Uber and Lyft in driving seat to remake US labour laws


California voters’ decision to let Uber and other gig economy companies continue to treat their workers as independent contractors has dealt a crushing blow to campaigners and legislators and paved the way for the companies to remake labour laws across the US.

Voters in the state overwhelmingly approved Proposition 22 on Tuesday, exempting the companies from a new employment law passed last year. As a result, drivers in the state will not be classed as employees but can draw upon limited healthcare provisions and will earn a minimum rate of pay.

The victory paves the way for similar legislation to be put in place across the US where, according to research from the investment bank Cowen, as many as 17 states are considering how to regulate the gig economy.

“California will certainly embolden them to try this kind of gambit as a way of protecting their business model,” said Professor David Weil, dean of the Heller School for Social Policy and Management at Brandeis University. “I think it’s clear that they have chosen to try different instruments of public policy to allow themselves to continue to be exempted from employer responsibilities.”

California’s verdict came after months of fiery campaigning, with gig companies able to outspend the opposition by a ratio of about $10 to $1.

“My heart is heavy,” said Cherri Murphy, a rideshare driver and activist from Gig Workers Rising, in a video response posted on Twitter on Wednesday. “These corporations spent over $200m on a corporate misinformation, deceptive campaign to rig our democratic process and to continue their exploitation of working people. It is a blasphemy and a sin.”

Other opponents of the gig companies, who have mobilised in key markets across the US, admitted a painful defeat but held out hope that the labour movement would be re-energised if there is a change of power in Washington.

“It was always going to be a long fight,” said William Fitzgerald, a former Google worker turned campaign co-ordinator for gig worker groups. “Three years ago, people said you couldn’t organise gig workers. Now you’ve got a broad-based coalition. The whole top of the Democratic ticket all stood with gig workers.”

The group said it would hold a debrief on Thursday to discuss next steps.

California’s verdict came after months of fiery campaigning © AFP via Getty Images

In California, though, the immediate battle is mostly over: the office of California’s state attorney-general said it was still “reviewing” the result to determine how to proceed in its ongoing worker classification lawsuit against Uber and Lyft, in which, had Prop 22 failed, the state was almost certainly going to win.

There remain a number of cases that will continue despite the setback.

In Massachusetts, the state’s attorney-general has sued Uber and Lyft over worker classification — a case that will be unaffected by California’s decision. Other measures could come into play in New York, Oregon, Washington state, New Jersey and Illinois.

In response, the companies have tried to strike a conciliatory tone with unions, following a highly divisive Prop 22 campaign that was marred by vicious online sparring and accusations of foul play.

“We’re ready to work with labour leaders and others to continue to build a stronger safety net for workers,” said John Zimmer, Lyft’s president, speaking to the Associated Press. 

Tony Xu, DoorDash’s chief executive, said his company was “looking ahead and across the country”.

Dara Khosrowshahi, Uber’s chief executive, told the Financial Times prior to the vote that Prop 22’s passing would begin a process of Uber proactively working with states, seeking to avoid the prolonged court battles it has seen in California. “I’d like to spend less time in court if I can help it,” he said. “I think we are going to use this as an outline for a dialogue that we have on a local basis.”

Prof Weil, a former labour department official, said the fight could now hinge on national legislation. The Fair Labor Standards Act, which offers its own definition of what entails an employee-employer relationship, could override state laws, for example. A week ago, Uber pushed to carve out exemptions related to its business. A Joe Biden administration, suggested Prof Weil, might be less amiable to the suggested changes. 

“The Act could still be something that would subject Uber and Lyft, and those kinds of platforms, to obligations as an employer,” Prof Weil said. “That could certainly happen, and I’m sure that’s not lost on those companies.”

But Moira Muntz, from the New York City-based Independent Drivers Guild, said she believed workers would perhaps now be best served by focusing attention on matters of representation rather than employment status — at least until such time when a broader reform of the law in the US is enacted.

