The battle over the gig economy is far from over. Last year, companies like Uber (NYSE:UBER), Lyft, Inc. (NASDAQ: LYFT), DoorDash, Inc. (NYSE: DASH), Postmates (POSTM) and Instacart (ICART) poured $200M into support for Proposition 22, which exempted them from treating drivers as employees in California. Instead, the app-based businesses promised new protections to workers, such as giving drivers 30 cents a mile driven to account for gas and other vehicle costs, healthcare subsidies for drivers who work 15 hours or more a week and occupational accident insurance coverage while on the job.
Fast forward: While California voters ended up passing the measure with an overwhelming majority, anew ruling from California Superior Court Judge Frank Roesch said treating drivers as independent contractors was unenforceable. The effort broke the state constitution by unfairly limiting the power of the Legislature in regards to workers' compensation and collective bargaining. He also declared that Proposition 22 hampered the state legislature's authority and its ability to pass future legislation, which is unconstitutional.
Uber, Lyft and other gig companies don't need to immediately change their way of doing business, but the ruling complicated their efforts to preserve their independent worker models. It's also a setback in their years-long fight which culminated in the most expensive ballot measure in the history of California. The companies had hoped to establish a "third type" of employment, in which drivers are treated as contractors but are given more benefits under certain conditions.
Response: "We believe the judge made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters' right of initiative," said Geoff Vetter, a spokesman for the companies' Proposition 22 campaign. "This outrageous decision is an affront to the overwhelming majority of California voters." Proponents of the initiative are already saying they will appeal the court's decision and the group is fighting to get a similar measure enacted next year in Massachusetts.
Comments