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It's an election marketing campaign for survival for gig firms like Uber

OAKLAND, California. – At the end of August, the urgency became clear. Top executives from Uber, Lyft, and delivery service DoorDash met to discuss a California election measure that would exempt them from a new state labor code and save their companies 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 that had already pledged $ 90 million to support the move that they would have to spend a lot more to win, said three people familiar with the discussions who weren't allowed to speak about it in public.

The electoral struggle, Proposition 22, has since become the most expensive in the history of the state. Funders have contributed nearly $ 200 million, with 10 days to go until the November 3rd election. Along the way, the companies were repeatedly charged with persistent tactics. A lawsuit filed on Thursday said Uber is forcing the assistance of its drivers.

Despite the high spending and spate of television commercials, only 39 percent of likely voters said they supported Uber and Lyft in a University of California Berkeley poll last month, while 36 percent opposed their proposal and others were undecided. People close to the campaign said they would want nearly 60 percent approval from polls before they could breathe a sigh of relief.

The election move, which is also backed by Instacart and a delivery company acquired by Uber, Postmates, could be a harbinger for gig companies in the rest of the country.

Prop 22 would exempt companies from complying with a law that went into effect earlier this year. The law is supposed to force them to treat gig workers as white-collar workers, but Uber and his colleagues have resisted fearing the cost of benefits like unemployment insurance and health care could push them into a financial downward spiral.

For example, although Uber and Lyft 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 more difficult to make a profit. DoorDash, which has applied for an IPO, is also having problems. Analysts estimate that compliance with California's gig worker law could cost Uber, which lost $ 1.8 billion in the last quarter, as much as $ 500 million a year.

Uber said it planned to cease working for the roughly 158,000 California drivers who were active on the platform on a quarterly basis in the event the polling failed. It would deal with about 51,000 drivers remaining, it is said, and will raise tariffs to cover higher business costs.

The campaign became more urgent on Thursday night when the California First District Court of Appeals ruled that Uber and Lyft must treat their California drivers as employees under the new Labor Code. The attorney general and city attorneys of San Francisco, Los Angeles and San Diego sued the companies in May to enforce the law.

"If Prop 22 doesn't win, we'll do our best to adjust," Dara Khosrowshahi, Uber's executive director, said in an interview with the Wall Street Journal this week. "Where we can do business in California is a question mark and the size and scope of our business will be reduced significantly."

In the past, Uber has asked its passengers for assistance. The pandemic made this difficult, so she urged her technical staff to get involved and used her app to solicit drivers for assistance.

Efforts were also made with the Yes-to-22 campaign to organize drivers, a move copied by the working groups that have long tried to organize drivers to fight for better working conditions. And it has relationships with high profile stakeholders like Mothers Against Drunk Driving and the California chapter of the N.A.A.C.P.

"Drivers want independence and four-to-one advantages and we will fight for them," said Julie Wood, a Lyft spokeswoman. "We believe California voters are on the side of the drivers too."

A DoorDash spokesperson Taylor Bennett said, “Our support for Prop 22 is part of our commitment to protecting the economic opportunity that tens of thousands of Californians value and access to supplies that so many restaurants rely on, especially at these critical ones Problems time. "

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

To get support, the companies have bombarded drivers and drivers with push notifications, campaign ads in their apps, and emails for Prop 22. Before signing up to start work, Uber drivers were shown a slideshow of warnings about how their lives could change if the sentence fails.

"A no would mean far fewer jobs," warned one of the slides in the Uber app. "That's why we're fighting so hard for victory."

In the lawsuit filed against Uber on Thursday, drivers claim the news violated a state law that prohibits employers from forcing their workers to participate in political activities.

"I can't rule out that employers have used such coercive tactics in the past, but I've never heard of an employer engaging in such a flurry of coercive communication on such a broad scale," said one of the drivers' lawyers, David Lowe, partner at Rudy, Exelrod, Zieff & Lowe. "In my view, it's an extraordinary thing for Uber to take advantage of this trapped audience of workers." Mr Lowe said he was against Prop 22.

Matt Kallman, an Uber spokesman, said, "This is an absurd, no merit lawsuit filed solely for press attention and without regard to the facts." He added, "It can't detract from the truth: that the vast majority of drivers support Prop 22."

In early October, the Prop 22 campaign was denounced by Senator Bernie Sanders after a fake progressive group called Feel the Bern endorsed the proposal in a campaign flyer implying that Uber had the support of progressive leaders. The mailers were in fact sent by a company that produces political mailers with different views.

"The Prop 22 campaign is working hard to reach voters across the state and across the political spectrum to ensure that the majority of drivers support Prop 22," said Geoff Vetter, a spokesman for the Yes on 22 campaign run by Uber , Funded by Lyft, DoorDash and other gig economy companies.

Questions about the N.A.A.C.P. Approval. A political advisory firm led by Alice Huffman, head of California's N.A.A.C.P., received $ 85,000 from the gig companies' campaign, public records show. The payment was previously reported by the CalMatters news site.

Mr. Vetter said the payments were for "outreach". The N.A.A.C.P. did not respond to a request for a comment.

Uber held an all-hands meeting for employees this month to meet drivers who support the proposal and sent out multiple emails asking employees to stand up for friends and family.

Although the internal messages were optimistic, the political staff expressed concerns to the campaign advisors during the meetings in late August and early September, said those familiar with these meetings. Among their concerns are that the voting language was inconvenient for companies and that people were voting earlier than usual because of the pandemic, which means advertising has to be quick and aggressive.

"We look at the data every day and our metrics are a tight race," said Justin Kintz, Uber's chief public policy officer, in an email to Uber employees in early October received from the New York Times. "At the same time, we are confident that we can win if we continue to implement our plan strongly."

While the email indicated that campaigns are optional, Mr. Kintz encouraged staff to join SMS banks to contact voters and promote the campaign through conversations with friends.

"The main reason that you spend so much money is the high stakes in these elections," said Vetter, the campaign spokesman. “Hundreds of thousands of jobs are pending. These are services that millions of Californians rely on. "

The opposition campaign, which is funded by unions, has raised around $ 15 million. Campaign # 22 proponents have argued that voters should oppose the move by tech companies and that the move would harm workers already disadvantaged during the pandemic.

"Proposition 22 will worsen racial inequality in California at its worst," said California Democrat Barbara Lee. “You crossed the line very clearly when you tried to take the stock shroud in a campaign that was always about allowing billions of dollars worth of app companies to write their own laws to help them continue to take advantage of the work of drivers, eight out of ten who are people of color. "

Regardless of the result of the vote, the gig companies and their opponents are likely to bring their campaigns to Washington. Massachusetts has filed a lawsuit similar to the California court lawsuit Thursday night, and Uber is hoping to avoid further state-to-state fighting by pushing for federal law.

Erin Griffith and Noam Scheiber contributed to the coverage.

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