Son of Prop 22

Keen to repeat their success in deciding the legal employment status of their workers in California via a generously-funded ballot initiative, the platform employers are at it again.

The Massachusetts Coalition for Independent Work, whose members include Uber, Lyft, DoorDash and Instacart Inc, is out to convince voters in the State that workers should be deemed as contractors and not full-time employees, potentially excluding them from benefits such as pensions and healthcare. If the companies are successful in getting the proposal to ballot, Massachusetts voters would follow their Californian counterparts in deciding the fate of thousands of gig workers. The Californian Proposal (Prop 22) passed successfully in November 2020.

On the day the votes were counted last November, shares in Uber closed up 14.59% at USD 40.99, a new 52-week high at the time, while Lyft closed up 11.28%. And even on the news of its involvement in Massachusetts ballot on August 4, Uber’s shares jumped from USD 41.81 to USD 43.07.

Given these companies’ valuations are intrinsically linked to their workers’ legal employment status it is no great surprise that they are seeking to take similar action in five other States. The gig companies say the proposal would establish an earnings floor equal to 120% of the Massachusetts’ minimum wage which is equivalent USD 18 an hour in 2023 before tips. Drivers would be guaranteed at least USD 0.26 per mile to cover vehicle upkeep. They also argue that the law would protect the ‘flexible earning opportunities… that drivers want’.

The trouble is it seems that what drivers and other gig workers want is stability, consistency, a fair wage and employment benefits. Beth Griffith, an Uber driver and chair of the Boston Independent Drivers Guild, told Reuters that the proposal was ‘exploitation’ adding ‘Uber, Lyft and the gig economy’s way of trying to create a sub-class of workers’.

These are thorny issues. Some drivers do value flexibility, though we remain unconvinced that this needs to come at the expense of employment rights. And the interests of different stakeholders are not aligned – changes that might give drivers better terms and conditions negatively impact valuations for investors. Customers want cheap fares but investors want profitable companies. There are no simple solutions, deliberation is required.

But that is precisely why these questions should absolutely not be decided in a binary yes/no choice presented to voters at state level. And as we said about Prop 22 last year, it is unthinkable that responsible investors would accept a group of fossil fuel companies attempting to rewrite environmental law through ballot initiatives. The same should go for platform employers seeking to amend employment law in their favour.

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