Californians have voted in favour of Proposition 22, a ballot measure that exempts ride-hailing firms Uber and Lyft from classifying their drivers as employees under labour laws passed in 2019.
On Tuesday, some 58% of voters cast in favour of Proposition 22 as Americans voted for their next president. The passing of Prop 22 means gig economy workers at Uber, Lyft and other tech companies will not be entitled to minimum wages, healthcare and other work benefits granted to those classified as employed.
The ballot measure – a direct referendum on a specific issue – is the most expensive in state history. The tech companies supporting it, which also include delivery firm DoorDash, outspent labour unions by approximately $220m to $20m.
The vote was seen as a key moment for the future of the gig economy, with the result marking a major victory for the business models of Uber and Lyft.
In 2019 the Supreme Court passed a labour law called AB5 that reclassified gig economy workers as employees.
In a statement, the Yes on Prop 22 campaign called it “a win for drivers across California”.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
The campaign had argued that drivers preferred to be classed as independent contractors because of the flexibility it provides.
Opponents of Proposition 22 argued that gig workers did not have complete flexibility due to conditions Uber and Lyft put on drivers, such as requiring them to be active on the app for a minimum period of time.
Campaign group Gig Workers Are Voting No On Prop 22 said it was “a loss for our democracy that could open the door to other attempts by corps to write their own laws”.
Proposition 22 will give gig workers some additional benefits, but critics argue these are not comparable to those received by employees.
Uber and Lyft previously threatened to pull out of the California market, arguing that classifying drivers as employees would make their running costs unsustainable.
The Silicon Valley firms are yet to make a profit despite bringing in billions of dollars in revenue. Their revenues have been further hampered by the coronavirus pandemic as rider volume plummeted during lockdown restrictions.