US gig economy giants Uber and Lyft got their way at the US election last week, successfully campaigning for a Californian ballot measure that keeps gig workers classified as independent contractors rather than employees.

The tech giants effectively circumvented California lawmakers and courts with a successful $200 million “Yes on 22” ballot measure campaign, allowing them to preserve their business model by preventing drivers from becoming employees eligible for benefits and protections.

Despite the referendum, critics such as Sandeep Vaheesan, legal director at Open Markets Institute, have labelled the outcome of Proposition 22  a “slap in the face of American Democracy.”

The result follows the most expensive ballot measure campaign in history by Uber, Lyft and other platform companies. Labour groups opposing the measure had reportedly raised only one tenth as much money.

Uber, which had threatened to leave California or dramatically decrease service if Prop 22 did not pass, thereby sending fare prices up, has signalled it will now seek similar arrangements across the United States after its successful “Yes on 22” campaign.

The companies will, however, have to improve some worker conditions as a part of the ballot measure.

Proposition 22

California lawmakers last year passed a bill to force the companies to reclassify their workers as employees.

Courts endorsed the law in a preliminary injunction against Uber and Lyft in August as the tech giants waged a public campaign to convince Californian voters that drivers’ lack of working protections was outweighed by the flexibility of being a contractor.

The companies ran TV ads, mail outs and pushed messages to drivers and customers through their apps, urging them to vote Yes on Proposition 22.

Uber CEO Dara Khosrowshahi claimed if Uber was forced to implement a mix of full and part-time driver employees it would cost nearly 1 million current drivers their work.

Last week Californian voters approved Prop. 22 by around 58 per cent to 41 per cent exempting companies like Uber and Lyft from classifying their drivers as employees and providing full-time employment benefits like overtime pay and workers’ compensation.

Proposition 22 does mandate some further protections for drivers, including an earnings guarantee of at least 120 per cent of minimum wage while on the job, 30 cents per engaged miles for expenses, a healthcare stipend, occupational, liability and vehicle insurance, and some protection against discrimination and sexual harassment.

However, the benefits only apply to drivers’ time on a job and do not reflect time before, after, or between rides or deliveries.

According to Vaheesan, “Corporations such as Uber, Lyft, Doordash, and Postmates spent more than $200 million on a propaganda campaign to mislead and intimidate gig-economy workers and voters, just to pass Prop 22. Through this referendum, these powerful platforms have robbed gig workers of basic employment rights in California. Prop 22 makes a mockery of democracy.”

Uber’s Victory lap

On an earnings call last week following the successful ballot measure, Uber CEO Dara Khosrowshahi said the tech giant will “more loudly advocate for laws like Prop 22”, later adding it would be a priority for Uber “to work with governments across the U.S. and the world to make this a reality”.

 In a letter following the vote, Khosrowshahi also told Uber drivers they will finally receive what many have been campaigning for over many years.

“With this vote, drivers and delivery people will get what so many of you have been asking for: access to benefits and protections while maintaining the flexibility and independence you want and deserve.

“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.”

Open Markets Institute’s Vaheesan says Proposition 22 has demonstrated the “predatory” practices of big tech companies that are “incompatible with democratic government”.

“These corporations will spend huge sums of money to protect their business models at the expense of workers’ rights and livable wages. Alarm bells are ringing everywhere, and Tuesday’s result in California underscores the urgency of taming these corporate titans and subjecting them to democratic controls.”

 In Australia, an extensive inquiry into the so-called gig economy by the Victorian Fair Work Ombudsman found some contracting businesses are carrying the costs of complying with workplace laws while platform companies like Uber and Deliveroo are deliberately avoiding them.

The Ombudsman found there is a genuine need for independent contractors in Australia but workers who don’t have much leverage in negotiations or a genuine choice about the work arrangement – like ride-sharing drivers or delivery riders – aren’t involved in “genuine independent contracting”.

The final report recommended “revisionist” rather than “revolutionary” changes for the local on-demand economy in Australia, including a new code of practice or standards, improved remedies for non-employee workers, and enhanced enforcement.

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