After $200 million California brawl, Uber and Lyft's gig worker fight is far from over

By Sara Ashley O'Brien, CNN Business

Updated 1512 GMT (2312 HKT) November 15, 2020

united shades of america gig economy clip 1_00000920

newt gingrich fox news

See how Fox News changed tune on accepting election results

WASHINGTON, DC - NOVEMBER 08: Former White House senior counselor to President Donald Trump
Steve Bannon leaves the E. Barrett Prettyman United States Courthouse after he testified at the Roger
Stone trial November 8, 2019 in Washington, DC. Stone has been charged with lying to Congress and
witness tampering. (Photo by Alex Wong/Getty Images)

Twitter shuts down Steve Bannon account after talk of beheading

Fox News anchors are questioning their own network's election calls

Signs in the video were manipulated to make it appear that Joe Biden was in Tampa, Florida. He was, in
fact, in St. Paul Minnesota.

False video of Biden aims to make him look unfit for office. 1.1 million watched it

Here's how to spot misinformation online

This fourth-grader doesn't have WiFi at home. So he walks to school

A 2x2 grid split screen showing Donald Trump and Joe Biden and energy industry equipment.

The future of renewable energy could look very different under Biden

See what's new inside Walmart stores

united shades of america gig economy clip 1_00000920.jpg

Gig worker: These jobs aren't for extra money. They're essential

It's official: Black Friday is irrelevant

screengrab fedex vaccine

What it could take to deliver a Covid-19 vaccine to the world

screengrab mcplant

Internet mocks McDonald's new meatless burger

New 13-inch MacBook Pro.

See Apple's new Macbooks with the M1 chip

Pfizer CEO Albert Bourla

Dr. Gupta talks to Pfizer CEO about vaccine effectiveness

Watch: People travel in Virgin Hyperloop for the first time

Stop the Steal Harrisburg 1

An online movement has these Trump supporters convinced the election was stolen

newt gingrich fox news

See how Fox News changed tune on accepting election results

WASHINGTON, DC - NOVEMBER 08: Former White House senior counselor to President Donald Trump
Steve Bannon leaves the E. Barrett Prettyman United States Courthouse after he testified at the Roger
Stone trial November 8, 2019 in Washington, DC. Stone has been charged with lying to Congress and
witness tampering. (Photo by Alex Wong/Getty Images)

Twitter shuts down Steve Bannon account after talk of beheading

Fox News anchors are questioning their own network's election calls

Signs in the video were manipulated to make it appear that Joe Biden was in Tampa, Florida. He was, in
fact, in St. Paul Minnesota.

False video of Biden aims to make him look unfit for office. 1.1 million watched it
Here's how to spot misinformation online

This fourth-grader doesn't have WiFi at home. So he walks to school

A 2x2 grid split screen showing Donald Trump and Joe Biden and energy industry equipment.

The future of renewable energy could look very different under Biden

See what's new inside Walmart stores

united shades of america gig economy clip 1_00000920.jpg

Gig worker: These jobs aren't for extra money. They're essential

It's official: Black Friday is irrelevant

screengrab fedex vaccine

What it could take to deliver a Covid-19 vaccine to the world

screengrab mcplant

Internet mocks McDonald's new meatless burger

New 13-inch MacBook Pro.

See Apple's new Macbooks with the M1 chip

Pfizer CEO Albert Bourla

Dr. Gupta talks to Pfizer CEO about vaccine effectiveness

Watch: People travel in Virgin Hyperloop for the first time

Stop the Steal Harrisburg 1

An online movement has these Trump supporters convinced the election was stolen

New York (CNN Business)Uber and Lyft scored a big win when Californians voted in favor of their ballot
measure that allows them to continue treating their drivers as independent contractors rather than
employees in the state. But there's likely a long, turbulent road ahead as the companies confront the
issue nationally.

The two ride-hailing giants, along with DoorDash, Instacart, and Uber-owned Postmates, spent more
than $200 million to pass Proposition 22 or Prop 22 in California -- a reaction to a state labor law,
Assembly Bill 5 or AB-5, that went into effect on January 1 and codifies an "ABC" test to determine if
workers are employees who are entitled to labor protections and benefits.

Classifying on-demand workers as employees has long been viewed as a potential existential threat to
the business model popularized by Uber (UBER) and Lyft (LYFT). The companies scaled their businesses
with massive fleets of workers who are treated as independent contractors, shirking the responsibility of
costly benefits entitled to employees, such as a minimum wage, overtime, paid sick leave and
unemployment insurance.

Under Prop 22, the companies will continue to treat drivers as independent contractors while granting
some drivers benefit concessions, but not the full suite of protections that they would likely have gotten
had the measure not passed.

