In a stunning preliminary injunction issued on August 10th, a California judge ruled that Uber and Lyft should classify their drivers as employees. Both companies appealed and now, voters in the state made the call on California’s Proposition 22 which would label app-based drivers as independent contractors.
According to projections from NBC News, California voters decided Tuesday that Uber and Lyft should be exempt from state labor law that aimed to make their drivers employees rather than contractors.
Proposition 22, a ballot measure, became one of Uber and Lyft’s last hopes to continue their operations in the state as they do today.
While classifying drivers as independent contractors would disqualify them for benefits granted to employees, the measure would also make them eligible for new benefits like minimum earnings and vehicle insurance.
Several gig economy apps supported the measure, including Uber, Lyft, DoorDash, Instacart, and Postmates.
As neither Uber and Lyft has reached profitability, the contractor-driver model is especially important for the businesses as it allows them to avoid the cost of benefits associated with employment that the companies would otherwise probably have to pass to consumers.
The proposition, therefore, has significant implications for DoorDash, Instacart, Uber, and Lyft, who rely heavily on gig workers for their delivery services.
“In a historic election, California drivers sent a clear message that we want to be independent and that what’s best for us is a new approach that preserves our independence while providing new benefits,” Bay Area rideshare driver Jimmy Strano said in a statement shared by Yes on 22, a committee funded by Uber, Lyft, and DoorDash.