Prop 22 Passes, a Victory for Uber, Lyft

Uber, Lyft and other ride-hailing and delivery companies won their bid to keep drivers as independent contractors in what became the most expensive initiative in California history, with $200 million spent and led by the app-based services.

The initiative won decisively with 58% of the vote in a test for the tech-driven "gig economy" that is central to ride-hailing companies business model.

Uber, Lyft, Postmates and other app-based delivery giants overshadowed union opposition and pumped over $180 million into their effort to pass the measure. Its passage immediately sent stock of Uber and Lyft soaring.

Heather Foster, a spokesperson for Lyft, said the ballot measure sent a signal as the nation grapples with the rise of the gig economy.

"I think other states will be looking to see how they can work with us," she said. "Last night really solidifies this future of work...It's now a part of our economy."

Prop. 22 exempts ride-hailing and delivery companies from a new union-backed California law that requires their gig worker drivers be reclassified as employees.

Experts believed a loss could drive up labor costs 20% to 30%. And the companies would have had to dash their business models increasing costs and wait times for many riders.

The victory gives companies protections from the Democratic-leaning Legislature that passed the union-backed law demanding drivers be employees. The initiative requires a seven-eighths majority vote in the Legislature to be overturned and prevents drivers from unionizing.

But the ballot measure could have repercussions beyond how companies like Uber and Lyft classify their drivers.

Morgan Harper, an advisor at the American Economic Liberties Project, said it sets a "dangerous precedent," signifying to businesses with enough campaign money that they can create carve-outs from worker protection laws.

"The $200 million was spent to confuse people about what was going on in this proposition," she said. "Which was actually going to be more protective: the proposition or the law in place?"