Prop 22: ‘The fight isn’t over’ for Uber and Lyft drivers, analyst says

What’s happening

The rapid growth of the gig economy in recent years has sparked an often contentious debate over where the growing ranks of rideshare drivers, delivery drivers, and other so-called gig workers fit within the country’s labor laws.

Major gig economy firms like Uber, Lyft, DoorDash, and Instacart typically classify their workers as independent contractors, meaning they don’t qualify for things like health insurance, sick leave, overtime, and unemployment insurance. Some lawmakers and labor rights groups are pushing to change laws so gig workers are instead considered employees and can qualify for those benefits.

This struggle plays out most pointedly in California, the state where most tech giants are headquartered. In 2019, state lawmakers passed a law establishing new criteria that required most gig workers across a variety of industries to be reclassified as employees. Uber, Lyft, and other gig companies spent $200 million promoting a ballot measure, Prop. 22, to exempt their drivers from that law. Voters approved the measure by a wide margin in November. But a superior court judge in the state ruled it unconstitutional last week, setting up what may be a lengthy legal battle that could leave California's gig workers in limbo until it’s resolved.

There is also movement on the federal level. In May, the Biden administration blocked a Trump-era regulation that would have made it easier for firms to classify workers as contractors. Labor Secretary Marty Walsh said he believes gig workers should be employees “in a lot of cases.” House Democrats passed a bill known as the PRO Act that includes a measure granting gig workers the right to form unionsthough the bill’s odds of advancing through the Senate are unclear.

Why there’s debate

Critics accuse gig companies of misclassifying their workers, many of whom work full time and perform functions similar to those of typical employees, in order to skirt regulations and save money. While the arrangement may help the companies’ bottom lines, labor rights groups say it denies gig workers the stability and benefits they deserve. There are also concerns that the contractor model will continue to spread into more and more industries in the coming years, a trend such groups believe could rapidly undermine worker protections throughout the U.S. economy.

Gig companies and their defenders argue that forcing them to classify workers as employees would eliminate the core appeal of gig work: flexibility. Both Uber and Lyft conducted polls last summer that showed 70 to 80 percent of their drivers preferred the “freedom” of working independently. The companies also say the costs of reclassifying their workers would ultimately be felt by consumers in the form of higher prices and reduced availability.

Others make the case for a middle ground that could provide gig workers some of the protections that employees enjoy without stifling services that they say have a lot of utility for both workers and consumers. Proposed solutions include expanding collective bargaining rights to certain independent contractors, requiring at least some benefits for those who work close to full-time hours, or creating a new legal category for workers who don’t comfortably fit within the contractor-employee binary.

What’s next

Gig companies say they plan to appeal the ruling that invalidated California’s Prop. 22 and will continue to operate under the measure until the appeal is complete. A similar fight appears to be headed to Massachusetts, where the companies are pushing to have a measure inspired by Prop. 22 on the ballot in time for next year’s midterm elections.

Perspectives

Gig companies are exploiting their workers

“So-called gig companies rely on one big innovation: breaking the law — or, to put it more politely, labor arbitrage.” — Alex N. Press, Jacobin

Consumers and workers benefit from the flexibility of the current system

“These workers often use their gigs for supplemental income. … Having access to these workers’ spare hours has let employers expand rapidly and give consumers greater access to affordable services.” — Editorial, Wall Street Journal

Convenience for consumers shouldn’t come at the cost of rights for workers

“The whole idea of the gig economy is that it is solving problems, but really, most of the problems that it solves are for the people who use the app, not for the people being used by it.” — W. Kamau Bell, CNN

There is space for a middle ground that protects workers without killing the gig economy

“One of the key innovations of app-based companies is their ability to match whatever workers are available to the customers seeking services, enabling individual workers to come and go on their own schedule. The challenge for the state is to preserve that innovation while guarding against the exploitation of those who rely on app platforms for their livelihoods.” — Editorial, Los Angeles Times

Many gig workers function as employees in everything but the title

“An employee is an employee, and the same test should apply for eligibility for all employee protections, including paid sick leave, worker’s compensation, and family and medical leave, pursuant to any other requirements such as full-time hours.” — Steve Kennedy, Hartford Courant

Gig workers don’t fit the logical definition of employees

“They are independent contractors by any reasonable definition not laid out by the court or politicians. They can decide when they want to work and for how long. They can work for anyone else they choose, including competitors. Most of us in traditional jobs would agree: That is not the generally understood definition of an employer-employee relationship.” — Editorial, San Francisco Chronicle

Most gig workers like being independent

“​​Taking a step back and considering what people want from work reveals a different view. The employment contract is just one way of working, and one that is increasingly out of step with what workers want.” — Iain Murray, National Review

Targeted reforms at the local level would be better than sweeping nationwide changes

“Designing smart solutions for independent workers starts with understanding that the workforce is diverse. Therefore, many one-size-fits-all solutions will be prone to problems. … Instead, specific reforms to address only targeted problems, likely on the local or industry level, will have fewer negative consequences.” — Liya Palagashvili, The Hill

The independent contractor model is a threat to more than just rideshare and delivery drivers

“Gig workers are still a small fraction of the total workforce, but the extension of independent contracting could shred decades of employment protections for future generations of workers.” — Mark Erlich, Boston Globe

The employee-contractor binary must be updated to fit the modern economy

“Labor laws need to adapt to innovations in employment — Proposition 22 was only a compromise. It doesn’t fix outdated employment classifications.” — Rachel Chiu, Orange County Register

A true government safety net would solve many of the problems at the heart of the debate

“Instead of pushing gig employers to reclassify their workers … we should think more broadly about delinking healthcare, unemployment insurance, and other vital benefits from specific forms of employment, while providing a protective labor standard for all workers.” — Alex Rosenblat, Harvard Business Review