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Uber drivers in California will continue being ‘independent contractors’: Reports

In a potentially significant development, voters in California, US have voted to allow app-based taxi drivers working with companies like Uber and Lyft to treat their drivers as independent contractors, and not as employees, as per a projection by CNN, and other American publications.

What is Prop. 22? Proposition 22 was a ballot measure — a proposed legislation that people can vote on — that will allow “gig-economy” companies to sidestep a Californian legislation AB5, under which these companies had to make drivers full time employees, thus giving them paid leaves and health insurance, among other things. Uber and Lyft had hit out against the law, threatening to leave California. Instead, the two companies along with several others backed Prop. 22, a counterproposal that would continue to classify drivers as contractual workers, but assuring them minimum wage and health insurance. The California Labor Federation, however, was unimpressed and called Prop. 22 a “misleading initiative”.

Companies go all out to get Prop. 22 passed: Prop. 22 become one of the most well-funded ballot initiative in Californian history, among ballot measures listed on Ballotpedia; the support side got more than $200 million, while the anti-side got less than $20 million. Uber, Lyft, Doordash, Instacart and Postmates invested heavily into the ballot. Uber had contributed over $57 million; Lyft, $49 million; DoorDash, $52 million; Instacart, $32 million and Postmates, $13 million. The opposing side was funded by labour unions. Other media outlets such as The Verge reported how Uber and Lyft used their respective apps to bombard riders and drivers with messaging, asking them to support the ballot measure.

A reporter from KQED, a public media outlet in California, had noted last month how Uber drivers were being shown regular pop-ups about Prop. 22. A lawsuit was filed againsst Uber in San Francisco, alleging that Uber was incentivising and coercing drivers into publicly endorsing Prop. 22, reported The Markup last week.

What this means for the gig economy; how India is handling the subject

Though the ballot measure is applicable only to one state of the US, it does set a precedent for how the gig-economy operates and is perceived and across the country. That Silicon Valley, the heart of the tech world, is situated in California gives the development that much more visibility. Within America, these companies have essentially figured out a playbook to counter measures to regulate them, and to bring in social security on par with full-time employees.

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India, too, is trying to find answers around regulating the booming gig economy. Recently, the Indian Parliament passed the Code of Social Security, which for the first time ever recognises gig workers and aggregators. The Code empowers the central government to formulate social security schemes, providing workers benefits such as insurance, maternity leave and more.

From initial impressions, the Code is already largely congruent with what gig companies want. It mandates aggregator companies to contribute between 1-2% of their annual turnover for social security funds for gig workers. This proposal of the code is largely similar to a proposal suggested by Uber CEO Dara Khosrowshahi, who had argued in a New York Times opinion piece for the establishment of “benefit funds”. “All gig companies would be required to participate, so that workers can build up benefits even if they switch between apps,” he wrote.

Just like America, gig workers in India have often complained of sub-par pay, and several health issues that come with working overtime. Delivery persons of food aggregator Swiggy were staging protests against a new payment structure put in place by the company, which the riders said resulted in diminished revenues for them. People working for ride hailing services like Uber and Ola work in a “very toxic and isolated work environment”, a report from August, released by Indian labour unions on the health hazards faced in course of such work had highlighted.

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