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Prop 22 Win Exempts Uber and Lyft Drivers from AB5

Californians voted 58 percent in favor of the ballot measure, meaning gig economy workers won’t be reclassified as employees

After a contentious legal battle, rideshare giants Uber and Lyft, along with other companies that rely on gig workers, are celebrating a win in Tuesday’s election, with 58 percent of California voters approving Proposition 22.

The ballot measure exempts the companies from the provisions of Assembly Bill 5 passed in 2019 which means app-based transportation drivers will stay independent contractors, rather than be classified as employees, with benefits such as full minimum wage requirements, overtime pay and sick leave.

In the run up to the election, the companies had launched a $200 million campaign to push for adoption of Prop 22.

Prop 22 is considered a major win for ridesharing companies. However as part of their campaign they have promised to provide certain worker benefits such as guaranteed minimum earnings, stipends to subsidize healthcare benefits and insurance coverage for on-the-job accidents.

“Prop 22 is now the first law in the nation requiring health, disability and earnings benefits for gig workers,” said Lyft chief policy officer and former Obama secretary of transportation Anthony Foxx, in a prepared statement. “Lyft stands ready to work with all interested parties, including drivers, labor unions and policymakers, to build a stronger safety net for gig workers in the US.”

Had the proposition failed at the polls, both Lyft and Uber had previously threatened to cease operations in the state because of the higher operating costs associated with classifying workers as employees.

Supporters of AB5, including labor organizations and California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego and San Francisco, say the companies should be required to pay regular worker protections and benefits.

“Uber and Lyft have used their muscle and clout to resist treating their drivers as workers entitled to those paycheck and benefit protections,” Becerra said.

The cities and state had filed suit to force the companies to reclassify their workers under AB5, a suit that was upheld on appeal in October.

Labor analysts say the passage of Prop 22 effectively creates a third category of worker and may prove to be a model for other states which may have been considering legislation covering gig workers.,