“We would encourage state legislators all over the country to take notice of what happened in California, and take steps now to give gig workers the right to bargain for a labour contract,” she said. “State legislatures have the power to create a right to unionise, the right to collectively bargain for gig workers. We are urging them to do so and to do so quickly.” 

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The guild, part of the influential Machinists Union, was able to negotiate rideshare drivers a tipping option within the apps and later a $27.86 an hour minimum wage, $17.22 after expenses.

In contrast, Prop 22’s promise of a $15.61 minimum could, according to one Uber-disputed study, come out as low as $5.61 an hour, after factoring in expenses and waiting periods, which are unpaid.

Such calculations will move from theory to reality for hundreds of thousands of rideshare drivers across California in the coming weeks. Those new conditions, critics say, may provide the most powerful campaigning tool yet. “We’re eager to see the receipts at the end of the month,” Mr Fitzgerald said.



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Prop 22: Uber and Lyft shares soar after California gig-work vote goes their way


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Catch 22 – Californians vote on the future of Uber | Business


If they reject gig companies’ ballot initiative, a business model will need rethinking


EVEN A HALF-EATEN apple shoved in Dara Khosrowshahi’s face by his young son during a Zoom interview does not ruffle Uber’s boss. “Not now, sweetheart,” was his calm response. Mr Khosrowshahi needs all the unflappability he can muster. Besides picking their president, on November 3rd Californians will vote on a ballot initiative, Proposition 22, that will shape the future of the ride-hailing firm and other gig-economy platforms. The companies have spent nearly $200m promoting the measure, in an effort to preserve their business model.

At issue is whether their freelance drivers, couriers and other gig workers should be treated as employees, entitled to benefits such as unemployment insurance and sick leave. More fundamentally, “Prop 22” is a stab at balancing worker protections with the gig industry’s flexibility, which lets people work when they want while ensuring that customers never have to wait long for a ride or a meal delivery.

Founded 11 years ago, Uber created the template for the gig economy. Its software matches demand and supply in real time. At first riders and drivers benefited, as Uber and Lyft subsidised rides in a battle for market share. In the past few years the duo began to cut costs, egged on since they went public last year by investors. Uber’s “take rate”, the share of fares it keeps for itself, now averages 26%, up from 20% in 2017, according to New Street, a research firm. Drivers get correspondingly less.

How much they earn per hour is a matter of hot debate. Whatever the pay, though, it comes with no benefits. This may not matter to those who drive to make cash on the side, in addition to other jobs. Uber claims the bulk of its drivers are such part-timers. Critics allege that most rides are provided by full-time drivers. Sharing these concerns, a year ago California passed a law, called AB5, which among other things redefined independent contractors as those who are free from the control and direction of the hirer. Gig firms argue they meet AB5’s criteria. On October 22nd an appeals court ruled they probably do not, pending a full trial next year.

Complying with AB5 would turn Uber from an online marketplace to something like a conventional black-car service, Mr Khosrowshahi says. It would, he adds, have to let go 76% of its 200,000-odd drivers in California. The remainder would work mostly at peak times—and no longer be paid “exactly in proportion to the value that they bring to the system”, he argues, which is “one of the underestimated features of the gig economy”. And, Uber warns, fares would rise by between 25% and 111%.

Nonsense, say Uber’s opponents. Veena Dubal of the University of California’s Hastings College of the Law, reckons AB5 would raise the firm’s cost per driver by a third. But, she says, it would preserve flexibility and protect vulnerable workers. As for fare hikes, findings in New York, where ride-hailing firms must pay the city’s minimum wage and respect other rules, suggest that these could be lower than Uber’s estimate.

