© Reuters. FILE PHOTO: FILE PHOTO: A sign marks a meeting point for Lyft and Uber users at San Diego State University in San Diego
By Tina Bellon and Munsif Vengattil
(Reuters) – Uber and Lyft Stocks rose Wednesday after California voters endorsed app economies' blistering campaign not to count drivers as employees, amid questioning whether companies can secure similar privileges in other US states.
California voters on Tuesday backed an election proposal from Uber Technologies (NYSE 🙂 Inc, Lyft Inc (NASDAQ 🙂 and its allies that cemented app-based grocery delivery and the status of drivers as independent contractors rather than employees.
According to state data, 58% supported the measure, with nearly 95% of counties reporting at least partially. The results are incomplete and must also be certified.
Uber's shares were up 13% while Lyft was up 17%. The companies, along with DoorDash, Instacart, and Postmates, put more than $ 205 million into the campaign.
The electoral measure known as Proposition 22 marks the culmination of years of legal and legislative disputes over a business model that gave millions of people the opportunity to conveniently order food or drive online.
While the proposal maintains the status of workers as independent contractors, it does offer them a number of benefits, including minimum wage rates, health care subsidies and accident insurance.
Uber emailed California drivers on Tuesday evening that it looks forward to rolling out the new benefits as soon as possible and to provide more details in the coming weeks.
"The future of self-employment is more secure because as many drivers as you have spoken and heard your voice – and voters across the state listened," the Uber email read.
A group of labor organizations that organized a campaign against Proposition 22 on Tuesday evening with a fraction of corporate funding called the Yes campaign fraudulent.
"The end of this campaign is just the beginning of the struggle to ensure gig workers get fair wages, sick pay and care if they are injured at work," said Art Pulaski, executive secretary treasurer of the California Labor Federation, in one Explanation.
The question of whether to treat gig workers as white-collar workers has also become a national issue in US politics, dividing Democrats and Republicans.
Democratic presidential candidate Joe Biden and his colleague Senator Kamala Harris have both expressed their strong support for California labor law, while the US Department of Labor under President Donald Trump released a rule that would make it easier for workers to be independent contractors to classify.
While California was pioneering, it was the first state to pass a law requiring companies that control how workers do their jobs to classify those workers as workers. But it is far from the only one, and unlike California, laws in many other states could not be reversed through electoral measures.
Lawmakers in Democratic New York, New Jersey, Washington, Oregon, and Illinois have introduced similar laws that were halted by the novel coronavirus outbreak. Several other states have launched audits of failure of app-based companies to pay for unemployment insurance.
Massachusetts sued Uber and Lyft in July over alleged misclassification of their drivers.
Edward Yruma, an analyst at KeyBanc Capital Markets, said in a statement on Wednesday that Proposition 22 could serve as a template for other jurisdictions to provide improved protection and benefits to drivers without reclassifying them as employees.