It’s not often that the fate of several industries hangs on an election, but that appears to be happening in California.
The livelihood of those working at Uber, Lyft, Instacart, DoorDash -- as well as independent contractors in search advertising and marketing, music and photography, and freelance writers -- seems unstable. And it's not due to COVID-19.
Uber, Lyft, Instacart, DoorDash and others survived the worst of COVID-19 and many even thrived, but it’s still unclear whether their business models will make it through a California law that passed last year.
The law, known as AB-5 or the Protect App-Based Drivers and Services Act, restricts flexible work situations such as independent contractors.
It would require these companies to reclassify their workers as employees and ensure that they received minimum wage, workers’ compensation and other benefits such as paid sick time and vacation.
California Governor Gavin Newsom signed the bill into law in 2019. It not only affects drivers at companies like Uber and Instacart, but professions such as independently contracted search marketers, freelance writers and photographers, and those in the music industry. California implemented the law on January 1, 2020.
Proposition 22 -- which appears on the California November 2 voting ballet -- would if passed, preserve the workers as independent contractors but would give them some benefits.
Dara Khosrowshahi, Uber CEO, told the WSJ the drivers want the flexibility of remaining independent. He said that if Proposition 22 fails, preventing drivers from working as independent contractors, the company will make the adjustments and comply by the law, but a new business model would require prices to rise in affected cities.
The Wall Street Journal reported that in recent weeks, Uber sent in-app notifications to drivers alerting them the company would only be able to hire three out of 10 as employees, and separately told riders their fare prices would rise between 20% and 100%.
To keep Californians working, Newsom did sign a bill in September exempting dozens of jobs from AB-5 rules.
The new law expanded the range of occupations held to an earlier standard for determining employment status. Exceptions were made for the music industry and for freelance writers and photographers.
The New York Times reports that backers contributed nearly $200 million to get Proposition 22 passed.