Enter Prop 22. It would scrap AB5’s narrow definition of independent contractors, while providing such workers with some benefits, including net earnings of at least 120% of the hourly minimum wage and health-care stipends. It could pave the way for portable benefits, which Mr Khosrowshahi has called a “third way” between the status quo and AB5, and which prominent economists, including the late Alan Krueger, have advocated (though it has no provision for collective bargaining, which Krueger also backed). Benefits would be based on “engaged time”; waiting between rides does not count. To qualify for a full health-care stipend, for example, drivers must be “engaged” for 25 hours a week. And any amendments to the proposition would require a seven-eighths supermajority in California’s legislature.

Critics call Prop 22 lopsided. Californians may still back it. They have been bombarded with ads and notifications in their apps warning that a no-vote would doom gig-working. Prop 22’s backers have won support from influential lobby groups such as Mothers Against Drunk Driving. Polls show the measure winning. If it does, this may bolster Uber’s case in other places, such as Switzerland, where authorities want to classify drivers as employees.

Even if Prop 22 succeeds, Uber’s business model needs work. It is still losing money and investors are getting impatient. Its share price is down by a fifth since it listed. Revenue from rides dropped by 75% in the second quarter, year on year, as covid-19 lockdowns sapped demand. Mr Khosrowshahi’s answer has been to expand from moving passengers to ferrying everything within a city. Quarterly revenues from its meal-delivery arm doubled as restaurant-goers self-isolated, and now account for nearly 70% of the total. “Just like Facebook built the social graph of connections between friends, we can build the local graph of the connections between people and things,” Mr Khosrowshahi explains. Until self-driving cars replace human drivers—don’t hold your breath—that business may not be viable in an AB5 world.

Clarification (October 28th 2020): An earlier version of this story implied that a court had ruled that gig companies misclassify their workers. In fact it upheld a preliminary ruling that they probably do, pending a full trial. Dara Khosrowshahi, Uber’s boss, also said that California’s labour laws would turn Uber from a digital marketplace to a conventional black-car company, not a taxi company as we suggested.

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Uber and Lyft lose appeal, leaving only one road to avoid classifying drivers as employees in California


Uber Technologies Inc. and Lyft Inc. must classify their drivers as employees, California judges have ruled.


AFP via Getty Images

Uber Technologies Inc. and Lyft Inc. must classify their drivers in California as employees, a state appeals court ruled Thursday.

Uber
UBER,
+4.26%

and Lyft
LYFT,
+3.73%

had appealed a San Francisco Superior Court judge’s August decision that called for the ride-hailing services to immediately comply with the law, which led to the companies threatening to stop serving their home state. California and the cities of San Francisco, Los Angeles and San Diego won the injunction in a lawsuit seeking to order the companies to comply with a California law that took effect in January.

From August: Uber and Lyft must make drivers employees because California law has ‘overwhelming’ edge, judge says

“We address here whether the trial court abused its discretion in granting a preliminary injunction that restrains Uber and Lyft from classifying their drivers as independent contractors,” Judge Jon B. Streeter wrote on behalf of the three-judge California Court of Appeal panel. “Seeing no legal error, we conclude the trial court acted within its discretion and accordingly affirm the order as issued.”

“This is a victory for the people of California and for every driver who has been denied fair wages, paid sick days, and other benefits by these companies,” said San Francisco City Attorney Dennis Herrera in a statement Thursday.

In his statement, California Attorney General Xavier Becerra referred to the unemployment crisis: “Remember, companies like Uber and Lyft… don’t pay into unemployment benefit funds for workers. That means that American taxpayers… are covering the unemployment benefits that gig workers are receiving from the COVID bailout.”

Erica Mighetto, a Lyft driver and worker organizer with Rideshare Drivers United in the Bay Area and Sacramento, said she hopes the court’s decision makes a difference with voters. “With all the Uber and Lyft advertising inundating our screens with deception about Proposition 22, it’s reassuring to know that our courts will not allow the companies to rob workers of basic protections,” she said.

Lyft said Thursday night that it is considering appealing to the California Supreme Court, whose 2018 ruling in a different worker-classification case set in motion the state law that went into effect earlier this year and which the two companies are now being ordered to comply with. Uber is also exploring its appeals options, it said.

