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Prop 22 explained: how California voters could upend the gig economy | California

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It’s not often that the fate of an industry hangs in the balance during an election, but that is exactly what’s happening in California this November.

Proposition 22, a proposal on the state ballot, is the result of a years-long battle between gig economy heavyweights like Uber, Lyft and Instacart, and their workers, who are fighting for better benefits and protections.

It’s also become the most expensive ballot-measure campaign in state history, as the Silicon Valley companies that built their businesses around gig labor seek to avoid having to reclassify their workers as full-time employees.

The high-stakes face-off could upend the gig economy as we know it and has been called a called “a bellwether” for worker rights. But who is behind it, and what would the proposition do? Here’s what you need to know.

What is Proposition 22?

Proposition 22 is a ballot measure that would exempt gig companies from AB5, a landmark labor law passed in 2019 that extended employee protections to gig workers. In other words, Prop 22 would allow these companies not to treat gig workers like employees.

The official name of the ballot measure is the “Protect App-Based Drivers and Services Act”. The measure, if passed by the majority of voters on 3 November, would apply to app-based drivers, including those who work for Uber, Lyft and DoorDash.

What is AB5?

Proposition 22 comes in response to California assembly bill 5, known as AB5, a law that changes the way workers in the state are classified.

AB5 sets out specific requirements for workers to be classified as contractors, which are: 1) they are free from the company’s control; 2) they are doing work that isn’t central to the company’s business; and 3) they have an independent business in that industry.

If the worker does not meet all three of the standards, they will be classified as an employee and thus entitled to the legal protections and benefits that come with employment in California. This includes minimum wage, overtime, expenses reimbursed, paid sick days, paid family leave, unemployment insurance and an employer healthcare option.

Uber and Lyft maintain that drivers are properly classified as independent contractors, but in August a California court ruled that both companies were violating AB5 in not reclassifying drivers as employees. That ruling appears to be stayed while Uber and Lyft argue their case before the judge.

What is the case against Prop 22?

Drivers and labor groups oppose Prop 22, saying it allows companies to sidestep their obligations to provide benefits and standard minimum wages to their workers. The official No on Prop 22 campaign claims gig economy companies “have made billions by exploiting their drivers for years” and now are spending millions to push Prop 22 “so they can permanently deny fair wages and benefits for drivers”.

The companies behind Prop 22 have indeed made billions on the contractor-based business model. When Lyft went public in 2019, it was valued at $22bn and had 1.9 million drivers working through its app. Uber was valued at $82bn ahead of its initial public offering in May 2019 and had 3.9 million drivers.

Assemblywoman Lorena Gonzalez, a San Diego Democrat, speaks at rally calling for passage of AB5, last year.
Assemblywoman Lorena Gonzalez, a San Diego Democrat, speaks at rally calling for passage of AB5, last year. Photograph: Rich Pedroncelli/AP

Many drivers say they have created a lot of the value for these companies but have seen very little of the profit. “Uber is paying drivers poverty wages and continues to slash wages while executives make millions,” one driver told the Guardian at a protest tied to the Uber IPO.

The Covid-19 pandemic has further underscored how the contractor system leaves workers in precarious positions, the campaign against Prop 22 says.

The passage of Prop 22 would be difficult to overturn, positioning gig workers as permanent contractors and posing a major blow to workers’ rights. California is the birthplace of the gig economy, and how it is regulated in its home state may have effects on how regulation plays out in the rest of the country, and the world.

What benefits does Proposition 22 offer?

While Proposition 22 would exempt workers from employee benefits gleaned through AB5, proponents of the ballot measure maintain that it would “ensure driver flexibility” by maintaining contractor status of workers “while providing new earning guarantees and benefits”.

Advocates of Proposition 22 say it would provide drivers with occupational accident insurance to cover injuries and illnesses on the job and “funding for new health benefits” that apply to drivers who work at least 15 hours a week. This means drivers who work at least 15 hours would be provided with stipends towards private health insurance, rather than be provided health insurance through an employer healthcare option. Workers who drive more than 25 hours would get a higher stipend to use towards health insurance.

Prop 22 also promises “guaranteed minimum earnings” equal to 120% of California minimum wage. Those minimums, however, only apply to “engaged time” on the app, which is the 28-33% of workers’ shifts when there is a passenger in the car. A study funded by the Yes on Proposition 22 coalition estimated workers would make $25-27 per hour. Another study from University of California, Berkeley, said earnings could still be well below the minimum wage, at $5.64 per hour. California’s minimum wage will be $14 in 2021.

Who supports Proposition 22?

A coalition of gig economy firms, including Instacart, DoorDash, Lyft, Uber and Postmates (a delivery service now owned by Uber) has spent more than $184m on campaigns promoting Proposition 22. The Yes on Proposition 22 campaign claims the majority of rideshare drivers support flexibility in work.

A number of workers outside of the ride-hailing platforms have also spoken out against AB5 and its effects. The bill was amended after freelance journalists complained of a measure in the bill that would prevent them from submitting more than 35 stories per year. Truckers and musicians have also spoken out against the bill and its effects on their work.

