Tag Archives: independent contractors

Uber, Lyft shares jump as California set to pass gig-worker ballot measure

By Tina Bellon and Munsif Vengattil

(Reuters) – Uber and Lyft stocks soared on Wednesday after California voters endorsed the gig economy’s blistering campaign not to count drivers as employees, even as questions loomed over whether the companies can secure similar privileges in other U.S. states.

Voters in California on Tuesday backed a ballot proposal by Uber Technologies Inc, Lyft Inc and its allies that cements app-based food delivery and ride-hailing drivers’ status as independent contractors, rather than employees.

According to state figures, 58% supported the measure, with nearly 99% of precincts at least partially reporting. The results are incomplete and must also be certified.

Uber’s shares rose 16%, while Lyft jumped 18%. The companies, along with DoorDash, Instacart and Postmates, have collectively poured more than $205 million into the campaign.

Reclassifying drivers could have amounted to more than $392 million each for Uber and Lyft in annual employee-related costs, a Reuters calculation showed.

The companies warned they could cut 80% of drivers, double prices and even leave California, their home market, if they lost. California represented 9%, roughly $1.63 billion, of Uber’s 2019 global rides and food delivery gross bookings, and some 16% of Lyft’s total rides.

The ballot measure, known as Proposition 22, marks the culmination of years of legal and legislative wrangling over a business model that introduced millions of people to the convenience of ordering food or a ride online.

While the proposal maintains workers’ status as independent contractors, it provides them with some benefits, including minimum pay rates, healthcare subsidies and accident insurance.

Uber in an email to California drivers on Tuesday night said it looked forward to providing the new benefits as soon as possible and would offer more details in the coming weeks.

“The future of independent work is more secure because so many drivers like you spoke up and made your voice heard – and voters across the state listened,” the Uber email said.

Uber is scheduled to report third-quarter results after the bell on Thursday.

A group of labor organizations that organized a campaign to oppose Proposition 22 with a fraction of the companies’ funding on Tuesday night called the Yes campaign deceitful.

“The end of this campaign is only the beginning in the fight to ensure gig workers are provided fair wages, sick pay and care when they’re hurt at work,” Art Pulaski, Executive Secretary Treasurer of the California Labor Federation, said in a statement.

The question of whether gig workers should be treated as employees has also become a national issue in U.S. politics, dividing Democrats and Republicans.

Democratic presidential candidate Joe Biden and his running mate, Senator Kamala Harris, have both voiced their strong support for California’s labor law, while the U.S. Labor Department under President Donald Trump has published a rule that would make it easier to classify workers as independent contractors.

While trend-setting California had been the first state to pass a law that requires companies that control how workers do their jobs to classify those workers as employees. But it is far from the only one and unlike in California, laws in many other states could not be reversed by ballot measure.

Stephen Ju, a Credit Suisse analyst, in a note on Wednesday said Proposition 22’s success may stunt other regional efforts to change classification.

Edward Yruma, an analyst at KeyBanc Capital Markets, said the measure could provide a template for other jurisdictions to provide drivers enhanced protections and benefits without reclassifying them employees.

Legislators in Democratic New York, New Jersey, Washington, Oregon and Illinois have introduced similar laws, which have been halted by the outbreak of the novel coronavirus. Several other states have launched audits over failures by app-based companies to pay into unemployment insurance.

Massachusetts in July sued Uber and Lyft over allegedly misclassifying their drivers.

(Reporting by Tina Bellon and Munsif Vengattil; Editing by Shinjini Ganguli and Alistair Bell)

California voters to decide fate of gig economy workers

By Tina Bellon and Lisa Baertlein

(Reuters) – Trend-setting California votes on the future of the gig economy on Tuesday, deciding whether to back a ballot proposal by Uber and its allies that would cement app-based food delivery and ride-hail drivers’ status as independent contractors, not employees.

The measure, known as Proposition 22, marks the culmination of years of legal and legislative wrangling over a business model that has introduced millions of people to the convenience of ordering food or a ride with the push of a button.

Companies describe the contest as a matter of ensuring flexibility for a new generation of workers who want to choose when and how they work. Opponents see an effort to exploit workers and avoid employee-related costs that could amount to more than $392 million each for Uber Technologies Inc, Lyft Inc, a Reuters calculation showed.

Uber, Lyft, Doordash, Instacart and Postmates, some of whom threaten to shut down in California if they lose, have poured $202 million into what has become the most expensive ballot campaign in state history.

“This debate is very emotional for me. I want to keep driving when I want and for whom I want,” said retiree Jan Krueger, 62, who drives part-time for Lyft in Sacramento and got a “Mom Lyft” tattoo on her shoulder.