“This ruling makes it more urgent than ever for voters to stand with drivers and vote yes on Prop. 22,” said Julie Wood, spokeswoman for Lyft.

Uber repeated its threat to leave the state, or at least to cut back on its service in California.

“If the voters don’t say Yes on Proposition 22, ride-share drivers will be prevented from continuing to work as independent contractors, putting hundreds of thousands of Californians out of work and likely shutting down ride-sharing throughout much of the state,” Uber spokesman Davis White said.

William Gould, professor emeritus at Stanford Law School and a former chairman of the National Labor Relations Board, said Thursday he wasn’t surprised that the appeals court upheld the lower court’s ruling: “These companies have defied the law and seem to willing to do so. I think they have zero chance before the California [Supreme Court].”

The ruling gives Uber and Lyft 30 days to comply after the appeals court follows certain legal procedures, which will likely not occur before the election. The companies have 10 days to appeal to the state Supreme Court, but it’s unclear whether they’ll do so with 12 days until the election, during which they’ll have another chance to avoid classifying drivers as employees. California residents are voting on Proposition 22, which seeks to exempt gig economy companies like Uber, Lyft and delivery services from the state law.

More on Prop. 22: How Uber and Lyft’s business model could be changed on Election Day

The most expensive proposition campaign in California history has raised more than $190 million from its proponents, with Uber ($53.5 million) and Lyft ($48.9 million) the biggest backers. The initiative’s opponents, largely made up of unions, have raised about $16 million.



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Melbourne Cup 2019, fight, brawl, Flemington Racecourse, Uber


An ugly brawl broke out at the Melbourne Cup on Tuesday, with racegoers wrestling each other to the ground in an embarrassing display at Flemington racecourse.

At around 5:45pm — after the day’s races had completed — punches were thrown and shirts were torn as security tried to separate a group of five men.

One man continued throwing wild, misdirected punches until a woman had to physically drag him away from further confrontation.

Many onlookers chose not to interfere, one filming the farce on their smartphone.



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Uber commits to going fully-electric by 2040 or sooner


Every taxi booked through the Uber app will be electric by 2040, the ridesharing giant says. 

In the US, Canada, and Europe, Uber is confident that will be the case by 2030. The ride-hailing firm is committing US$800 million to help drivers switch to electric cars, as well as building partnerships with EV-makers in order to secure discounts. 

Uber claims the move forms part of its “responsibility as the largest mobility platform in the world.” If successful, hitting those goals would put the firm ahead of Paris Climate Agreement targets. 

A blog announcement read: “We’ll seek to build the most efficient, decarbonized, and multimodal platform in the world for on-demand mobility. 

“While we’re not the first to set ambitious goals in transitioning to EVs, we intend to be the first to make it happen. Competing on sustainability is a win for the world, and today we challenge other mobility platforms to transparency, accountability, and more action.”

Uber and other ridesharing firms, such as Lyft, have been frequent targets of criticism over contributions to urban congestion and air pollution. Ride-hailing is a quick and convenient option for mobility, but research suggests consumers often choose these services over greener alternatives, like walking, cycling, or public transport. 

Uber’s plan contains four key actions: 

  1. Expanding Uber Green to make it easier for riders to choose to travel in hybrids or EVs — Uber Green will be launched in 15 US and Canadian cities and enables customers to pay an extra dollar to request an EV or hybrid vehicle. Riders will also receive 3x the reward points.
  2. Committing US$800 million in resources to help hundreds of thousands of drivers transition to EVs by 2025 — Part of this will be subsidized by the surcharge above, and from fees it collects under its London and French Clear Air Plans. They amount to around 15 cents per ride to pay for the electrification of its cars in European cities.
  3. Investing in a multimodal network to promote sustainable alternatives to personal cars — Uber will continue to offer bikes and scooters in its app where possible, following its investment tie-up with Lime and integration across more than 55 cities. It will enhance its carpool feature and continue to develop transit partnerships to offer journey planning alternatives to its cars.
  4. Being transparent and accountable to the public — The firm is releasing a Climate Assessment and Performance Report to measure and report on emissions from customers’ real-world use of its products. The report analyzes real-world data from the nearly 4 billion rides facilitated by Uber’s platform in the United States and Canada from 2017 through 2019.