The California Chamber of Commerce, California Police Chiefs Association, and the California NAACP also support Prop 22. A recent online poll cited by the Yes on 22 campaign found more than 60% of app-based drivers supported Prop 22. The group maintains that most drivers want to remain contractors.

“Drivers prefer independence because it provides the flexibility to choose when, where and how long they want to work,” Geoff Vetter, spokesman for the Yes on 22 campaign, said.

Tactics used to promote Proposition 22 have been aggressive and persistent: Uber and Lyft both sent out a number of emails and push notifications within their apps encouraging riders to vote yes. Instacart has encouraged workers to advertise the ballot measure with stickers.

Who is against Proposition 22?

A number of workers and worker groups have publicly organized against Proposition 22. The official “No On Prop 22 Coalition” is made up of four driver groups: Gig Workers Rising, We Drive Progress, Mobile Workers United and Rideshare Drivers United. Cumulatively these groups represent more than 55,000 workers in California.

Editorial boards at the Los Angeles Times, the New York Times and a number of California papers including the Sacramento Bee, the Fresno Bee, the Modesto Bee, Merced Sun Star and San Luis Obispo Tribune have called on voters to reject Prop 22.

Kamala Harris and Joe Biden have spoken also against it, while Bernie Sanders has also condemned the ballot measure, tweeting: “I’m opposed to Prop 22 because people working full time deserve decent wages and good benefits.” The Service Employees International Union also joined the fight against Prop 22.

What happens if Proposition 22 passes?

If Proposition 22 passes, workers will retain their status as independent contractors. They will not be provided health insurance through Lyft or Uber but will get stipends towards insurance. It will also be difficult to change or overturn in the future, because that would require a 7/8 supermajority – difficult to attain in the California legislature.

What happens if Proposition 22 doesn’t pass?

In theory, companies will not be exempt from AB5 and drivers would then be entitled to healthcare, minimum wage and other employee benefits. However, Uber and Lyft have threatened to pull out of California if the bill is passed – so it’s possible we will no longer have rideshare as we know it. Uber has also forecasted that fares would increase 25%-111% if it were to comply with AB5.



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Also on California ballot: Gig economy, race in admissions

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Written by Karishma Mehrotra
| San Francisco |

October 26, 2020 4:01:40 am


Supporters of “pro-black” initiatives on the ballot at an event hosted by the California Democratic Party Black Caucus. (AP)

Should Uber drivers be considered employees? Should public schools consider race when accepting students? Should 17-year-olds who will turn 18 by the time of a presidential election be allowed to vote in the primaries? Should prisoners be able to pay cash to get bail?

Other than choosing between presidential candidates Donald Trump and Joe Biden, in what is being called the contest for “America’s soul”, these are some of the questions Californians will be voting on come November 3. Debates in this Democratic state have long been leading indicators of social issues roiling America — and the propositions on the ballot this time are no different.

“To study California initiatives and referendum is to study a microcosm of the major… issues that people and politicians have cared about,” wrote historian John Allswang in his book on the state’s proposition system.

This year’s propositions, put on the ballot by citizens who garnered at least 623,212 signatures in support of each, come from a long tradition of direct democracy in the country. US citizens can suggest propositions — or legal measures — to be put to popular referendum in a state, bypassing the legislature.

California was the second (after its close liberal sister Oregon) to institute the system in the late 1800s and has used it most frequently. A series of propositions in the 1900s dealt with politics over oil exploration and insurance companies. In 2008, Proposition 8 was one of the first legislative debates about gay marriage. In 2010, voters were asked to choose between emission standards and employment rates — all issues that made their way eventually to international discourse as well.

This year, the most contested proposition, Prop 22, has voters asking if Uber drivers should have flexibility or stability. With stickers on Uber vehicles and on bags of online grocery service Instacart, app-based companies have spent $181 million — the most in California’s history on a proposition campaign — to get voters on their side. If it passes, it would exempt companies like Uber from providing employee benefits to their drivers. A group of gig workers sued Uber for $260 million on Thursday for the company’s aggressive in-app messages asking riders to support the prop.

Currently, companies like Uber, Lyft and food delivery firm DoorDash use a contracting model so that they don’t have to pay their workers unemployment insurance, overtime, or compensation. The companies claim most of their drivers, a million Californians, would prefer the flexibility of contract work over the stability of employee benefits.

“(E)mployment comes with a cost: hundreds of thousands of drivers would lose work opportunities overnight,” wrote Dara Khosrowshahi, Uber CEO, in a blog post. “To be clear, I’m not arguing that gig work is perfect. On the contrary… we should be honest about how independent work must improve to meet the needs of the moment.”

Uber and the companies argue that if this proposal doesn’t pass, drivers would be forced to become full-time or leave the platform, and prices will increase.

Those who are voting against the proposition want drivers to get full employee protections and say companies shouldn’t write their own labour laws. Democratic nominee Joe Biden has endorsed this side.

Another contentious measure, supported by Democratic Vice-President nominee Kamala Harris, would allow public entities in employment, contracting and education to consider race, sex, colour, ethnicity, or national origin to address diversity. In other words, it would allow affirmative action, giving preferential treatment to historically disadvantaged groups. The state had outlawed this practice in the 1990s. The system is different from quotas, which are banned by American federal law.