Beyond California

After their Election Day victory, the companies were quick to signal they would pursue models similar to
Prop 22 outside the state, underscoring how their business models remain on unsteady ground.

Uber CEO Dara Khosrowshahi said on the company's November 5 earnings call that, "you'll see us more
loudly advocating for new laws like Prop 22," calling it an "IC+ model," short for independent contractor
plus some benefits. He added "we want to have a dialogue" with governments in other states. Lyft CEO
Logan Green echoed that sentiment days later on its earnings call, saying it is "continuing to engage with
policymakers across the country."

California Labor Commissioner sues Uber and Lyft for alleged wage theft

California Labor Commissioner sues Uber and Lyft for alleged wage theft

Jenny Montoya Tansey, policy director at the Public Rights Project, a public interest legal nonprofit that
has been involved with AB-5 enforcement efforts in California told CNN Business that it is "not surprising
to me to hear that Uber and Lyft are now saying they want to take the fight to other states -- because
they're going to need to."

Many other states have some form of ABC test for unemployment insurance eligibility, with several
states determining that Uber and Lyft drivers are owed such coverage. Massachusetts, which has a law
similar to California's AB-5, is currently challenging Uber and Lyft over how they classify workers, which
the companies have indicated they intend to fight.
Montoya Tansey said that the attention that the AB-5 law, and the ensuing enforcement action, received
"shone an even sharper light for other states and cities around the country to start thinking about
pursuing these companies on worker rights."

"They had a good month," she added. "But I don't think that necessarily means things are always going
to be good for them in the future."

Shannon Liss-Riordan, a Boston-based lawyer who has been challenging Uber and Lyft over worker
classification through various lawsuits for seven years, told CNN Business that it is clear the gig economy
companies have been "emboldened from what they were able to pull off in California."

Californians were bombarded with the Yes on Prop 22 messaging, as the companies waged an
aggressive campaign of television ads, in-app messages, and confusing mailers.

New York Uber and Lyft drivers win key battle over unpaid unemployment benefits

New York Uber and Lyft drivers win key battle over unpaid unemployment benefits

"It really was information warfare -- and, given the war chest the gig economy companies had and the
access to so many people, they were able to win that information war," added Liss-Riordan, who
secured a $20 million settlement from Uber in 2019 in a class action lawsuit over alleged
misclassification of some California and Massachusetts drivers.

(In a statement at the time, a spokesperson said the company "has changed a lot since 2013," citing
improvements in the app for drivers, and that it would "continue working hard to improve the quality,
security and dignity of independent work.")

Even with the passage of Prop 22, Uber and Lyft still have to answer to a lawsuit brought by the
California Attorney General and a coalition of city attorneys over driver classification, for which they may
be held responsible for violations of the AB-5 law up until Prop 22 takes effect; they're also facing a suit
from the California Labor Commissioner, which the companies have pushed back on.

A new administration

President-elect Joe Biden and Vice President-elect Kamala Harris called for "no" votes on Prop 22, with
Biden saying the gig economy companies "are trying to gut" the AB-5 law and calling it "unacceptable."
Harris similarly took issue with the companies trying to "exempt themselves from providing essential
protections and benefits."

How gig workers should be classified is still up for debate at the federal level. But, the Trump
administration's Department of Labor proposed a rule in September under the Fair Labor Standards Act,
or FLSA, that would make it easier for the companies to classify drivers as independent contractors. The
FLSA establishes baseline standards like minimum wage and overtime for employees, and the proposed
rule "would make it easier for corporations to cheat their workers and avoid minimum wage and
overtime protections," according to the National Employment Law Project.
Instacart now valued at nearly $14 billion after 'unprecedented surge' in demand during
pandemic

Instacart now valued at nearly $14 billion after 'unprecedented surge' in demand during pandemic

William Gould IV, a Stanford University law professor and former National Labor Relations Board
chairman, told CNN Business that while "it's early days," the companies are "likely to face some kind of
pushback at the national level. We'll see some tip-off when we see who is appointed Secretary of
Labor."

Biden has also endorsed the Protecting the Right to Organize Act or Pro Act, which provides new
protections to workers around the right to organize. It expands who has the right to unionize by using an
"ABC" test to determine if workers are employees. He has pledged to appoint members to the NLRB
"who will protect, rather than sabotage, worker organizing, collective bargaining, and workers' rights to
engage in concerted activity whether or not they belong to a union."

Delivery workers navigate a pandemic, protests and curfews to make ends meet

Delivery workers navigate a pandemic, protests and curfews to make ends meet

Meanwhile, the companies will continue to push for a "third way," something in between independent
contractors and employees. That approach includes a portable benefits fund that workers can put
towards health insurance or paid time off. Notably, among those who have advocated for a "third way"
is Seth Harris, who is part of Biden's transition Labor team and was acting Secretary of Labor during part
of the Obama administration.

