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In record-breaking $200 million fight to preserve the gig economy, messaging doesn’t always need money

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By Levi Sumagaysay and Elisabeth Buchwald

If you live in California, Proposition 22 is impossible to ignore because of the work that gig companies have done to spread the word.

The most expensive ballot initiative in the state’s history is about to top $200 million in funding, mostly from gig-economy companies Uber Technologies Inc., Lyft Inc., Instacart, DoorDash Inc. and Postmates, which are seeking to exempt themselves from treating their workers as employees in accordance with state law. The money is being spent in ways that would feel familiar to most voters: Relentless ads on TV, radio and streaming services such as Google’s YouTube /zigman2/quotes/205453964/composite GOOG -1.75% /zigman2/quotes/202490156/composite GOOGL -1.82% ; campaign mailers that arrive in mailboxes nearly every day; and calls to vote for the measure following Californians around the web and on Facebook /zigman2/quotes/205064656/composite FB -1.14% and Instagram. 

More on Prop. 22: How Uber and Lyft’s business model could be changed on Election Day

Beyond those channels, though, Uber /zigman2/quotes/211348248/composite UBER -1.46% , Lyft /zigman2/quotes/208999293/composite LYFT -0.69% and other gig companies are bombarding Californians with pro-22 messages by leveraging power that doesn’t involve money changing hands: By urging customers and workers to vote for the measure when they open their apps or use their services. This is a legal gray area that prompted a lawsuit against Uber last week, which included accusations that the company violated sections of the state labor code and the Unfair Competition Law, and have raised other questions related to free speech and data privacy.

The companies are deploying their engineers and other employees to help distribute or design hard-to-avoid, pro-initiative messages including DoorDash delivery bags emblazoned with support for Proposition 22, Uber requiring drivers and users to click “Yes on 22” before they are able to connect on a ride, and banner ads within the Instacart and DoorDash apps. Because the companies use employees’ time — effectively leveraging full-time employees in an effort to avoid adding to their ranks — the companies have had to quantify how much they have spent on these kinds of activities, in what are described as non-monetary donations. 

The gig companies have claimed $9.9 million in these types of expenditures as of Monday, according to campaign-finance records. They are categorized as non-monetary costs that are described as employee time, consulting and expenses, advertisements and more. The DoorDash bags were identified as campaign paraphernalia with an estimated fair market value of $100,500. Another expense listed as non-monetary, with a $48,350 value: DoorDash is paying people to place Yes on 22 ads on their vehicles. The company and the campaign say that’s being done via Wrapify, which pays any drivers, not just delivery workers, to drive around with ads on their cars.

Non-monetary charges are just roughly 5% of the $199.4 million collected by the campaign through Oct. 23, all but $100,000 of the total amount coming from the gig companies. In total, that is almost exactly the combined money raised by the top two U.S. Senate campaigns in this nationwide election cycle, according to filings through Sunday —Democrats Jaime Harrison of South Carolina ($109 million) and Amy McGrath of Kentucky ($90 million) — and the most ever raised in a California proposition campaign.

The Yes on 22 campaign has spent the biggest amount of its haul, $ 95 million, on TV, radio and online advertising airtime — almost five times the opposition’s entire campaign war chest of $19.2 million. About $55 million of that was spent in less than a month, between Sept. 20 and Oct. 17, during the run-up to and the early days of California’s early-voting period, which began Oct. 5.

Proposition 22 could go a long way toward protecting the gig economy, whose business model depends on minimizing the costs of on-demand labor and operations. The measure would exempt app-based platforms from a state law that went into effect in January, and instead offers new wage guarantees and benefits for workers while keeping them as independent contractors with fewer protections than employees.

The state of California has repeatedly told Uber and Lyft that they must live up to Assembly Bill 5, the law that was passed to formalize a new standard for employment that was set in a 2018 state Supreme Court ruling. The fate of the measure could affect lawsuits in California — in which the companies have repeatedly lost, most recently on Thursday — plus possible measures and legislation outside the state.

See: Uber and Lyft told to classify drivers as employees less than two weeks before California votes on the issue

Beyond breaking out their checkbooks, the companies have shown just how forceful they will be in these types of campaigns, which could spread to other parts of the U.S. as gig companies seek to protect their business models and avoid paying for benefits, unemployment insurance and other costs of employing workers. 

The in-app, pro-Prop. 22 messaging gives the companies an inherent advantage because they have a captive audience of workers and customers. In fact, after news reports about Uber drivers having to click on a Yes on 22 button before they could accept rides in the app, the company made adjustments to allow drivers to exit out of the pop-up.

As for how the campaign is accounting for those messages, campaign spokesman Geoff Vetter said, “Yes on 22 has disclosed these in-app ads as non-monetary contributions to the extent required by law.”

The time the companies’ employees have spent to get out those messages also raises legal questions, although the companies say they are properly accounting for that time in accordance with campaign disclosure laws.

A couple of ride-hailing drivers and nonprofits sued over that messaging Thursday in San Francisco Superior Court, saying “Uber has taken advantage of its raw economic power and its exclusive control over communications through its driver-scheduling app by wrongfully pressuring its drivers to actively support Proposition 22.” The company said the lawsuit is “absurd” and “without merit.”

According to Fair Political Practices Commission records, three complaints about Yes on 22 messaging are open and pending investigations. Three similar anonymous complaints were rejected. While the commission would not comment on the complaints, a spokesman for the FPPC said any political advertising must be reported and have the required disclosure about who paid for it.

Catherine Fisk, a professor at UC Berkeley, points to two sections of California labor code that say “no employer shall make, adopt, or enforce any rule, regulation, or policy… controlling or directing, or tending to control or direct the political activities or affiliations of employees” and “no employer shall coerce or influence or attempt to coerce or influence his employees through or by means of threat of discharge or loss of employment to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.” 

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Volume: 626,481
Nov. 30, 2020 12:34p
P/E Ratio
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Market Cap
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$ 1,754.55
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Volume: 525,351
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P/E Ratio
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Volume: 9.24M
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N/A
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Market Cap
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$12.40 billion
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$636,277
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