By Preetika Rana and Christine Mai-Duc
Uber Technologies Inc., Lyft Inc. and DoorDash Inc. are spending
tens of millions of dollars and flooding voters with messages in a
neck-and-neck battle to preserve their current business model in
California.
The companies, along with other gig-economy giants like
Postmates Inc. and Instacart Inc., have contributed nearly $200
million to persuade voters to approve a ballot measure that would
exempt them from a new state law requiring businesses to reclassify
contract workers as employees. That amount, the most ever raised
for a California ballot question, according to Ballotpedia,
suggests how pivotal the vote will be for companies reliant on a
labor model in which workers are summoned at the touch of an
app.
The opposition, which has raised far less -- roughly $19
million, largely from labor unions -- says the companies have
flourished on the backs of gig workers without providing them the
protections that most employees receive.
Victory for Uber, Lyft, DoorDash and others would let stand the
companies' business models in their home state of 40 million
people. If voters reject the Proposition 22 measure, the companies
would be compelled to offer their drivers broad employment
benefits, such as minimum wage, paid sick leave and unemployment
assistance, that would weigh heavily on their already money-losing
bottom lines.
Defeat for the companies in their home state also could set a
precedent for battles in other U.S. states and in other countries
where the gig-worker model has been challenged. Uber was forced to
reclassify its food-delivery drivers as employees in Geneva last
month. Massachusetts sued Uber and Lyft over alleged driver
misclassification in July.
Having to classify gig workers as employees would severely limit
the companies' operations in a lucrative market. Uber has
internally discussed operating in just three jurisdictions,
including the San Francisco Bay Area and Los Angeles, if the ballot
measure fails, according to a person familiar with its plans.
Analysts say Uber and Lyft stocks could also tank. The
companies, already struggling to turn a profit, estimate they would
each need to invest hundreds of millions of dollars to develop the
infrastructure needed to support drivers. DoorDash, also
unprofitable, plans to go public later this year.
Despite the millions spent on advertising and messaging, voter
sentiment on Proposition 22 is roughly even. A poll released Monday
by the Institute of Governmental Studies at the University of
California, Berkeley, found 46% of likely voters said they would
support the measure and 42% said they would vote against it. The
gap is within the poll's margin of error of plus or minus 2
percentage points.
The companies' campaign said it is on track to spend more than
$82 million on television and radio ads by Election Day. Opponents
say they expect to spend more than $11 million on ads by then.
The California law targeted by Proposition 22 was signed by
Democratic Gov. Gavin Newsom late last year and went into effect
Jan. 1. The gig companies combined forces to seek an exemption
after attempts to reach a compromise with unions and lawmakers
failed.
Uber, Lyft and the other companies argue that the law would end
drivers' ability to set their own schedules, a core benefit of
working for on-demand platforms. While the law doesn't forbid
flexible scheduling, Geoff Vetter, a spokesman for the companies'
campaign, said it doesn't outline a realistic framework either.
"What other examples of an employment situation exist where
employees can choose when they work, how long they want to work,
and the ability to work for competitors almost simultaneously? It
frankly doesn't exist, " Mr. Vetter said.
Uber says part-timers account for most of its drivers. In the
last three months of 2019 -- the last full quarter before the
coronavirus pandemic -- less than 10% of its California drivers
were online for 40 hours or more a week, the standard for full-time
U.S. employees. Those drivers accounted for a quarter of trips.
In recent weeks, Uber has bombarded its drivers in California
with in-app messages stating that the company would hire only three
out of every 10 drivers as employees, limit time off and force them
to drive in designated areas if Proposition 22 fails. Riders get a
message before each trip warning of rising prices, longer wait
times and less reliable service if the measure doesn't go Uber's
way.
DoorDash and Instacart customers have found "Yes on Prop 22"
fliers inside their packages.
The companies have made more than $10.2 million worth of
nonmonetary contributions to the Yes on 22 campaign, including
in-app messages and emails to drivers and users. If Proposition 22
succeeds, the companies are guaranteeing new protections to
freelance drivers, such as 30 cents per mile driven, health-care
subsidies to those who work at least 15 hours a week and
occupational-accident insurance coverage while on the job.
Critics say those protections fall short of the benefits
full-time employees are entitled to. The Internal Revenue Service
mileage rate employers typically use to reimburse employees is 57.5
cents per mile.
"It's not the right time to cheat essential workers out of
protections they desperately need," said Steve Smith, a spokesman
for the California Labor Federation and the No on 22 campaign.
"They're out there, putting their health, even their lives, at risk
by continuing to work."
California's labor unions, which hope to organize gig workers if
they become employees, have relied on text messaging and phone
calls to counter the companies' TV ad spending.
"Just the sheer volume of messaging they're able to get out
through television is unlike anything I've ever seen," said Mr.
Smith.
In a typical election year, Mr. Smith's organization would aim
to contact voters in a union household two to three times,
including once in person. On Proposition 22, he said, their goal is
to reach them six to eight times, in part because advocates are
canvassing less in person because of the pandemic.
Stacey Grumet, a 43-year-old entrepreneur who lives in Los
Angeles, says she isn't a fan of the existing law because it limits
her ability to hire freelance workers. But, she says, the tech
companies' aggressive campaign turned her off and she plans to vote
against the measure.
"If they're exempted, that only leaves businesses like mine that
are affected," Ms. Grumet said.
Vikram Rao, a 31-year-old engineer in San Francisco, says he
feels better about supporting the measure after the companies'
promises to provide new benefits to drivers.
"There is value in the flexible working arrangement for many
drivers and value to society in these services existing as they do,
particularly in areas with very bad or zero public transportation,"
he said.
Write to Preetika Rana at preetika.rana@wsj.com and Christine
Mai-Duc at christine.maiduc@wsj.com
(END) Dow Jones Newswires
October 28, 2020 07:48 ET (11:48 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Uber Technologies (NYSE:UBER)
Historical Stock Chart
Von Mär 2024 bis Apr 2024
Uber Technologies (NYSE:UBER)
Historical Stock Chart
Von Apr 2023 bis Apr 2024