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The gig economy's (very) long game

Fully Charged
Bloomberg

Hey, Lizette here. America's largest gig economy companies have plowed millions into California's Proposition 22, making it the most expensive ballot measure in the history of the state. If voters approve the measure, it would also be the most difficult to change.

Companies including Uber Technologies Inc., Lyft Inc., Instacart Inc., DoorDash Inc. and Postmates Inc. have put $189 million dollars behind Prop. 22. A recent University of California, Berkeley poll showed that the race remains tight, even though the pro-labor groups have only cobbled together $16 million in opposition to the proposal. 

The measure would allow ride-hailing and food delivery companies to continue flouting a state law, which went into effect earlier this year, designed to classify their drivers and couriers as employees. The companies argue that the provision would enshrine the freedom enjoyed by gig workers to choose their own hours. Labor rights advocates say that it would deny workers employee protections in perpetuity.

But buried deep in the measure's mind-numbing legalese, is a rare proviso: The authors prohibit any change to the law unless it's consistent with the proposal's intent and more notably, can garner a seven-eighths majority in each house of the state legislature. 

"It's a super, super, super majority. It's crazy," said Mary-Beth Moylan, an associate dean at the University of the Pacific's McGeorge Law School in Sacramento, California. "I've never seen this before." Moylan said propositions typically require a two-thirds majority for the legislature to amend—a high bar, which can be difficult to reach, and makes Proposition 22's higher threshold all the more striking.

Said Moylan: "It really speaks to the fact that proponents want this unchangeable."

So, what exactly is Silicon Valley locking into place for all time? Flexibility. The proposal's proponents say that it will ensure companies are able to tap into an on-demand work force, and that workers will be able to clock in whenever they want or need to. The proposal would allow companies to avoid paying California benefits mandated for regular employees, including paid sick leave and unemployment coverage.

However, by making the bar so high for changes to the law, the proposal's language leaves little flexibility to adapt to new economics in the future.

That's notable because the gig economy companies that are pushing the ballot proposal are barely a decade old. Some, like Instacart, have only come into their own during the pandemic. Instacart recently hit business targets not expected until 2025 and has added 600,000 people to its army of shoppers in mere months. Meanwhile rideshare businesses like Uber and Lyft are also still evolving. Both companies have continued investing in self-driving efforts—initiatives that will reduce the number of human drivers needed, or perhaps someday replace them altogether.

The proposition would carve out some new benefits for drivers. In a nod to the most active gig economy workers, Prop 22 offers a health insurance stipend for drivers who work more than 15 hours a week. It will also require companies to pay medical costs and some lost wages if a worker is injured while working or waiting for a job. A third provision guarantees companies will pay 20% more than the local hourly minimum wage, but only for the time a driver spends driving. Time spent waiting around, which makes up about one-third of a rideshare driver's working day, is not paid, meaning that workers' income may be even lower than minimum wage in some cases.

"If this ends up passing it's going to be pretty much status quo for the drivers. Not much will change," said Harry Campbell, a former ride-hailing driver and founder of driver resource site and industry blog, the Rideshare Guy. "If they had a proposition that was actually better for drivers and offered real improvement they wouldn't have to spend so much trying to pass it." Lizette Chapman

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