Is CA judge right Uber/Lyft Prop 22 unconstitutional?
- Uber was established in San Francisco in March 2009 as a revolutionary app “that let people tap a button and get a ride.” Since its startup, it has turned into a global empire of food delivery and self-driving cars.
- Lyft was founded in 2012 in San Francisco as well. Even though they came after Uber, the idea spurred on from a company called Zimride, which was meant to be a service offering long-distance rides.
- In 2018, the Supreme Court ruled in the Dynamex case that most wage-earning workers are employees and employers are responsible for classifying independent contractors.
- September 2019 Assembly Bill 5 expanded Dynamex testing criteria requiring Uber and Lyft to label their independent contractors as employees.
- In November 2020, California voters created an exemption for ridesharing companies with Prop 22.
- On August 27, 2021, California Judge Frank Roesch ruled that Prop 22, which allowed gig companies to label themselves as independent contractors, was unconstitutional.
A California court recently ruled that Prop 22, a ballot initiative that permitted rideshare drivers to work as independent contractors rather than traditional employees, was unconstitutional. This is a major legal loss for both ride-sharing drivers and the people of California, and its impact will be long-lasting if the ruling stays in place.
First, rest assured, using Uber, Lyft, and Doordash is going to become more expensive both for passengers and restaurants. If Uber/Doordash have to pay the drivers as employees, money has to come from somewhere; the passengers/diners will be supplementing that extra pay. Second, all the ride-sharing companies are already financially hurting. They will cut down on drivers and add additional fees to cover employee benefits. The predictable end result of this is high unemployment.
Third, drivers who once freelanced had unparalleled flexibility but will now no longer have a side gig to make extra money. Instead, they will now have to rely on the government for assistance. Fourth, this ruling means that future entrepreneurs will make business deals that only incorporate conventional employee-employer relationships used to, which will increase the cost and limit options for freelancing and freelancers everywhere. Further, this ruling will also disrupt the viability of other industries where freelancing is common—everything from music composition in entertainment, copywriting/writing/editing, graphic design, to even dog walking, hair styling, and much more. Finally, this ruling will most likely reduce innovation and inhibit new startups from thriving as most are initially dependent on contracted jobs. The benefits of being an independent contractor include huge savings to the California government and reduced consumer debt. Hopefully, higher courts won't overlook these details if litigation continues.
Uber, Lyft, and other app-based companies make a sizable profit off of their worker low-base hourly pay. But these workers deserve to be treated like employees because that's exactly what they are. This proposition wouldn't be fair to every employee who drives or works for these companies as their full-time jobs. They'd be considered 1099 contractors—or independent contractors—and miss out on health insurance, workers' compensation, overtime, and various other benefits that employees should receive from their employers. There's simply no logic in trying to pass this proposition because they are, in fact, employees—it's as simple as that.
According to The New York Times, these companies poured over $200 million dollars into Prop 22, knowing it would benefit them not to have to treat their employees like actual employees. This is a display of these companies' poor characters as they seem to elevate profit over people. The judge made a smart move in ruling against Prop 22, and the drop in stocks these companies are experiencing will show other businesses that some legal officials aren't willing to sacrifice the working class for economic gain.
These companies and those who voted for the proposition have their priorities out of order, and the judge rightly declared it unconstitutional as these gig workers are still employees. The judge was able to see that it makes no difference whether they do their work in an office or through an app. Rather than exempting these companies from such decent legislation that protects employees, California is doing the right thing to find a legal way to make Uber/Lyft responsible for providing the benefits their employees deserve.