, and the brunt of that pain is likely to fall on the most vulnerable populations. In New York City, 90 percent of app-based drivers are immigrants and less than 16 percent have a college degree; two-thirds of those operators use Uber and Lyft as their only source of income. California does not have comparable statistics available, but the demographics are more likely than not to be similar—and New York is mulling new gig economy regulations itself. Those drivers should hope A.B. 5 won't be the model.

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  1. I hope it doesn’t pass and Uber lyft grubhub et. AL. Leave California and all of those people loose a revenue stream. There is nothing bad that happens to CA that they don’t deserve.

    1. I would normally support such restrictive legislation if it hurt white Christians but since this article specifically mentioned that immigrants will be hurt, I am going to oppose it and support BIPOC in racial solidarity.

      1. This is a stunningly misinformed article that simply repeats the lies that have been told by Uber/Lyft/Doordash for years to justify abusing their workforces. The polls cited that drivers overwhelmingly support P22 were extremely small and biased, which has been widely reported. There is NOTHING in AB5 that restricts driver flexibility. Only the hiring companies can do that and their business models REQUIRE large workforces to provide good service, so do the math. Prop 22 is NOT about worker flexibility OR jobs. It is ONLy about three large companies wanting to buy lifetime exemptions from California’s employment laws and I am speaking from more than 5 years of experience. They want a blank check from voters to continue abusing workers! That should not be acceptable to anyone that has “Rabbi” in their username!

        1. Are you a professional believer and repeater of lies??

          Your desire to tell other people how to live is fascist at best.

          None so blind as those who refuse to see……..you are blind as to the reality and effect on everyday people who do not need government to protect them from themselves.

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        2. Given the growing list of freelance occupations that have been granted exceptions to a law purportedly about protecting freelance workers from cruel exploitation, A.B. 5 seems like it’s meant specifically to punish three particular companies. Therefore, it should be ruled an unconstitutional bill of attainder and nullified regardless of what the vote on Prop 22 happens to be.

        3. Can’t tell if serious (and stupid) or sarcasm.

        4. Fuck off and die, slaver.

    2. It’s going to pass. In literally every case where local gov tried to crush Uber they have won. The people want to ride in an Uber it’s that simple. Even commie california will vote to pass 22.

      1. That’s not certain at all. Polls of voters do NOT show it’s going to pass, although it may get close. Defeating P22 will be a victory for drivers and force these large companies to start treating them with respect. MOST of the riders are being picked up by full-time drivers that have never had ANY control over the rates they charge or who is getting into their cars. They have no way to respond to complaints that cause their accounts to be closed, even though most rider complaints are fake.

        1. You will destroy others ideas of a good jobs in order to force companies to create your idea of a good job.

          Get real full time job if you do not like the gig economy, don’t ruin it for everyone else!

        2. A study conducted by Beacon Economics LLC found that, by its most conservative estimate, Lyft would have to lay off 219,547 drivers in the Golden State.

          Would you consider unemployment to be a victory?

          1. I don’t believe scam studies paid for by the companies looking for permanent permission to continue stealing from drivers. After 5 1/2 years and nearly 15,000 trips of experiencing this in person, I’ve had enough. The average part-time driver quits within 90 days. MOST trips are being completed by full-time drivers like me. If you really believe that drivers overwhelimgly support P22, read this –
            https://www.vice.com/en/article/epdg9k/gig-worker-groups-release-solidarity-letter-opposing-proposition-22

            1. Fuck off and die, slaver.

        3. Fuck off and die, slaver.

      2. One cold night my car wouldn’t start, and AAA couldn’t get it started. I had to go somewhere, and the AAA guy suggested Uber. I called a taxi company and they said about a 20 minute wait before I could even schedule something.

        5 minutes later I had Uber installed, and 6 minutes after that I was being picked up.

        Death to the entrenched, kickback-laden taxi service and the corrupt politicians protecting them.

        1. Taxi service: What can we do about this?

          Corrupt politician: Same thing that we always do: Create memes the regulatory burden is to benefit people!

          Useful idiots: protectworkersprotectpeopleevilcorporations!!!!

    3. Seriously. Let them live in the progressive paradise they have created. Let them fully enjoy the fruits of their legislators and bureaucrats, good and hard.

    4. Given that Biden is highly likely to make that idiotic law national (Reason is OK with that, mind you), you’ll also get fucked. Hard.

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  3. IRONCLAD RULE OF THE AUTHORITARIAN WELFARE STATE:

    “We can’t allow financial independence and must stamp it out whenever and wherever possible.”

    1. NOTHING in AB5 affected ANYBODY’s ability to work as an independent contractor, not did it restrict anybody’s ability to enjoy work flexbility. It only required the hiring companies to actually treat them as independent contractors. Many companies have been using this designation for decades as a dodge to pay lower wages and benefits to workers. They hire lawyers to scramble through the dark spaces between the laws like cockroaches. Passing Prop 22 would be a victory for the cockroaches, not the drivers!

