California Ballot Propositions: Voters Decide Employment Fate Of Gig Economy App-Based Drivers

SAN FRANCISCO (CBS SF/AP) — Election Day dawned Tuesday at the San Francisco Bay Area headquarters of ride-share giants Uber and Lyft with the fate of their business models in the hands of California voters.

Will voters support the independent contractor Gig economy or will they decided that app-based drivers must be treated as employees eligible for benefits and job protections.

Proposition 22 has been bankrolled largely by Uber and Lyft and aims to create an exemption to a labor-friendly law passed by the Legislature last year.

Opponents say the companies exploit drivers to keep profits high and the ballot measure would deprive workers of other rights.

Supporters say the measure would allow drivers to maintain the freedom to work hours they choose and would provide other benefits. Uber and Lyft, both based in San Francisco, have threatened to pull out of California if the proposition fails.

The gig economy powerhouses — with help from DoorDash, Postmates and Instacart — have collectively spent about $200 million on Proposition 22 vs. labor's $20 million.

The spending, which doesn't even account for $30 coupons Uber Eats and other services have been offering customers to promote their brands, will likely put future ballot measure spending on steroids, said political science professor David McCuan of Sonoma State University.

"What Prop. 22 does is it raises the tide of all ballot measures," McCuan said. "It sets records that are just going to be blown past the next time...It makes the parallel route of direct democracy a playground that will be measured in the billions in a few (election) cycles."

If more than 50% of votes are in favor of the measure, drivers would remain independent contractors exempt from mandates for overtime, sick leave and expense reimbursement. Drivers would receive some "alternative benefits," including a guaranteed minimum wage and subsidies for health insurance if they average 25 hours of work a week.

If the measure fails, drivers would be subject to the same labor laws as other workers covered by the landmark state labor law known as AB5, which was aimed at Uber and Lyft and provides job protections and benefits.

State Attorney General Xavier Becerra took the companies to court, claiming they were misclassifying their drivers as contractors in violation of the law. A state appeals court recently sided with a San Francisco Superior Court judge who said the new employment standards apply to the app-based companies.

Uber and Lyft argued in court that their drivers meet the criteria to be independent contractors, not employees. They also said the law didn't apply to them because they are technology companies, not transportation companies, and drivers are not a core part of their business.

That ruling could be undone by the outcome of the vote, though further litigation is likely, and the companies said they might appeal the earlier rulings to the California Supreme Court.

Some Uber drivers recently sued the company for sending ads supporting Proposition 22 in the app they use, claiming they were subject to political coercion. But another San Francisco judge rejected a request to block the ads, saying such a move would infringe on the company's First Amendment rights.

A nonpartisan poll by the UC Berkeley Institute of Governmental Studies finds 46% of voters backed Proposition 22, while 42% are opposed. Twelve percent said they were undecided.

While support of the measure has grown 7 points since the institute's poll in September, the percentage of opponents has also grown by 6 points. A quarter of voters surveyed in last month's poll were undecided. Geographically, the measure was trailing by 20 points in the Bay Area.

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"The relatively large proportions of undecided voters in both polls suggest that many voters were having a difficult time reaching a final decision on this initiative. How these late deciding voters ultimately come to judgment will likely determine its fate," poll director Mark DiCamillo said in a statement.

The poll found Prop. 22 having its strongest support among the state's Republicans (71% to 21%). A majority of Democrats were opposed, but not by as large of a margin (52% to 34%). Meanwhile, voters with No Party Preference or with minor political parties were closely divided.

Pollsters found significant differences among age, as majorities of voters under 40 were opposed, while a plurality of voters 50 and up supported Prop. 22.

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