Vanessa Bain, a California-based gig worker and founder of a non-profit Gig Workers Collective, said she
doesn't expect the fight for proper benefits and protections to get much easier.

"It is not as simple as 'Biden is President.' It is still going to be an uphill battle," she told CNN Business,
while adding that the national fight is what's next. "We're in a situation where, excluding legal remedies
to Prop 22, we really need to go above its head and go to the federal level."

Bain said her organization is talking to allies to strategize on what's next.

"We absolutely took a major L - it doesn't feel good but I do feel more committed than ever to the work
of ensuring gig workers are properly classified," added Bain.

A deal with labor?

Lyft cofounder and president John Zimmer told the Los Angeles Times after Prop 22's passage that he's
open to striking a deal with labor unions in California, something that could help bolster the positioning
of the companies when pushing a Prop 22-like model in other states.

"I'd rather stand in the same room talking across the table than not talking to each other," Zimmer said
in an interview on CNN International's First Move with Julia Chatterley last week, adding that the
company has spoken with unions in recent years but never reached a deal. "I'm hopeful we can continue
those conversations."

Food delivery giant DoorDash files paperwork to go public

Food delivery giant DoorDash files paperwork to go public

In the past, companies have expressed interest in sectoral bargaining -- which would allow drivers to
organize on an industry-wide basis -- while remaining independent contractors.

Rome Aloise, International Vice President of Teamsters, told CNN Business said it talked with Uber and
Lyft for several years but never got close to a deal. The sticking point has been employee status and
striking something good for drivers, that would also protect "our traditional companies from being
sucked into this big abyss." Teamsters represents hundreds of thousands of UPS workers, for example.

"We stand, and will continue to stand, with rideshare drivers in their fight to improve working
conditions, pay and win a voice at work," said Mary Kay Henry, the president of the Service Employees
International Union, in a statement.

Teamster's Aloise said there's interest in talking -- "you can't find a solution if you're not talking" -- but
not to expect anything imminent.

"I don't want to give the impression there's something out there that could be easily done, I don't think
we're any place close at this point," Aloise said. "We haven't had any discussions since Prop 22 passed, I
can tell you that."

PAID CONTENT

Doctor: If You Have Tinnitus (Ear Ringing) Do This Immediately!

Doctor: If You Have Tinnitus (Ear Ringing) Do This Immediately!

Sponsored: fitnessforhealth24.com

READ: John Kelly statement on Trump not helping with the transition to a Biden administrationREAD:
John Kelly statement on Trump not helping with the transition to a Biden administration

Politics

READ: John Kelly statement on Trump not helping with the transition to a Biden administration

Coronavirus cuts lifeline for Indonesian migrant families

Coronavirus cuts lifeline for Indonesian migrant families

CNA

Do this Immediately if You Have Enlarged Prostrate (Watch)

Do this Immediately if You Have Enlarged Prostrate (Watch)

healthtrend.live

A California man saved 10-year-old girl from drowning. Now the girl and her mother are raising money
to help pay for the hero's dream weddingA California man saved 10-year-old girl from drowning. Now
the girl and her mother are raising money to help pay for the hero's dream wedding

U.S.

A California man saved 10-year-old girl from drowning. Now the girl and her mother are raising money
to…

Many military Covid-19 cases show no symptoms, new reports findMany military Covid-19 cases show
no symptoms, new reports find

Health

Many military Covid-19 cases show no symptoms, new reports find

Do this Immediately if You Have Enlarged Prostatic (Watch)

Do this Immediately if You Have Enlarged Prostatic (Watch)

Stay Healthy

Why is it never too late to love?

Why is it never too late to love?

DateMyAge.com

Search CNN...

Search

World

US Politics

Business

Health

Entertainment

Tech
Style

Travel

Sports

Videos

Features

More

Weather

FOLLOW CNN BUSINESS

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA,
which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: Copyright 2018 Morningstar,
Inc. All Rights Reserved. Factset: FactSet Research Systems Inc.2018. All rights reserved. Chicago
Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its
licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are
calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have
been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks
of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones
Trademark Holdings LLC. All content of the Dow Jones branded indices Copyright S&P Dow Jones Indices
LLC 2018 and/or its affiliates.

Terms of Use

Privacy Policy

Accessibility & CC

AdChoices

About Us

Modern Slavery Act Statement

Advertise with us

CNN Store

Newsletters

Transcripts

License Footage
CNN Newsource

Sitemap

© 2020 Cable News Network.A Warner Media Company.All Rights Reserved.

CNN Sans ™ & © 2016 Cable News Network.