Before this week’s announcement, Uber already had announced a “bold plan” to ensure every vehicle operating in London — where it’s had a rocky few years — was fully-electric by 2025. 

Uber’s announcement follows renewed environmental commitments by fellow Silicon Valley tech giants like Microsoft and Apple. But some have accused the firm of ‘greenwashing’ or ‘virtue signaling’, while others have pointed out that, by 2030 or later, its fleet is likely to be partially or fully-autonomous anyway, and therefore electric by default.





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Section of Ola, Uber drivers go on strike in Delhi-NCR


The striking Ola and Uber cab drivers will assemble at Mandi House in New Deli to press for their demands, including extension of moratorium on EMI payment till December, an increase in fares and withdrawal of speeding violation penalties.

The strike may pose challenges for commuters (File photo)

A section of drivers working with cab aggregators Ola and Uber went on strike on Tuesday affecting services in some parts of Delhi-NCR as they demanded a fare hike and moratorium on loan repayment.

The striking cab drivers will assemble at Mandi House later in the day to press for their demands, including extension of moratorium on EMI payment till December, an increase in fares and withdrawal of speeding violation penalties, said Kamaljeet Singh Gill, the president of the Sarvodaya Drivers Association of Delhi.

“The strike has led to unavailability of cabs in many parts of the Delhi-NCR including Greater Noida, Dwarka and Uttam Nagar,” Gill said.

The strike may pose challenges for commuters, including students who are to appear in the IIT-JEE Mains exam beginning on Tuesday.

Taxi drivers of various associations in Delhi-NCR, who work with Ola and Uber, decided to go on strike from Tuesday as their appeals for help did not lead to any action by the government, Gill said.

“Due to the acute financial crisis caused by the coronavirus-induced lockdown, drivers are unable to pay their EMIs. The moratorium of loan repayment ended and the banks are already putting pressure on us. Drivers are scared that banks will tow away their vehicles for not paying EMIs,” he said.

The drivers have also demanded that fares should be hiked and their commission increased by the cab aggregators. Gill said the fare should be fixed by the government instead of the cab aggregators.

No reaction was immediately available from Ola or Uber about the impact of the strike on their services.

Amid the pandemic, the strike may cause hardships to commuters as Metro train services are yet to resume and public transport buses are running at reduced capacity in view of social distancing norms.



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Uber, Lyft win delay on converting drivers to employees


Uber Technologies and Lyft were spared from having to rapidly convert their California drivers to employees after a state appeals court agreed they can keep their business models in place while challenging a judge’s order to comply with a state labor law.

The decision Thursday is a big reprieve for the ride-hailing companies, whose leaders said they might need to temporarily shut down in their home state if forced on short notice to provide drivers with costly benefits including health insurance and overtime. The appeals court scheduled arguments for Oct. 13.

Lyft shares rose as much as 8.6% on the news, while Uber’s stock gained 7.75%.

The delay buys time for the companies as they campaign for a ballot measure set for a statewide vote in November that would free app-based transportation and delivery companies from the sweeping requirements of the law known as Assembly Bill 5.

Proposition 22 exempts the companies from paying for full benefits that employees currently get under California law, such as unemployment insurance and complete workers compensation, while requiring them to pay 120% of minimum wage, health care contributions and medical and disability coverage, among others.

San Francisco Superior Court Judge Ethan Schulman had refused on Aug. 13 to indefinitely pause the injunction he issued earlier in the week.

More must-read tech coverage from Fortune:



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Uber and Lyft may shut down in California


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Uber Q2 2020 earnings: Rides decline while food delivery soars


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