      1. A communist always knows what is best for the lowly workers……do not listen to the workers, listen to their would be masters

      2. Fuck off and die, slaver.

  4. Rather than add exemptions, AB5 should be repealed.
    This just legitimizes the fascists picking economic winners and losers.

    Of course, what should happen is that Uber & Lyft just suspend service in CA and give any CA IP address a landing page saying service has been shut down by legislative fiat will resume when the voters replace the legislature.

    1. The California assembly did pass a bill to exempt gig workers from AB5… except for drivers! What a joke.

      https://www.sfchronicle.com/business/article/AB5-clean-up-bill-allows-gig-work-for-musicians-15528850.php

      1. You have to remember that elected officials in California are smarter than everyone else. They know when someone is getting a bad deal even when those getting that bad deal don’t. We always need parents and California legislators fill that role after we leave home.

    2. 22 is bad law It gives them the the independence but still burdens the company get ride of the first law that created more problems than it solved. I’m voting no on 22

      1. Good for you. Defeating P22 will result in higher pay and real benefits for the drivers. Don’t believe the company lies. Support the drivers by voting NO on 22!

        1. It’ll result in no employment for the drivers when Lyft and Uber exit CA.

          1. Only suckers believe the lies of these companies. Ridesharing companies aren’t going anywhere. Just look at New York and Seattle. Uber/Lyft screamed bloody murder and threatened to leave if those cities passed minimum wage rules. The cities did and the companies obeyed. P22 isn’t about helping drivers, it’s about stipping away higher wages and benefits. Don’t believe me? Read this –
            https://www.vice.com/en/article/jgxy4x/uber-and-lyfts-shameless-propaganda-is-trying-to-steal-protections-from-drivers

        2. Fuck off and die, slaver.

  5. “Rep. John Bingham (R–Ohio). In 1866, Bingham served as the principal author of Section 1 of the 14th Amendment, which, among other things, forbids states from passing or enforcing laws which violate the privileges or immunities of citizens. As Bingham told the House of Representatives, “the provisions of the Constitution guaranteeing rights, privileges, and immunities” include “the constitutional liberty…to work in an honest calling and contribute by your toil in some sort to the support of yourself, to the support of your fellow men, and to be secure in the enjoyment of the fruits of your toil.” (https://reason.com/2020/10/26/this-judge-is-wrong-about-economic-liberty-and-the-constitution-2/#comments)

    I guess the California legislature wouldn’t actually believe the above. State-sponsored “slavery,” defining when you work, for whom you work, and for what wage, is just fine….

    1. Even more on point is the Contract Clause:

      No State shall … pass any … Law impairing the Obligation of Contracts

      Doesn’t get much clearer.

      1. How about “shall not be infringed”?
        Looks like that is very obscure and confusing.

    2. As you saying that contracts are NOT enforceable? That companies that say you’re going to be an independent contractor are valid even when they treat drivers as employees? People that think AB5 restricts the ability of people to work independently don’t understand the issue at all. Employment laws have been on the books for many decades. AB5 never changed anything! It simply expanded a State Supreme Court ruling (that was based on existing law) that only applied to wages and overtime to all aspects of the worker/employer relationship. It didn’t restrict independence and it didn’t restrict flexibility. ANYONE that wants to run their own business can still do so. Passing P22 ONLY gives 3 big companies lifetime passes on having to obey existing employment laws. If you owned a big company that obeys those laws, how would you feel about 3 companies getting an exception?

  6. Prop 22 will pass. No one wants to go back to trying to call a smelly taxi, and not knowing what the fee will be or when they will show up.

    1. Or if they will pick up black people. Remember that problem that completely vanished as well?

      1. If I don’t want to pick up a certain person, or I want to charge more for a certain reason, that’s my right as a contractor.

        But if I’ll be punished, then I’m an employee.

        It’s really that simple. Uber and others are employers. They should be following labor laws for their employees.

  7. You’d think eventually people would learn their lesson and stop living in California. It’s pretty much the only place where this kind of stuff happens. It’s your fault if you stay.

    1. NY
      HI
      WA
      DC
      OR
      now VA

  8. Frankly, it makes no difference what polls say about Uber and Lyft drivers. They signed contracts to drive as contractors, not employees. The government has no right to change terms of those contracts.

    How economic liberty has sunk so low is beyond me. Well, not literally. I understand progressives all too well.

    1. > The government has no right to change terms of those contracts.

      I’m guessing you never watched The Empire Strikes Back.

      1. This deal is getting worse all the time.

        1. CA Politician: Your parents (founding fathers) were nothing. You come from nobody.

          Mesmerized yokel: I am nobody.

          CA Politician: But not to me. Join me, and together we will dule the galaxy!

          1. Dule = rule + dole

            1. Nice

    2. Yes, drivers signed contracts to work as independent contractors and most actually want to do so. BUT the COMPANIES are the ones that have always broken their own contracts, WHICH THEY WROTE! There have always been laws that determine when a worker can be an independent contractor and when they must be employees. if the companies don’t treat their workers as IC, then they have to pay them the minimum wages and benefits required by law for employees. This has ALWAYS been entirely within the control of the companies. It amazes me how many people want to hold drivers to the contracts, but don’t want to hold the companies to those same contracts!

