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From: Glenn Petersen8/21/2021 10:47:18 AM
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California Ballot Measure That Classifies Uber, Lyft Drivers as Independent Ruled Unconstitutional

Proposition 22, which passed in November, was the most expensive such measure in the state’s history

By Preetika Rana
Wall Street Journal
Updated Aug. 20, 2021 11:58 pm ET

A California judge said the November ballot measure that allowed Uber Technologies Inc., Lyft Inc. LYFT -1.92% and DoorDash Inc. DASH 1.11% to continue treating their drivers as independent contractors is unenforceable and unconstitutional.

The companies, which spent more than $200 million to pass Proposition 22 in November, said they would appeal the ruling.

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The companies don’t need to immediately change their way of doing business, but Friday’s ruling adds a wrinkle in their efforts to preserve their independent-worker models and serves as a setback in their yearslong fight against the California law at the heart of the ruling.

Uber and other companies are in a global tug of war with regulators over whether and how to grant more benefits like paid sick leave and health insurance to workers in the so-called gig economy, where apps distribute individual tasks to a pool of people who are generally regarded as independent contractors.

California sued the companies last year, saying they were in violation of the state’s so-called gig law because none of them reclassified their drivers as employees after the statute went into effect in 2020. A high-stakes legal battle ensued, culminating in Proposition 22, in which the companies asked state voters to exempt them from the law.

Uber, Lyft, DoorDash and Instacart Inc. promised workers flexibility, alongside some benefits, if the ballot measure passed. Opponents of the measure said those benefits fall short of those awarded to full-time employees. Still, California voters passed the measure with an overwhelming majority.

Superior Court Judge Frank Roesch said in Friday’s ruling that Proposition 22 limits the state legislature’s authority and its ability to pass future legislation, which is unconstitutional.

“We believe the judge made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters’ right of initiative,” said Geoff Vetter, a spokesman for the companies’ Proposition 22 campaign. “This outrageous decision is an affront to the overwhelming majority of California voters.”

Friday’s ruling came after a group of ride-share drivers and labor unions challenged the constitutionality of the ballot measure in February.

“Today’s ruling by Judge Roesch striking down Proposition 22 couldn’t be clearer: The gig industry-funded ballot initiative was unconstitutional and is therefore unenforceable,” said Bob Schoonover, the president of SEIU California State Council, one of the labor unions involved in the lawsuit. The companies “tried to boost their profits by undermining democracy and the state constitution,” he added.

Proposition 22 was the most expensive ballot measure in the history of California. It allowed the ride-hailing and delivery companies to avoid complying with a law that could have reshaped their business models and battered their business in the most populous U.S. state. But the effort to win popular support did lead the companies to guarantee new protections.

The companies now offer health insurance for drivers who work 15 hours or more a week, occupational-accident insurance coverage and 30 cents for every mile driven, among other protections.

The win in California set the tone for gig-worker regulation in the rest of the country. Uber, Lyft, DoorDash and Instacart have joined forces for a Proposition 22-like ballot in Massachusetts next year.

Uber, which has a larger global footprint, has had to make concessions outside the U.S. It agreed to grant its U.K. drivers an employment status entitling them to vacation pay and pension contributions after exhausting its legal options in March.

California Ballot Measure That Classifies Uber, Lyft Drivers as Independent Ruled Unconstitutional - WSJ
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