New York (CNN Business)Uber and Lyft scored a big win when Californians voted in favor of their ballot measure that allows them to continue treating their drivers as independent contractors rather than employees in the state. But there’s likely a long, turbulent road ahead as the companies confront the issue nationally.
The two ride-hailing giants, along with DoorDash, Instacart, and Uber-owned Postmates, spent more than $200 million to pass Proposition 22 or Prop 22 in California — a reaction to a state labor law, Assembly Bill 5 or AB-5, that went into effect on January 1 and codifies an “ABC” test to determine if workers are employees who are entitled to labor protections and benefits.
Classifying on-demand workers as employees has long been viewed as a potential existential threat to the business model popularized by Uber ( UBER ) and Lyft ( LYFT ). The companies scaled their businesses with massive fleets of workers who are treated as independent contractors, shirking the responsibility of costly benefits entitled to employees, such as a minimum wage, overtime, paid sick leave and unemployment insurance. Under Prop 22, the companies will continue to treat drivers as independent contractors while granting some drivers benefit […]