“Everybody is super concerned about (the companies) leaving or raising prices and not being available in remote areas,” Krueger said of her passengers and driver friends.

The proposition is the app makers’ response to a new California law that requires companies that control how workers do their jobs to classify those workers as employees.

The app companies argue the law does not apply to them because they are technology platforms, not hiring entities, and that their drivers control how they work.

Companies warn they could cut 80% of drivers, double prices and even leave California, if they are forced to pay benefits including minimum wage, unemployment insurance, health care and workers’ compensation.

Uber, Lyft, DoorDash, Instacart and Postmates also have challenged the new law in court, but judges so far ruled against them. Uber and Lyft recently lost an appeal, which narrows their options if Prop 22 fails.

California represents 9%, roughly $1.63 billion, of Uber’s 2019 global rides and food delivery gross bookings, and some 16% of Lyft’s total rides.

Prop 22 would leave gig workers as contractors and provide them with more modest benefits than state law, including minimum pay while riders are in their cars, healthcare subsidies and accident insurance.

Company-sponsored surveys have found that more than 70% of current gig workers do not want to be employees, but labor groups have questioned those polls, saying drivers are divided.

Los Angeles Uber driver Christine Tringali said the companies’ actions were shameful.

“How can someone fight so hard to avoid paying people a living wage and giving them job security? We work just as hard as anyone else,” Tringali said.

Californians are split on the issue. An Oct. 26 poll by UC Berkeley’s Institute of Governmental Studies of over 6,600 state residents found that 46% of voters would vote in favor of the ballot measure and 42% against it, with the remainder still undecided. The poll had a sampling error of 2 percentage points.

First-time voter and college student Jonah Cervantes’ mail-in ballot included a “yes” on Prop 22. He hopes to start driving for Uber or Lyft in a few months.

“It would be a lot harder for people to just hop on” as new drivers without Prop 22, said Cervantes.

(Reporting by Tina Bellon in New York and Lisa Baertlein in Los Angeles; additional reporting by Lucy Nicholson in Los Angeles; editing by Peter Henderson and Lisa Shumaker)

Uber, Lyft prepare to shut down California rides service on Friday

By Tina Bellon

(Reuters) – Uber Technologies Inc. and Lyft Inc. are preparing to suspend their ride-hailing services in California beginning on Friday morning unless an appeals court rules at the last minute they cannot be forced to treat their drivers as employees, rather than independent contractors.

Lyft in a blog post on Thursday said it would suspend its California operations at midnight.

Uber in a blog post said it would have to temporarily shut down unless the appeals court intervenes.

The companies have sought the intervention of an appeals court to block an injunction order issued by a judge last week. That ruling forced the companies to treat their drivers as employees starting Thursday after midnight, but Uber and Lyft have said it would take them months to implement the mandate.

The appeals court has not yet intervened.

The threat to suspend service in the most populous U.S. state marks an unprecedented escalation in a long-running fight between U.S. regulators, labor groups and gig economy companies that have upended traditional employment models.

California, a state frequently seen as a leader in establishing policies that are later adopted by other states, in January implemented a new law that makes it difficult for gig companies to classify workers as independent contractors.

A judge on Aug. 10 ruled that Uber and Lyft had to comply with the law beginning on Friday, forcing them to treat their ride service drivers as employees entitled to benefits including minimum wage, sick pay and unemployment insurance.

Uber’s fast-growing food delivery business Eats is not impacted by the shutdown, the company has said. Other gig economy companies, including DoorDash and Instacart, will also be able to continue operating under the contractor model.

The shutdown comes at a time when demand for rides has plummeted amid the coronavirus pandemic, with California among the U.S. states with the slowest recovery, according to the companies.

California represents 9% of Uber’s global rides and Eats gross bookings, but a negligible amount of adjusted earnings, Uber said in November. Lyft, which only operates in the U.S. and does not have a food delivery business, last week said California makes up some 16% of total rides.

Uber and Lyft say the vast majority of their drivers do not want to be employees. The companies say their flexible on-demand business model is not compatible with traditional employment law and advocate for what they call a “third way” between employment and contractor status.

Lyft, Uber, DoorDash, Instacart and Postmates are spending more than $110 million to support a November ballot measure in California, Proposition 22, that would enshrine their “third way” proposal and overwrite the state’s gig worker bill.

Labor groups reject the companies’ claims that current employment laws are not compatible with flexible work schedules and argue the companies should play by the same rules as other businesses. They say the companies’ ballot measure would create a new underclass of workers with fewer rights and protections.

An Aug. 9 poll among Californians by Refield & Wilton showed 41% of voters planned to support the companies’ proposal and 26% oppose it, with the remainder still undecided.

(Reporting by Tina Bellon in New York; Editing by Steve Orlofsky)