CA Prop 22, the Gig Industry's Servitude Scam, Declared Unconstitutional
An attempt by rideshare and delivery companies to rig labor laws in their favor was overturned by Alameda Superior Court Judge Judge Frank Roesch, who ruled that language used in Proposition 22 was contrary to the California Constitution. The idea that a ⅞ majority in the legislature would be required to amend the law seemed like not such a good idea to the judge.
The law, approved by 59% of voters in November 2020, shielded app-based ride-hailing and delivery companies from labor law, requiring such services to treat drivers as employees and not independent contractors, who don’t have to receive benefits such as paid sick leave or unemployment insurance.
Uber, Lyft and other companies spent more than $200 million to convince voters that a “third way” for labor relations was needed to preserve the rapidly growing gig economy. Flexible hours and the prospect of being your own boss were the selling points for proponents, along with promises of insurance and wage protections. Furthermore, rideshare giants Uber and Lyft threatened to pull out of California if voters didn’t agree with their vision.
Uber says it plans to appeal the ruling, setting up a fight likely to end up in the California Supreme Court. For all the money the gig companies spent on lawyers, they made one huge error: saying the section the judge took issue with wasn’t “severable” from the rest of the law. Ergo, the whole thing goes in the trash can. LOL.
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The companies backing Prop 22 raised prices and cut pay within weeks of its passage. Drivers, it turns out, were ineligible for health insurance if they’d already signed up for Medi-Cal, something many did out of a desperate need to protect their families.
The financial assistance offered for drivers who did qualify only kicked in if they’d purchased insurance on their own, and then they were expected to wait for quarterly grants based on how many hours were driven. Needless to say, the amount of time required was difficult to quantify.
The promise of a higher minimum wage (provided in return for drivers being exempted from labor laws) was also bogus. Terms and conditions meant the true minimum wage was something on the order of $5.64 per hour.
The gig companies were so thrilled by their success that plans are being drawn up to introduce similar ballot measures in other states. The $200+ million spent in California was a bargain.
Lyft and Uber had effectively stolen $413 million (by misclassifying their drivers) from California’s employment insurance fund since 2014 – and that’s just one cost they ducked through this victory. Yet to come might be the savings they’ll realize on worker safety and job-related death claims as the risks of operating a business are shifted onto drivers.
There was a time in economics where companies were graded on their ability to produce some tangible thing or service and turn a profit.
Uber isn’t part of that universe. It will never be profitable. Ever.
Cory Doctorow’s version of this sad fact is at least entertaining.
But they had billions to burn. Mohammed bin Salman, the murdering Crown Prince of the Saudi royal family, funded Softbank – a Japanese pump-and-dump investment scheme behind Wework and other grifts – with $80B as part of his “Vision 2030” plan.
Vision 2030 is a scheme to diversify Saudi wealth away from hydrocarbons by attempting to establish monopolies that will allow the family to control entire sectors of the global economy.
These schemes are longshots, and the fallback position is to unload failed monopolies – with staggering debt-overhangs – on investors who’ve been suckered with the promise that really big piles of shit surely have a pony buried underneath them somewhere.
That’s what happened with Uber’s IPO, of course – Softbank and Mister Bone Saw made out like bandits and Uber now lumbers on under the ownership of problem gamblers who read the company’s S1 and bought in anyway.
The S1 – the document that explains how the company plans to be profitable – set two conditions for Uber’s profitability.
First, all the public transit in the world had to shut down and be replaced by Uber.
Next, all the drivers had to be replaced by AIs.
The dirty little secret here, as far as the newest investors are concerned, is that self-driving cars aren’t coming nearly as soon as many predicted. Which is why Uber sold off its shares in the company doing their AI development work after pouring more than one billion dollars down the drain.
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Moving forward, Prop 22 remains in effect until the appeals are exhausted. My bet is that they will lose.
At that point Assembly Bill 5, formalizing an earlier court ruling on employment vs. contractor status, will be the law of the land. AB5 has been amended since its passage to take off some of it’s rough edges by preserving contractor status for groups with a history of that sort of status.
Uber, et.al. will be asked to play by the same rules as other employers, including paying their share of unemployment benefits, supporting a minimum wage, and workman’s compensation.
No good deed goes unpunished these days, and Assemblymember Lorena Gonzalez, the brains and political force behind AB5, will once again be subjected to the kinds of verbal abuse and boorish behavior that’s become so famous with the vaxxer crowd as they scorn her husband, Supervisor Nathan Fletcher. The abject failure of their promises to unseat her in 2020 proves the quack-a-doodle set to be toothless when served from their corporate masters.
There are bigger issues at play here, namely the connection between workplaces and benefits. Letting people beholden only to stock price increases and CEO bonuses dictate what the rules will be is just plain wrong.
What worked as a social and economic model back in the days of the New Deal doesn’t work anymore for large numbers of people in the workforce, regardless of their status.
Unfortunately, there are significant political players who have a vested interest in keeping the status quo. Then there are the forces who don’t see the need for any kind of mandated benefits system. The scary part is that they are, for practical purposes, allied in their opposition for a re-do...Medicare for all is a prime example.
Despite all their complaints about being victimized, and their reality of political power being limited to a social media presence, the real losers could ultimately be the people everybody is claiming to champion.
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