Proposition 22 passed in California in big win for Uber and Lyft

Uber's latest offering will even match riders with their preferred drivers.

Voters in California have voted to accept the controversial Proposition 22, which defines app-based drivers of services such as Uber and Lyft as contractors, rather than employees, after what is being reported as the most expensive campaign in state history.

Proposition 22 will in effect reverse California Assembly Bill 5 (AB5), which was passed in 2019 and essentially classified drivers as employees and ordered companies to treat them as such. That would have meant adhering to minimum wage laws, as well as offering drivers employee benefits such as sick pay.

Rideshare operators such as Uber and Lyft have opposed the bill since day one, claiming that both prices and waiting times in the state would increase. The two rideshare heavyweights argue that their business models are too complicated for ordinary state laws: in effect, this is legislation playing catch-up with the fast-paced progress of Silicon Valley.

The Proposition 22 campaign has been heavily funded by the pair, as well as other firms such as DoorDash, to the tune of some $200 million, making it the most expensive campaign in Californian state history. Alongside conventional fundraising, the campaign for the ballot measure has offered a glimpse into what the future of transport politics might look like. The Los Angeles Times reports that Uber app users were targeted by push notifications within the app, explaining the consequences of a defeat on Proposition 22. This highly targeted and quite aggressive mode of campaigning is something California has not seen before.

But their efforts were rewarded in the early hours of Wednesday morning as 58.4 per cent, or nearly seven million voters, opted for the change.

Dara Khosrowshahi, CEO of Uber, wrote to all drivers informing them of the result. In his email, he claimed that the victory maintained “the flexibility independence you want and deserve.” He also went on to promise healthcare contributions and accident insurance to drivers “as soon as possible.”

Not everybody sees Proposition 22 as an empowerment of drivers though. Gig Workers Rising, a campaign which seeks to support the rights of app drivers, took to Twitter to blast the actions of the big corporations: “When corporations spend hundreds of millions of dollars to write their own labour laws even after our elected officials and public institutions have, numerous times, rejected them, that is a loss for our system of government and working people. “

There could yet be numerous legal challenges to Proposition 22, with Gig Workers Rising promising to “keep fighting”, but this appears to be a landmark moment for drivers and the platforms that they operate on.