Uber manages to give the status of entrepreneur to drivers

Both Uber Technologies Inc. and Lyft Inc. bypassed labor protections Tuesday decades of development, which allows them to continue to compensate for their drivers as independent contractors.

Intentionally, very little will change under the measure approved by California voters, which was underwritten by the trucking companies, as well as Instacart Inc., DoorDash Inc. and Postmates Inc.

While Proposition 22 requires that these Transportation services application-based offer new and modest benefits it saves drivers the trouble of offering the much more expensive benefits enjoyed by full-time employees.

For businesses, that makes the more than $ 200 million they and their supporters spent on the election campaign – a record for the most populous state – worth every penny, according to William Gould, professor at the Stanford Law School.

“Two hundred million or more it’s much cheaper from your point of view that pay these benefits to employees that the legislature has established for them, ”said Gould, former chairman of the National Labor Relations Board under Bill Clinton.

Tuesday’s vote is by no means a global panacea for the ridesharing industry, which was devastated by the coronavirus pandemic. Uber and Lyft will continue to face legal challenges to their work model in other parts of the United States and internationally.

UK’s highest court expected to issue final decision before year-end in Uber’s five-year struggle for to avoid reclassify their drivers as employees.

Uber and Lyft will continue to face legal challenges to their work model in other parts of the United States and internationally.

But in its original state, transport and delivery companies no longer have to worry about requests from the state attorney general to comply with last year’s labor law reform, Assembly Bill No. 5, which increased benefits for workers in various industries.

For Uber and Lyft, Proposition 22 also amounts to a pass to landmark 1989 California Supreme Court rulings that define who is granted employee status in a state deemed employee-friendly. .

“It’s shocking, it’s so strange that this fundamental right can be presented to voters in an election where wealthy businesses can influence something so important to the people,” said lawyer Shannon Liss- Riordan.

The Boston-based lawyer has been the toughest opponent of the trucking companies in dozens of lawsuits in California she filed on behalf of drivers over seven years in search of benefits including minimum wage, sickness benefits and work accidents.

Uber and Lyft still face substantial exposure from the treatment of their drivers before Proposition 22, despite reaching deals to settle previous lawsuits. Said Liss-Riordan. Most California drivers did not participate in these regulations and can still sue, he said.

Instead of full benefits, Proposition 22 requires companies to offer a lower benefits package that includes a guaranteed rate of pay when drivers have an affected passenger and alternative health, disability and non-life benefits. -discrimination. A Morgan Stanley analyst estimated that this will increase Uber’s labor costs by about 5%.

However, the initiative does not include a compliance mechanism that allows regulators or individual drivers to go after companies for evading their obligations, legal experts have said.

“Proposal 22 creates these rights, but as rare and extremely insufficient as they are, there are real doubts as to the possibility for workers to access them”said Terri Gerstein, project director of State and Local Compliance for the Work and Professional Life Program at Harvard University.

The move reflects the argument that Uber and Lyft have made in court for years: California labor law is outdated and does not apply to digital platforms that connect drivers and passengers.

In a role reversal, Proposition 22 obliges state officials to defend the measure against any legal recourse. If they don’t, the state must pay independent lawyers to do so.

Some jurists fear that the initiative could serve as a model for other companies looking for a way to avoid paying social benefits, which, in turn, threatens to deprive the treasury of tax revenue. on income and payroll.

The Fiscal Policy Institute estimates that misclassifying workers costs California $ 7 billion in annual revenues.

Gould described Tuesday’s vote as a paradox for the California proposal system, an exercise in direct democracy devised over a century ago, at a time when the state legislature did not care about the fate of the most vulnerable. the proposal system has changed, ”Gould said. “These companies are the new thief tycoons and they are using the system to establish privilege status for themselves.”