Why Lyft is spending money on Illinois pols

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While Lyft was leading a high-profile campaign to derail a gig-worker law in California, it was quietly laying the groundwork for a similar effort in Illinois.

The on-demand-ride company formed a political action committee, Illinoisans for Independent Work, on June 30 with $1.2 million, according to filings with the State Board of Elections. The PAC spent nearly $500,000 on mailings and digital media buys on behalf of 11 Statehouse candidates in the most recent elections. Lyft also doubled its direct campaign contributions, doling out a total of $133,000 to 50 state legislators from both parties, as well as more than a dozen Chicago aldermen.

Illinois is one of three states, alongside Washington and New York, where Lyft formed political action committees to fight potential legislation aimed at providing protections to independent contractors who deliver food or people for app companies such as Lyft, Uber, Grubhub and DoorDash.

These companies got a wake-up call last year when California passed a law that would have forced them to treat gig workers as employees rather than independent contractors. The law would have sharply increased costs for the companies, most of which already are struggling to turn a profit, threatening the rise of the so-called gig economy that depends on cheap labor summoned by mobile phones. But Lyft, Uber and others fought back successfully in California, spending more than $200 million on a ballot proposition that carves out an exemption for them.

Now the companies want to export those efforts. If they succeed, their Illinois drivers will remain contractors who don’t receive benefits such as a minimum wage, workers’ compensation, sick leave and unemployment. If they fail, customers could see higher prices as the companies pass along the costs of extending those benefits to drivers.

"We’re continuing to engage with policymakers across the country and believe that the policy solution that California voters chose can provide a model for other states," Lyft CEO Logan Green told investors and analysts Nov. 10.

The San Francisco-based company declines to discuss its plans for Illinois, saying in a statement, "Lyft believes it is important to engage in the political system in order to advocate on the issues that reflect our values."

Exactly what that means is anyone’s guess. The 11 candidates who benefited from Lyft’s PAC include Sen. Patrick Joyce of Park Forest and Rep. Terra Costa Howard of Lombard, who each won, and Rep. Diane Pappas of Bloomingdale and Monica Bristow of downstate Alton, who each lost.

Spending by the PAC ranged from $21,000 to $78,000 per candidate. All the recipients are Democrats, and all but one received support from Democratic legislative leadership or Gov. J.B. Pritzker.

"It came out of the blue," says a spokeswoman for Howard. "Terra is a strong union supporter. We were quite surprised. Terra believes employees should get health care, unemployment and retirement benefits."

It’s likely that Lyft focused on Illinois last year when state Rep. Will Guzzardi told Crain’s that he was contemplating a bill patterned on California’s HB 5 that would make companies such as Lyft, Uber, DoorDash and Grubhub treat drivers as employees.

The bill never got introduced during a COVID-shortened spring legislative session. Guzzardi says he’s planning to introduce legislation next year.

State Sen. Cristina Castro, an Elgin Democrat who received $2,000 from Lyft in the most recent election cycle, says she’s been having conversations about gig work with companies, workers’ rights advocates and workers.

"We can’t let gig workers be mistreated, but we also cannot pass sweeping legislation that will put undue financial pressure on the companies," she says in a statement. "There is a middle ground, and that’s what needs to be found. It is too early to say whether or not legislation will be necessary to meet this end, but what I can say is that I do not want another ‘Prop 22’ here in Illinois."

State Sen. Jason Barickman, a Republican from Bloomington and gig-economy proponent, got $2,500 from Lyft, according to state election records. "To the extent there is an organized political effort by Lyft or others, I presume they’re just preparing for a political battle that they would seem to be positioned well for, based on what you see in California," he says.

Barickman says he doesn’t have plans to introduce a bill but is keeping an eye out for legislation that would turn gig workers into employees. "Now is the time to make it easier, not harder, to put Illinoisans to work in this innovative and entrepreneurial economy," he says.

Prop 22 drew attention as the most expensive ballot initiative ever in California. "The companies spent over $200 million, which is unheard of," says Ken Jacobs, chairman of the Labor Center at the University of California at Berkeley.

"There’s no question in my mind that laws like Prop 22 will show up in states around the country and be heavily funded by the gig companies just like they were in California," says Bryant Greening, a Chicago lawyer whose firm represents people who sue app companies for accidents, injuries and assaults. "This was a life-or-death law for gig companies in California."

Jacobs says voter-led ballot initiatives like Prop 22 are easier to pass than legislation, which would be required in Illinois. But Lyft, Uber and other transportation-app companies have shown political strength in the state, defeating legislation passed by the Illinois General Assembly in 2014 that would have regulated them like traditional cabs.

Lyft has strong ties to Democrats, despite the inherent tension between the gig-economy model and organized labor. Valerie Jarrett, a close adviser to Barack Obama, is on Lyft’s board of directors. And former Transportation Secretary Anthony Foxx is its chief policy officer. Yet Lyft’s goals seem at odds with President-elect Joe Biden, who ran on a promise to crack down on misclassification of workers as independent contractors and allow gig workers to form unions.

A.D. Quig contributed.

via Crain’s Chicago Business

November 13, 2020 at 03:17PM

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