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Saturday, Jul 31, 2021

The evolving gig economy and the battles between companies and workers

The evolving gig economy and the battles between companies and workers

A victory by gig-economy companies in California to keep classifying their workers as contractors has given the industry a playbook to face rising labor movements nationwide. The efforts to force the companies to treat their workers like full-time employees could annihilate their business models.

Gig companies like Uber, Lyft, Postmates, Doordash and Instacart spent more than $200 million this year backing a California state proposition known as Prop 22 — that has enshrined their workers as contractors in exchange for some limited benefits, including funding that can be used for health insurance.

  • They were fighting a new law in California, known as AB5, that changed rules on worker classification.

  • They won: 58% of California voters backed their gig-worker proposition.

    Uber planned to operate only in the San Francisco Bay Area, Los Angeles, Orange County and San Diego — employing just 45,000 drivers (instead of 200,000) — if California voters had rejected Prop 22 last month

Now the companies are working to export this approach to other states.
  • They're already begun to pour resources into states like Illinois.

  • They recently also formed the the App-Based Work Alliance, an advocacy group focused on federal-level policy.


Years of worker discontent and activism collided with this year’s pandemic to lay bare just how vulnerable gig workers are, while also giving them access for the first time ever to some traditional benefits.

  • That's boosted pro-labor efforts pushing for gig companies to reclassify workers as employees so they can receive full benefits and legal rights and protections.

  • Earlier this year in May, California Attorney General Xavier Becerra (who’s been selected to be the next secretary of health and human services by President-elect Biden), filed a lawsuit against Uber and Lyft for allegedly misclassifying their ride-hailing drivers. He was joined by the city attorneys of San Francisco, San Diego and Los Angeles.

The industry faces a long road:
  • States: 32 other states already use the same legal test to determine worker classification as California’s law, and some states are already introducing (or looking toward) even stricter measures.

  • Congress: The PRO Act, a bill that would expand collective bargaining rights and allow the National Labor Relations Board to fine companies breaking laws, passed in the House, though it's unlikely to be taken up by a GOP-controlled Senate.

  • White House: Both Biden and Vice President-elect Harris have expressed support for AB5, and their labor platform is strongly pro-union and endorses the PRO Act.

With their victory at the California voting booth, gig-economy companies hope 2020 will be a turning point in their efforts to thwart tougher rules.

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