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It’s an election battle for survival for gig companies like Uber

OAKLAND, Calif .– At the end of August, the urgency was becoming evident. Top executives from Uber, Lyft and delivery service DoorDash met to discuss a California voting measure that would exempt them from a new state labor law and save their businesses money. hundreds of millions of dollars.

The survival of their businesses was on the ballot.

Days later, political strategists responded to executives’ concerns by telling companies, which had previously pledged $ 90 million to support the measure, that they had to spend significantly more if they wanted to win, said three people close to the discussions, who were not allowed to speak publicly.

The ballot measure fight, Proposition 22, has become the costliest in the state’s history since then, with its backers contributing nearly $ 200 million and 10 days remaining until the November 3 election. Along the way, companies have been repeatedly accused of tough tactics; a lawsuit filed on Thursday claims Uber is forcing support from its drivers.

Despite the heavy spending and a barrage of TV advertising, only 39% of likely voters said they supported Uber and Lyft in a poll conducted last month by the University of California at Berkeley, while 36% opposed their proposal and that others were undecided. People close to the campaign have said they would like to see nearly 60% approval in the polls before they can breathe a sigh of relief.

The voting measure, which is also backed by Instacart and a delivery company Uber is acquiring, Postmates, could be a harbinger for concert businesses in the rest of the country.

Prop 22 would exempt businesses from complying with a law that came into effect earlier this year. The law aims to force them to treat construction workers like employees, but Uber and its peers have resisted, fearing the cost of benefits like unemployment insurance and health care could send them into a downward financial spiral. .

Although Uber and Lyft, for example, are publicly traded companies with a combined value of $ 70.5 billion, they have never been profitable. They lose billions of dollars every year and the pandemic has made it even harder to make a profit. DoorDash, which filed for release, also struggled. Analysts estimate that complying with California’s Small Worker Law could cost Uber, which lost $ 1.8 billion in its most recent quarter, up to $ 500 million a year.

Uber said it plans to cut work for the roughly 158,000 California drivers active on the platform each quarter if its voting measure fails. He would use roughly 51,000 drivers remaining, he said, and increasing tariffs to meet higher commercial costs.

The election fight gained momentum Thursday night when the California First District Court of Appeals ruled that Uber and Lyft must treat their California drivers like employees under the new labor law. The state attorney general and city attorneys in San Francisco, Los Angeles and San Diego sued the companies in May to enforce the law.

“If the Prop 22 doesn’t win, we’ll do our best to adjust,” said Dara Khosrowshahi, general manager of Uber, in a statement. Interview with the Wall Street Journal this week. “Where in California we can operate is a question mark, and the size and scale of the company will be significantly reduced.”

In the past with local regulators, Uber has mobilized its passengers to support it. The pandemic has made this difficult, so he urged his technical staff to get involved and used his app to contact drivers for help.

The Yes in 22 campaign also launched an effort to organize drivers, an initiative copied from task forces that have long tried to organize drivers to fight for better working conditions. And he’s forged relationships with high profile advocacy groups, like Mothers Against Drunk Driving and the California chapter of the NAACP.

“Drivers want independence plus four-to-one advantages, and we’re going to fight for them,” said Julie Wood, spokesperson for Lyft. “We think California voters are on the drivers side as well.”

DoorDash spokesperson Taylor Bennett said, “Our support for Prop 22 is part of our commitment to protect the economic opportunity that tens of thousands of Californians enjoy and the access to delivery that so many. restaurants matter, especially at such a critical time. time.”

A spokesperson for Instacart declined to comment. Postmates did not respond to a request for comment.

In an effort to gain support, companies have bombarded drivers and drivers with push notifications, campaign ads that appear in their apps, and emails promoting Prop 22. Before logging in to start work, Uber drivers have received a slide show of warnings about how their lives could change if the proposal fails.

“A vote no would mean a lot less jobs,” warned one of the Uber app slides. “This is why we are fighting so hard to win.”

In Thursday’s lawsuit against Uber, drivers say the posts violate a state that prohibits employers from coercing their employees into political activity.

“I can’t rule out that employers have engaged in coercive tactics like this in the past, but I have never heard of an employer engaging in this kind of barrage of coercive communications at such a level. wide, never, “said one of the pilots’ lawyers, David Lowe, partner at Rudy, Exelrod, Zieff & Lowe. “It‘s such an extraordinary thing, from my perspective, for Uber to exploit this captive audience of workers.” Mr. Lowe said he was opposed to proposal 22.

Matt Kallman, a spokesperson for Uber, said: “This is an absurd, baseless lawsuit filed only for the attention of the press and without regard to the facts.” He added: “This cannot distract from the truth: the vast majority of drivers support prop 22.”

In early October, the Prop 22 campaign was denounced by Senator Bernie Sanders after a bogus progressive group calling itself Feel the Bern endorsed the proposal in a campaign flyer that implied Uber had the support of progressive leaders. The mailers were, in fact, sent by a company that creates political mailers representing different points of view.

“The Prop 22 campaign is working hard to reach voters across the state and across the political spectrum to make sure they know that drivers are overwhelmingly supporting Prop 22,” said Geoff Vetter, spokesperson. the Yes in 22 campaign, which is funded by Uber, Lyft, DoorDash, and other giant economy companies.

Questions were also raised about the approval of the NAACP. A political consulting firm headed by Alice Huffman, the leader of the California NAACP, received $ 85,000 from the concert societies campaign, according to public records. The payment was reported earlier by the CalMatters news site.

Mr Vetter said the payments were for “awareness.” The NAACP did not respond to a request for comment.

Uber held a general meeting this month to allow employees to meet with drivers who support the proposal and sent out several emails encouraging staff to lobby friends and family.

Although internal messages have been upbeat, policy staff voiced concerns to campaign consultants at meetings in late August and early September, people familiar with the meetings said. Among their concerns: that the language of the ballot was against business, and that people were voting earlier than usual due to the pandemic, which means advertising should be swift and aggressive.

“We look at the data every day and our metrics show a tight race,” Justin Kintz, Uber’s public policy manager, said in an email to Uber employees in early October obtained by The New York Times. “At the same time, with continued strong execution against our plan, we are confident that we can win.”

While the email said the campaign was optional, Kintz encouraged employees to participate in text banks to contact voters and promote the campaign in conversations with friends.

“The main reason you see so much spending is because of the high stakes in this election,” said Vetter, the campaign spokesperson. “Hundreds of thousands of jobs are at stake. These are services that millions of Californians rely on. “

The union-sponsored opposition campaign raised around $ 15 million. Supporters of the No in 22 campaign argued that voters should reject the push by tech companies and that the measure would hurt workers already disadvantaged during the pandemic.

“Proposition 22 will worsen racial inequalities in California at the worst possible time,” said Representative Barbara Lee, Democrat of California. “You’ve very clearly crossed the line when trying to claim the fairness mantle for a campaign that has always been about allowing multi-billion dollar app companies to write their own law so they can carry on. to exploit the work of the drivers, eight out of 10 of whom are people of color.

Regardless of the outcome of the vote, concert companies and their opponents are likely to campaign in Washington. Massachusetts has filed a lawsuit similar to the one the California court ruled on Thursday night, and Uber hopes to avoid further state-by-state battles by pushing for federal legislation.

Erin Griffith and Noam Scheiber contributed reporting.

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