Newsom sidesteps Prop 22 position, signals desire for gig industry deal

By Jeremy B. White 10/29/2020 04:13 PM EDT

Just after casting his ballot Thursday, Gov. Gavin Newsom declined to say how he voted on California’s landmark gig economy fight, signaling his continued desire for a compromise.

The Democratic governor deflected a question about Proposition 22, a tech industry-funded measure to shield companies like Uber from having to reclassify their app-dispatched workers as employees rather than independent contractors.

Newsom noted that the tech companies had failed to win an exemption in the Legislature from the sweeping classification law CA AB5 (19R) despite his administration’s efforts to broker a deal. But he said the continued possibility of a compromise made him reluctant to publicly weigh in.

“There was an effort as it relates to some of these platform companies to” win relief from AB 5, Newsom said. “We led that effort, fell short. I want to position ourselves … where we can accommodate if there is a need and desire to see some compromise on this issue.”

What it means: Newsom has long sought a middle ground in California’s intensifying fight over gig workers, seeking a solution that mollifies organized labor while allowing tech companies some latitude. His reluctance to take sides on Prop 22, even as he has weighed in on other high-profile 2020 ballot measures, shows he’d still prefer a deal.

The context: A 2018 California Supreme Court ruling created a more stringent classification test that requires more businesses to treat workers as employees — a designation that brings various wage and benefit requirements — rather than as independent contractors. The Legislature followed up with AB 5 and did not carve out contractor-reliant firms like Uber and DoorDash.

Even after he committed to signing AB 5, Newsom advocated for a compromise that would avert a ballot battle — including by potentially creating a unique-to-California route for gig workers to organize. Tech companies have similarly floated an alternative worker classification.

But unions that fought for AB 5 and their tech industry foes never managed to surmount their differences, so Silicon Valley went to the ballot: Uber, Lyft, DoorDash, Postmates and Instacart are spending some $200 million to pass Prop 22, and organized labor is spending a fraction of that against the initiative.

Meanwhile, California has sued Uber and Lyft to compel them to reclassify their drivers, and courts have signaled the state would likely prevail at trial. That ups the stakes for passing Prop 22 — and if it fails, tech firms could also have an even greater incentive to make a deal.

What’s next? If Prop 22 passes, tech companies are sitting pretty. If it doesn’t, that could create space for Newsom to take another crack at a deal.

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