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No End in Sight in the Fight Over How Uber, Lyft Classify Their Workers

Aug 30, 2021

Yahoo Finance Tech – A judge this week struck down a California ballot initiative championed by Uber, Lyft, and DoorDash that let companies treat so-called gig workers as contractors rather than employees. But the battle between labor advocates and those companies could rage on for years, experts say.

Proposition 22, passed by California voters in November, exempted so-called gig companies from a state law that would have required them to treat their workers as employees entitled to benefits like health care and workers compensation.

In his Aug. 20 opinion, California Superior Court Judge Frank Roesch ruled that the state’s controversial Proposition 22 is unconstitutional, because it “limits the power of a future legislature to define app-based drivers as workers subject to workers’ compensation law.”

But that opinion is unlikely to deter gig companies from trying to continue classifying their workers as independent contractors.

“Given the difficulties involved in reaching any kind of compromise, it’s likely that they’ll start over again and we’ll have more of these ballots, more of these initiatives, more campaigns, more expenditures, more litigation,” William Gould, former chairman of the National Labor Relations Board, told Yahoo Finance.

“One thing we know is that they have enormous resources and ability to litigate forever,” added Gould, who also serves as a Stanford Law School professor.

And if they’re able to successfully continue the fight in California, the companies could make similar inroads in states across the country.

Gig economy companies will fight to the state’s highest court:

Gig economy companies have fought to classify their workers as independent contractors for years, and it’s unlikely to stop any time soon. The idea is to avoid having to pay the thousands of drivers and delivery people who work for Uber, Lyft, and DoorDash the same kind of benefits they would otherwise pay full employees.

The companies, however, claim workers appreciate the flexibility of being independent contractors.

Prop. 22 was a reaction to California’s Assembly Bill 5, which ordered that gig economy workers be classified as employees entitled to benefits.

Uber and Lyft were defiant in the face of the bill, threatening to leave California if they were required to make the change. Prop. 22, however, allowed the companies to continue to operate in the state while offering a modicum of benefits to drivers including stipends for health insurance and wage floors.

Leaving California, one of the gig economy’s biggest markets, would seem outrageous for Uber and Lyft, but both companies have pulled out of markets before in the U.S. and abroad. In 2016, Uber and Lyft shut down operations in Austin, Texas, when voters rejected a ballot measure that would have allowed the companies to regulate themselves in the city. The proposition was designed to override a city council measure that, among other things, required all drivers be fingerprinted.

But after spending millions lobbying Texas state lawmakers, Uber and Lyft convinced the legislature to take control of rule making for ride-sharing companies, and the firms returned to Austin.

“It’s really kind of a classic struggle between employers wanting to have rules that give them flexibility and maximize their profits, and workers who understand that and realizing that they would have more power if they could be classified as employees,” Todd Vachon, director of the Labor Education Action Research Network at Rutgers University, told Yahoo Finance.

If Uber, Lyft, and DoorDash successfully appeal the Prop. 22 ruling, driver and labor advocates will likely end up fighting all the way to the California Supreme Court. But that could take at least a year, Vachon said.

Plan B for Uber / Lyft? See What’s Next!
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Source:
Yahoo Finance Tech
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