Business

Californians vote to make Uber, Lyft and food-delivery drivers contractors, not employees

Voters in California backed a ballot proposal by Uber and its allies in Tuesday's U.S. election that cements app-based food delivery and ride-hailing drivers' status as independent contractors, rather than employees.

Proposition 22 has 58% support so far after a well-funded effort from many affected companies

App-based gig workers are shown Oct. 8 holding a demonstration outside Los Angeles City Hall to urge voters to vote No on Proposition 22, but their effort has been defeated. (Mike Blake/Reuters)

Shares of Uber Technologies Inc and Lyft Inc jumped in premarket trading on Wednesday as Wall Street cheered the app-based firms' projected victory in their battle to set the terms of the gig economy they have helped create.

Voters in California backed a ballot proposal by Uber and its allies in Tuesday's U.S. election that cements app-based food delivery and ride-hailing drivers' status as independent contractors, rather than employees.

According to state figures, 58 per cent supported the measure, with nearly 95 per cent of precincts at least partially reporting. The results are incomplete and must also be certified.

Uber's shares rose 12 per cent, while Lyft jumped 16 per cent. The companies, along with DoorDash, Instacart and Postmates, have collectively poured more than $205 million US into the campaign.

The ballot measure, known as Proposition 22, marks the culmination of years of legal and legislative wrangling over a business model that introduced millions of people to the convenience of ordering food or a ride online.

The result was a rebuke to state legislators.

California, a state frequently seen as a leader in establishing policies that are later adopted by other states, in January implemented a new law that makes it difficult for gig companies to classify workers as independent contractors. A judge on Aug. 10 ruled that Uber and Lyft had to comply with the law, but an appeals court halted the order soon after.

Some of the companies had threatened to leave California, their home market, if they lost the ballot measure.

Labour groups vow to continue fighting

While the proposal maintains workers' status as independent contractors, it provides them with some benefits, including minimum pay rates, health-care subsidies and accident insurance.

Uber in an email to California drivers on Tuesday night said it looked forward to providing the new benefits as soon as possible and would offer more details in the coming weeks.

"The future of independent work is more secure because so many drivers like you spoke up and made your voice heard — and voters across the state listened," the Uber email said.

A group of labour organizations that organized a campaign to oppose Proposition 22 with a fraction of the companies' funding on Tuesday night called the Yes campaign deceitful.

"The end of this campaign is only the beginning in the fight to ensure gig workers are provided fair wages, sick pay and care when they're hurt at work," Art Pulaski, Executive Secretary Treasurer of the California Labor Federation, said in a statement.

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