What Uber, Lyft Prop 22 wins, means for the way forward for all freelance work

Rideshare driver Jesus Jacobo Zepeda of Lancaster, Calif. Attends a nationwide day of action rally to demand that hail-fighting companies Uber and Lyft comply with California law and provide “basic worker rights” to drivers in Los Angeles, California, USA, August 20, 2020.

Mike Blake | Reuters

California voters gave Uber and Lyft a huge hit in the battle for the future of gig economy workers and approved Proposition 22, but it’s not just the tech giants and freelancers who supply people and groceries that are expecting a big impact from the voting decision.

Independent contractors across the country could breathe a sigh of relief as California voters sent a message to state lawmakers that AB 5, the law that classifies freelancers as workers, is largely unpopular. Other states, including New Jersey, Massachusetts, New York, and Illinois, have been considering craft laws, among other things, to force companies to treat freelancers as employees. Now these states can see the risks more clearly, experts say.

“It’s not going to go away, but it’s being redesigned and looked at in much more detail,” said Miles Everson, CEO of MBO Partners, an advisor to the independent contractor community. The overarching message Prop 22 sends is that “one size fits all” legislation that brings together all the professional professions is not working and not popular with voters.

AB 5’s problems were already known, as California was forced to create around 100 spin-offs for various professions to get exempt from the law. That included many unskilled workers “in the big people’s zone who take advantage of the little people,” Everson said, but also the independent contractors that a company like MBO Partners serves: sole traders who set up their own businesses, do six-digit numbers and themselves continuing education degrees in many cases.

“It’s a major societal issue,” said Everson, whose company supports a more detailed set of guidelines for the self-employed. He found that there are more people working as freelancers today and growth is continuing, but AB 5 was not a good solution. “This is not all about Uber and Lyft. It’s about people who want to start their own business. … high-end knowledge workers who generate six-digit numbers should be happy with the decision.”

“But it’s far from over,” he said. “Working people have different needs and characteristics and you have to divide this up for different cohorts of workers, and to do that the pendulum will swing more. This is a step towards compromise, but a much bigger step, the need highlights legislation not to generalize. “

Steve King, partner at small business and independent consultancy Emergent Research, believes this will affect action in other states. “It will dampen the buzz for AB5-like laws elsewhere, and I think it will reduce the chances for that.” [current version of the] Pro Act at the federal level, even if Biden wins, “he said.” Prop 22 won pretty big. “

For freelancers based outside of California, this result is useful as it is another reason not to pass an AB 5 law unless lawmakers are very careful about it. This will deter other states from following the AB 5 path. “This vote shows that you would get a pushback anywhere you would try another AB 5. This was a pretty clear blow to AB 5,” he said, adding, “had it failed, it would have been much more likely that other states go. ” with an AB 5. “

Worker misclassification remains a serious problem and freelancers, who now comprise 12% to 15% of the workforce in the United States, will continue to grow as the workforce and laws across the country remain confusing.

This vote shows that you get pushback anywhere you would try another AB5. This was a pretty clear blow to AB 5.

Steve King

Emergent Research Partner

Kim Kavin, co-founder of the non-partisan group Fight for Freelancers and a freelance writer and editor in New Jersey, said, “Everyone’s celebrating today. All the mess in the results of the federal elections … we’re just excited about this result.”

She added that while the focus is on winning for Uber and Lyft, “we see this as a big win in a bigger fight, we see the voters standing with us … we hope this has an impact on that policy makers in New Jersey has … and at the federal level. “

King advocates well-drafted federal law to provide clarity. A version of the Pro Act that has been criticized by the professional industry as it stands, which aims to be more freelance-friendly and identify truly independent contractors, is needed, he said.

“The most productive way would be at the federal level, even if it isn’t passed into law,” Everson said. Adding Department of Labor policies can help, but it can also change from administration to administration. President Trump’s DOL has proposed new guidelines for employee misclassification.

In California, the effects of Prop 22 are limited for the time being. While traditional logistics companies might next claim to be app-based, like an Uber, many freelancers in various professions are still subject to AB 5, and that won’t change.

“AB 5 was just a mess. It was meant well … but poorly written and vague,” King said.

