What Prop. 22 could mean for the gig economy nationwide

After Election Day in California, labor groups and coalitions of drivers were devastated. Ride-hailing companies were relieved.

With Prop. 22's passage in California, Lyft, Uber, DoorDash, and other apps that rely on so-called gig workers will continue to treat those workers as independent contractors. (The SF Chronicle put the vote at 58 percent for, 41 percent against.)

If the measure failed, the state's new(ish) employee classification law AB 5 would have turned those contractors into employees with benefits.

So what does this mean for the rest of the country? California is often a bellwether. New York, Massachusetts, and other states considering gig economy legislation could look to its new "hybrid" model, in which companies give workers some limited benefits.

After spending more than $200 million on Prop. 22 and winning, companies including Uber and Lyft could push similar federal regulations to avoid stronger labor laws like AB 5.

"It's a little clearer now," said Diana Tsudik, partner and managing attorney for the Los Angeles law firm Gilson Daub, which specializes in workers' comp. "Gig work is here to stay."

Prop. 22 goes into effect officially on Dec. 16.

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After Prop. 22 passed, DoorDash CEO Tony Xu said in a statement the law was a win for its delivery workers, while Uber didn't immediately respond to a request for comment. Lyft sent out a statement saying the law will provide drivers a health care subsidy, earnings guarantee, medical and disability coverage, and an appeals process for deactivated drivers.

Opponents, however, were fighting for a higher guaranteed minimum wage, like in New York City, where drivers earn $27.86 per hour.

"Proposition 22 leaves California’s gig workers with no representation, no collective bargaining rights, no path to negotiate a livable wage, and no ability to have a real voice in their pay and benefits,” Brendan Sexton, executive director of the Independent Drivers Guild in New York, said in an email statement.

Ajay Prakash, CEO of laundry delivery service Rinse, which employs its delivery workers, weighed in on the new benefits that come with Prop. 22.

"Driving for Uber and Lyft will be relatively more attractive than it might have been before, but it still will not come with the protection and support that being classified as a W2 employee brings," he wrote in an email.

One of the main backers of "No on Prop. 22," Gig Workers Rising, called the passage of the law "a loss for our democracy."

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"When corporations spend hundreds of millions of dollars to write their own labor laws even after our elected officials and public institutions have, numerous times, rejected them, that is a loss for our system of government and working people," the statement continued.

Only two weeks ago, a California superior court ruled against Lyft and Uber for defying AB 5 (which went into effect Jan. 1). The ruling said Uber and Lyft could no longer classify its drivers as contractors.

Tsudik said everything isn't settled quite yet. Uber and Lyft could still be penalized for non-compliance with AB 5 going as far back as January. Once Prop. 22 is in place, she said, "Everyone's watching to see if they comply with what they promised."

Harry Campbell, who runs The Rideshare Guy blog about the ride-hailing industry, said the law could benefit "part-time drivers the most since they’re able to take advantage of things like flexibility and cherry-picking the most lucrative hours to work."

There has been some fallout at Uber and Lyft. The Information reported Lyft execs left over the measure, and an engineer at Uber said it caused them to resign.

As Gig Workers Rising put it, just because Prop. 22 passed doesn't mean drivers and delivery workers won't keep fighting for more rights and protections: "This is far from over."