Uber and Lyft have won the support of California voters for new rules that will allow them to avoid offering drivers employment rights, lifting what they said was an existential threat to their business models and sending their shares soaring.

Gig economy companies had borne much of the $200m cost of campaigning in favour of Proposition 22, a state ballot measure that had secured more than 58 per cent of the vote with 71 per cent of vote counted.

The measure will mean Uber and other app-based gig economy groups will be exempt from a Californian law that would force the companies to treat workers as employees, with associated health benefits, holiday pay and other benefits.

Uber and Lyft both claimed complying with the law would make their businesses unworkable and force them to shut down in California.

Under Prop 22, the companies will instead offer limited healthcare options and a minimum earnings guarantee, with drivers remaining as independent contractors.

Uber shares were up 12 per cent and Lyft shares jumped 14 per cent in early-hours trading, before Wednesday’s official market opening.

“With this vote, drivers and delivery people will get what so many of you have been asking for: access to benefits and protections, while maintaining the flexibility and independence you want and deserve,” Uber chief executive Dara Khosrowshahi wrote in a message to the state’s drivers.

Labour organisations that had opposed Prop 22 conceded the race shortly before midnight, California time. In a statement, the groups reiterated their view that Uber, Lyft and others were exploiting workers.

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“Gig workers did not lose today, democracy did,” a spokesman for Gig Workers Rising said. “When corporations spend hundreds of millions of dollars to write their own labour laws . . . that is a loss for our system of government and working people.”

Analysts expect that the victory in California will provide Uber with momentum to bring Prop 22-like measures to other parts of the US where its business model has been facing similar scrutiny.

Via Financial Times