However, he hesitates to say that the decision is a clear political win for all freelancers, although he expects many will. He said Prop 22 was too narrow and too focused on drivers to be sure it would define the freelance struggle. It provides discussion points on political interests that want to show that voters don’t want workers to be forced into traditional jobs. But he said his company’s poll shows that the average voter really viewed Prop 22 as an “Uber / Lyft” problem.

California “still a mess” for freelancers

In California, the situation is “still a mess” for many freelancers, according to King. And instead of causing state lawmakers to reconsider their stance, it “could just infuriate a group of politicians,” he said.

Many of the effects of AB 5 that are already in California will continue, such as: B. Corporations fearful of breaking GI 5 and facing heavy fines for opting for full-time employees or hiring freelancers outside of the state or country. And a very confusing law remains for freelancers in California.

“AB 5 is still the law,” he said with a new spinoff for drivers. “And it’s the strangest law ever written in California that affects so many people.”

Harry Campbell, known as The RideShare Guy and advisor to Gig Economy workers, said his survey of drivers showed that many want to be independent contractors. A survey in September found that 60% of drivers prefer Prop 22. Those who benefit most from Prop 22 are part-time drivers who value the flexibility of the hours, he said.

King of Emergent Research said some of the most effective Uber and Lyft sponsored ads included those with drivers advocating Prop 22.

“It’s easy to point out the sheer amount of money spent by the Yes on 22 coalition and say that was why it passed, but I’m not so sure,” said Campbell. He noted that spending on previous election initiatives had actually hurt them in places like Austin, where voters spoke out against the companies and many felt they were being bombarded with news.

The results don’t bode well for similar efforts in other states backed by traditional unions, at least in relation to its driving world. “Labor threw a slap on the fences in California with AB 5, and now companies have shown that if they spend enough money they can take their case to the polls and come up with a proposal to hire the drivers as independent contractors I’m assuming that many states will work to find a compromise between labor and gig companies that keeps drivers classified [independent contractors] However, ICs offer them some advantages. “

The Independent Drivers Guild, a member of the Machinists Union, which represents 200,000 drivers on the east coast, said in a statement Wednesday that the California experience should lead pro-worker state lawmakers to step in, and called New York and New Jersey to specifically do this. “Collective bargaining, not voting and lengthy litigation, is the only real long-term solution for gig workers,” said Brendan Sexton, its executive director.

AB 5 is not a roadmap

King said there could be a moral victory for California freelancers and lawmakers would be more willing to do more spin-offs and reduce the aggressiveness of AB 5 state enforcement, but “the AB 5 problem remains.”

Jim Manley, an attorney for the Pacific Legal Foundation who currently represents associations of journalists and photographers in an AB 5 case disputed in California, said Prop 22 shows voters approve of the backlash that has existed at AB 5 since its inception .

“We should leave it to workers to decide how a company is to be structured … This is great news for ridesharing companies, but it also sends a clear message from voters that they don’t support policies like AB 5 bad public order.”

He said any exceptions that have already been added to the legislation show the lack of care with which they have been written and that efforts like Prop 22 are not a long-term solution.

“In my opinion, voters want more freedom for workers and don’t believe that this can be achieved through piecemeal spin-offs for industry,” said Manley, adding, “If we go down this path, we will continue down the same path we went. ” was on.”

That means industries with enough political pull or resources to have a major lobbying battle get their spin-offs, but “it doesn’t help freelance comedians who don’t have a coalition,” Manley said.

He doesn’t expect the lawmakers who wrote AB 5 to admit mistakes in greater ways than any exceptions they already had to add, but he agreed with the other experts that doing so will make lawmakers outside California more cautious.

“The message Prop 22 sends is to pump the pauses in type AB 5 legislation and think more carefully about how you affect the people you want to help,” he said. “Policy makers need to take a look at what happened with Prop 22 and ask if this is the fight they want to be waging. The rest of the country can learn from California.”

New Jersey-based freelancer Kavin said worker misclassification is a big problem and federal clarity would help, but “AB 5 is not a roadmap.”

She said the Pro Act, under consideration by the Democratic leadership and backed by Biden, represented the interests of unions like the AFL-CIO, and that the political powers had not even given freelancers “a place at the table” in drafting laws represent their interests.

“As big and expensive as Prop 22 was, I hope you can hear us,” she said.

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