This is most often brought up in the case of university admissions. Many Asian Americans believe affirmative action measures hurt them, as their higher scores are de-valued for another’s identity. Others say diversity should focus more on class, not race.

A social media campaign directed at Asian Americans targets Chinese American politicians who support the proposition: “Will Assemblyman Evan Low Betray You?” one flier reads. Signs across the state read “Don’t Divide Us” or “Opportunity for All”.

Prop 24, calling for consumer data privacy protections, is more than 50 pages long. It wants changes to the California Consumer Privacy Act of 2018, redefining sensitive data, limiting the time companies could hold onto data, and creating a new regulatory agency — with several parallels to the Personal Data Protection Bill currently pending in Indian Parliament.

California and several other states are also tackling criminal justice reform, in the backdrop of this summer’s Black Lives Matter protests. In Ohio and Maine, voters are considering a civilian review board to investigate police misconduct, and in Michigan, the police may need a search warrant to access electronic communication. Other states are tackling campaign finance reform and recreational marijuana use. Mississippi is considering a new state flag, while Rhode Island might change its official state name.

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Direct Selling Industry To Benefit As India Embraces Gig Economy

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Direct selling remains a compelling option for young entrepreneurs

In these tumultuous times, direct selling has provided hope for millions of people who were looking to utilize their skills to go the startup route

20 Mn individuals could be engaged in direct selling by 2025, FICCI-KPMG

Times are tough, Covid-19 is unrelenting and with no clear end in sight. No one predicted how severe and lasting the cascading impact would be on the economy when lockdown started. Pay cuts, job losses, and business closures have debilitated a system already battling a fiscal downturn. According to the Centre for Monitoring the Indian Economy, the unemployment rate in India is estimated to be at 27.1% as of early May, as nearly 122 MnIndians lost their jobs in March and April 2020.

India, like other countries, refocused their gaze within as the infections began to rise rapidly. Initiatives like ‘Vocal for Local’ and ‘Aatmanirbhar Bharat’ urged businesses and individuals to recalibrate and realign strategies. This approach encouraged local manufacturing, but also created a sense of ownership and determination among budding entrepreneurs.

Direct selling remains a compelling option for young entrepreneurs. It provides a business opportunity at negligible initial investment or operating costs. The option lends flexibility to work on their own time. However, it is Aatmanirbharta that has always been a central tenant in direct selling.  Running your own business means you decide whether your business sinks or floats.

In these tumultuous times, direct selling has provided hope for millions of people who were looking to utilize their skills to go the startup route.  The 2019 sales figures of $2.47 Bn proves that direct selling industry is thriving and illustrates its potential with the continued growth. The direct selling industry is growing at a healthy rate of 12.1% YoY and India currently ranks 15th, four places up since last global rankings. The pandemic notwithstanding, direct selling is bucking the trend and continues to make a rapid recovery.

Apt For Remote Working culture

So, what is to account for this continued growth during unprecedented strife? The conventional work models have seen a paradigm shift with an exodus to digital. However, direct sellers have always been nimble and adaptable.  Most importantly though, the direct selling industry has always depended on person-to-person (P2P) interactions.

Social media tools like FB live, Instagram live, video conferencing, podcasts and webinars showcase the one-on-one skills marketers have by increasing the number of encounters and focusing direct sellers’ energy towards individual customers . This move has opened new possibilities for direct sellers, and this augurs well for the recovery of the industry and its workforce that thrives working on its own terms. 

Empowering Entrepreneurship

As per the report by FICCI-KPMG, 20 million individuals could be engaged in direct selling by 2025. Direct selling is a business and allows you to be your boss without the commitment of high initial capital and overhead costs. Today, direct selling comprises of millions of professional sellers who are extremely skilled at what they do and can achieve seemingly lofty goals. It also provides flexible work hours to homemakers, which is an important reason the sector has a large percentage of its workforce as women.

Vocal for local

The local growers and manufacturers stand to benefit as the demand of homegrown product continues to rise. As per the industry report, the direct selling industry employs close to 6 Mn representatives and has added to this workforce during the pandemic. The industry has seen a demand spike in wellness products which are rich in vitamins, minerals, antioxidants, phytonutrients. Such products are essential for building immunity and homegrown firms in this segment have benefited by building significant manufacturing capabilities in India.

In summation, the direct selling industry has created a robust ecosystem which provides an avenue for entrepreneurial aspirants to own and operate their own business. The sector continues to attract a ready workforce in search of stable earning opportunities without the trappings of a mundane work life, just the way the gig economy works.



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Irish gig economy app expects to sign up 30,000 users by January

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Gigable, an Irish app aimed at the freelance economy, expects to sign up almost 30,000 people by year end as Covid-19 boosts restaurant deliveries and the demand for drivers.

John Ryan, founder of the company, said that the number is up from 7,000 since before the pandemic took hold and growth accelerated as restaurants sought freelance drivers.

Gigable allows freelance workers to connect with delivery jobs offered by restaurants in Ireland and Britain.

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