Deliver

Uber, Lyft, and DoorDash score a gigantic win as CA voters save the gig economy

Thursday, November 5, 2020 by Robinhood Snacks |
_Christmas came early for Uber and Lyft_

Christmas came early for Uber and Lyft

Saved by the ballot... App-based driving companies are majorly relieved after CA voters said "Yes" to Prop 22. That exempts them from CA's AB5 law, which would've forced them to reclassify gig drivers as employees (think: healthcare, PTO, paid sick leave).

  • "The Ride Scare"... In August, Uber and Lyft said they'd shut down in CA because it was forcing them to follow AB5 (cue: panic). Hours before the shutdown, regulators said they could wait until the Prop 22 vote.
  • $200M and 200M emails later... Uber, Lyft, DoorDash, Postmates, and Instacart spent $200M to support the Prop (and spammed us with notifications). It was the most expensive campaign for any ballot measure in CA history.

Deliver the deets... This law would've made hiring drivers more expensive, making these chronically unprofitable apps even more unprofitable. Now they'll save billions of $$$ in a key market. Uber and Lyft shares soared more than 10% yesterday.

  • Drivers get: New benefits like health insurance if you work 15 hours or more per week and at least 120% of minimum wage. They also retain flexibility to work when they want.
  • Riders avoid: Up to 2X price increases and fewer available drivers. Uber would likely have dramatically reduced drivers if the Prop failed.
THE TAKEAWAY

It's a massive blow to AB5... Gig companies were the main target of this law. Now that they're exempt, that just leaves other independent contractors like freelancers. But AB5 has caused some companies to stop hiring CA freelancers to avoid paying them as employees. Vox cut 200 freelance writers to comply with AB5. That's why CA has been handing out exemptions and loosening requirements.