Editorial: Prop. 22 just showed tech companies how to write their own labor laws
State lawmakers had the chance last year to strike a deal with app-based companies to boost the benefits and protections that workers on their platforms would receive. They didn’t, and in hindsight, that looks to be a terrible mistake.
On Tuesday, California voters overwhelmingly backed Proposition 22, a measure to treat app-based drivers for Uber, Postmates and the like as independent contractors eligible for more limited benefits and protections than the Legislature provided last year in Assembly Bill 5. The proposition was sponsored by the app companies, which spent more than $200 million to persuade voters to approve it. That was about 10 times as much as opponents — largely organized labor — spent to try to defeat the measure.
In doing so, the proposition’s sponsors laid out a road map for how companies can write their own employment laws and regulations through the ballot box. Californians should take that as a warning.
AB 5 codified a 2018 state Supreme Court ruling that required companies to treat more independent contractors as employees. Instead of creating a third category of protections for gig workers, which would have been the far-sighted thing to do, labor-friendly Democrats in the Legislature spurned overtures from Uber et al and, in essence, required those workers to be treated as employees eligible for minimum wage, overtime pay, unemployment insurance, workers’ compensation and other state-mandated protections.
These terms would clearly be better for drivers on those platforms. But the app companies — many of which have not been profitable — argued that they wouldn’t be able to afford the increased costs unless they radically changed their business models. Instead of allowing drivers to work on demand, when they wanted and where they wanted, they would have to schedule driver shifts and territories. Plus, they contended, they would need dramatically fewer drivers, given that the vast majority of gig workers now put in only a few hours a week. The Yes on 22 campaign augmented their pitch with drivers in television ads urging voters to let them continue to do the jobs they need and love the way they’d been doing them.
That left the No on 22 campaign struggling to explain why the state should force changes in the app companies’ business model that threatened those jobs. After all, the proponents argued, no one is forced to work for Uber or Postmates. People who didn’t like the miserly pay and limited benefits provided by Proposition 22 don’t have to drive for those companies.
So the app-based transportation and delivery services will no longer have to worry about AB 5. And they will continue to offer their drivers great flexibility, along with some new benefits — a wage floor that translates to about 20% less than the state minimum, insurance that covers them to some degree in the case of on-the-job injury or death, and the chance to earn subsidies for health insurance. It’s not nothing.
And for the tens of thousands of Californians who count on doing a few hours of gig work occasionally to help pay the bills or spend a bit more, the passage of Proposition 22 means that those opportunities will still be there. But for the workers who’ve chosen gig driving as a full-time job — the ones the apps rely on to deliver the bulk of their services, and who would be most likely to keep their gigs if Proposition 22 failed — the result is a perpetuation of their second-class treatment.
Those drivers — in fact, all gig drivers — deserved a better deal, one that assured them the same level of protection that the state’s minimum wage laws and workers compensation system provide employees, and the chance to unionize. But it’s probably too late now for the Legislature to provide that; under Proposition 22, it would take an impossibly large seven-eighths majority to change the terms approved by the voters.
Gig companies have been pressing their drivers to vote yes on Proposition 22 and — regardless of the drivers’ feelings on the matter — to push the same message to customers.
Just as ominously, the app companies have provided a template for future efforts, in California and elsewhere, to use the ballot box to reclassify employees as contractors and cut their benefits. Before we see the next Proposition 22, lawmakers should do the work they could have done last year and create a new category in state employment law for gig workers that provides the protections that those who make a living at these jobs need without sacrificing the flexibility and choice that make these jobs attractive in the first place.
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