Economy & Business

Californians Pass Prop 22, Exempting Uber, Lyft from Classifying Drivers as Employees

An illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. (REUTERS/Kai Pfaffenbach)

Uber and Lyft won a vote among California voters Tuesday that exempts the companies from having to reclassify their drivers as employees, which would require them to pay for certain employee benefits.

Californians voted 58 percent to 41 percent to approve Proposition 22, which would allow the gig economy companies to classify their drivers as independent contractors who can set their own hours, according to the Associated Press.

The two ride-sharing companies along with delivery services DoorDash, Postmates, and Instacart spent $200 million to support the ballot measure, the most expensive ballot campaign in California’s history.

Labor unions had supported a state labor law passed last year that would have mandated certain companies including Uber and Lyft provide benefits like sick leave, minimum wage, overtime, health insurance, and reimbursement for expenses. The proposition would exempt the companies from the state law, but the measure does include a concession to labor groups of a wage floor and some benefits to drivers.

In their Yes on 22 campaign, Uber and Lyft and the other delivery companies warned drivers leading up to the election that if the ballot measure failed, only some of the companies’ current drivers would be hired as employees, and the added expenses would end up driving up costs. Customers were told the state law would result in longer wait times for the services.

“App-based ride-share and delivery drivers across the state will be able to maintain their independence, plus have access to historic new benefits,” the companies said in their campaign to pass the proposition.

Shares of Uber spiked 11 percent, and Lyft shares rose 13 percent Wednesday morning after the results of the vote came in.

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