California's ride sharing gig economy was in trouble when the state passed their proposal AB5, which would force companies to classify all of their freelancers as employees and entitle them to PTO, healthcare, and more. However, Proposition 22 has passed in California, giving Uber
Prop 22 carves out an exception in AB5, letting ride and delivery companies side step the controversial labor law and offers gig workers benefits like healthcare and minimum pay, among others. Both companies, along with Postmates and Instacart, dumped over $205 million into the campaign for Prop 22. After its success, Uber's shares popped 12%, and Lyft jumped 9%.
According to California figured, the ballot passed with 58% in favor, however the results are technically incomplete and have yet to be certified before it goes into effect. California isn't the only state to look into forcing companies to cover their gig workers. Massachusetts, New York, New Jersey and Illinois are also considering legislation that would turn freelancers into employees. With California's attempt and the success of Prop 22, which basically circumvents it, the states can see the pros and cons of introducing that kind of law.
Uber and Lyft had previous threatened to leave the state of California over AB5, until Prop 22 was created to help them keep their business in the state. It was so popular because those who worked as freelancers for the companies would lose their jobs if they left the state. During a pandemic, the timing was worse than ever. With the introduction of Prop 22 and the benefits included, the companies are looking into taking their new California model and bringing it across the States.
According to a quote form DoorDash's CEO Tony Xu inReuters, they're "...looking ahead and across the country, ready to champion new benefits structures that are portable, proportional, and flexible." With that in mind, the gig economy might find itself doing better than ever.