      1. If I don’t want to pick up a certain person, or I want to charge more for a certain reason, that’s my right as a contractor.

        But if I’ll be punished, then I’m an employee.

        It’s really that simple. Uber and others are employers. They should be following labor laws for their employees.

        1. “If I don’t want to pick up a certain person, or I want to charge more for a certain reason, that’s my right as a contractor.”

          Uh, only if you wrote the contract that way, my friend.
          If my contract said I would code programs in accordance with the clients coding standards, I wrote to the standards, no matter how poor.

  9. The best part of the story is that the California Assembly already passed a bill to exempt everyone else from AB5 except drivers.

    California is just a joke.

  10. Someone needs to inform Lorena Gonzalez that Mexicans are supposed to be innate libertarians.

    1. They are showing their love for America by becoming representatives and displaying the Latinx work ethic by passing legislation.

  11. Don’t understand why the state is so hostile against gig workers. They get their taxes either way. Workers still pay income taxes, companies still pay their taxes. The state isn’t losing out. So why the intense antagonism?

    I can see individual cities pissed that they don’t get taxi medallion fees anymore, but that’s not at the state level.

    So why the fuss?

    But it looks like Prop 22 may go down to defeat. People don’t vote rationally, and this proposition is being seen as evil corporations trying to bypass the kind and compassionate state. Every gig worker I know is for Prop 22, but they’re overwhelmed by the hordes of voters who only think what the media has told them to think.

    1. Because it’s about unions, who want to increase their membership and whose pocket lint is all over the Democratic Party.

      Democrats cannot vote against big labor’s interests. Unions provide too much money and too much GOTV volunteers.

    2. California is not hostile against gig workers. It’s hostile against Uber and Lyft specifically.

      1. Yeah, Uber and Lyft are such honest and law-abiding companies, right? They have abused workers for years with scam contracts that allowed them to change rates without notice, de-activate driver accounts for no reason and no ability to appeal, and have conducted business in a fraudulent manner from day 1. Heck, the company began as UberCab until SF showed them the rulebook for taxi companies and they decided they don’t want to be subject to those rules. They just want to conduct business like taxis! Obey the laws? Heck no! That’s why they’re trying to BUY their own law. How do you feel about 3 companies trying to buy lifetime exemptions to the laws followed by thousands of California companies? Is that right?

        1. Yeah, they’re private companies. They can change rates on you just as Twitter can restrict the NY post for random reasons they make up on the spot.

          Uber was founded by Obama personnel, who anticipated that ACA costs would incentivize the gig model in the market place. They really knew what they were doing!

    3. Two words.
      Payroll taxes.
      As “employees” Uber and Lyft will withhold taxes and pass them on to the state. An independent contractor pays income taxes, but not payroll taxes. Same way Joe Biden and his wife avoided (legally) payroll taxes of over half a million dollars on their book deals.

  12. Those “were never good jobs,” insisted Assemblywoman Lorena Gonzalez (D–San Diego),

    Were here from the government, and we WILL< help you!!

  13. State run by Democrats. And Joe Biden is a crook.

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  15. “Those “were never good jobs,” insisted Assemblywoman Lorena Gonzalez (D–San Diego), the legislator behind A.B. 5. ”

    Can we stop putting Ds next to their name? Replace it with a C for Communist. It’s about time we start calling a spade a spade.

  16. “A.B. 5 hurts the intended beneficiaries”

    Please. The intended beneficiaries were labor unions, and they’ll do fine under this bill.

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  18. Prop 22 needs to fail. The Libertarian Party of California recommends a “NO” vote, due to fact that Prop 22 will allow Uber and Lyft to “give drivers what they want”, but at the cost of competition. This Prop will pull the ladder up and prevent other TNC’s from coming into the market, GIVING UBER AND LYFT A MONOPOLY.

    1. Exactly this. Uber and Lyft will continue to operate outside established regulations – ditto for their drivers.

      I’m for changing the rules for all, not just favored companies/services/professions.

      1. How does the Libertarian Party of California support what you said?

        1. Libertarian Party of California?
          What’s that when it’s home?

    2. I see the logic behind this, but I also see the logic behind this was such a specific targeted law, that Law makers immediately started amending in exemptions for everyone who wasn’t Uber and Lyft. If these two companies get out from under the law, then the support for the law will plummet, and the incentive to amend rather than remove will go away.

      I don’t think it’s anymore likely the law will be removed, but I don’t think the law is going to be removed if prop 22 fails either.

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  20. Funny how nobody mentioned what is actually driving this. You can’t UNIONIZE subcontractors and people who live off of tips. Democrats are owned by the unions. Want to know why the hospitality industry is being targeted by COVID shutdowns? They are targeting tipped workers. Destroy the industry and rebuild it with people paid hourly that the SEIU can unionize. The same goes for Uber and Lyft. Yes the entrenched taxi industry has a bit to do with it, but, the unions are right there too.

    1. Yes. The sponsor is a union official in San Diego.

    2. Just for the record, the democrats are owned by the lawyers union. (association, as they prefer)

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