Are Changes Ahead for Gig-Economy?

On Thursday, a California appears court upheld a state order that ride sharing companies, Uber and Lyft are required to treat their drivers in California as employees instead of independent contractors. The ruling from the court comes less than two weeks before voters in the state of California will be asked to vote on Proposition 22 on November 3rd. Proposition 22 classifies app-based drivers as independent contractors instead of employees and provides independent contractor drivers other compensation, unless certain criteria are met.

The battle for the ballot has become the most expensive in the history of California with its backers contributing over $200 million dollars. Companies including Postmates, DoorDash and Instacart have joined the fight with Uber and Lyft to prevent this new labor law. A poll conducted by the University of California last month, showed that only 39% of likely voters would support the tech companies. Uber has stated that if the vote does not go in their favor, they plan on cutting 158,000 California drivers each quarter and increase fares by 25-111% in order to meet the high business cost which will include health care and unemployment insurance. Uber’s CEO Dara Khosrowshahi said, “If Prop 22 does not win, we will do our best to adjust. Where in California we can operate is a question mark, and the size and scale of the business will be substantially reduced.”

It will be interesting to see what unfolds in California this election season. Will other states follow suit and propose changes to labor laws for the gig economy?



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