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Lyft Chief Policy Officer on the passage of prop 22 in California

Anthony Foxx, Lyft Chief Policy Officer, joined Yahoo Finance to discuss the passage of prop 22 in California.

Video Transcript

ADAM SHAPIRO: There was a major victory for Uber drivers and Lyft drivers in California. Proposition 22 passed, which means that those drivers are going to be able to remain independent contractors, if I've got that right. Alexis Keenan is going to confirm it. But even better, we've got Anthony Foxx, Lyft's Chief Policy Officer, here to discuss what this means. And very simply, what does it mean, Anthony?

ANTHONY FOXX: Well, it means that the independence that drivers depend upon to shift from platform to platform, to be able to work when they want, how they want, and where they want has been preserved. And it's a big deal also because there have been historically some legal restrictions against us doing more to provide benefits for drivers. And what California and the voters of California have now done is they've created the independence maintained, but now there's also benefits to go along with it for drivers. And we think it's a very, very important step forward.

ALEXIS KEENAN: Hi, Anthony. Alexis here. Now the Prop 22 measure, it still imposes additional new costs on Lyft, on other app-based transportation companies in terms of minimum wages, insurance benefits that you're offering. And with Lyft having that heavy 16% of its revenues coming from the state of California, and also with COVID-19 continuing to put a lot of pressure on yours and other travel and transportation-based industries, I'm wondering how Lyft is looking at that, and whether leaving the state of California, which was one of the things that was on the table, could still be on the table for Lyft in the state.

ANTHONY FOXX: Look, with Prop 22's passage, we are committed to California. And we are looking forward to growing our business. I think the most important thing as a result of Prop 22 is that that layer of uncertainty has been removed from both our business and, frankly, more for our drivers. They now know that they're going to walk into a world in which they can continue to be flexible independent workers, but they're now going to have a stronger safety net. And we're very, very happy to see that happen.

SEANA SMITH: Anthony, it's Seana. You mentioned that a layer of uncertainty has been removed. This has been talked about as a bellwether issue for the rest of the country. We talked to an analyst yesterday who referred to it as a watershed moment. How are you looking at this and how it will impact your strategy here going forward?

ANTHONY FOXX: Well, I hope that leaders across the country, whether that's at the state level or potentially at the federal level, will at least pause and acknowledge that what's happened in California is potentially a new way to look at defining the problem of gig workers. Gig workers do want to work when and how and where they want. They do want to have the flexibility to take care of a sick relative or to have a full-time job elsewhere and to make extra money doing this. And the vast majority of the drivers are in that situation.

So I think that leaders across the country who may have been looking at doing something like AB5, I hope they take a moment and digest the fact that this flexible work model is something that deserves to be protected, but you don't have to sacrifice the safety net to do that. There's a way to do both. And I think that's what I'm hoping we see across the country.

ALEXIS KEENAN: Anthony, in theory, the state could still go ahead and seek to hold Lyft and other companies liable for violating AB5 from the time it was enacted in January of this year up until, I guess, the present. So with California courts already having sided with the state on that issue, how is Lyft planning to manage that potential battle?

ANTHONY FOXX: Yeah. We have our legal team looking at those issues. Of course, when this ballot measure was put on the ballot, there wasn't an attorney general lawsuit pending, and there now is. And so we're looking at that and it's under review. But I don't have a full answer for you right now.

ADAM SHAPIRO: Um, Mr. Foxx, you served in the Obama administration. I'm curious how your former boss, President Obama, would look at this legislation, which now will fail, I guess, in California.

ANTHONY FOXX: Well, Prop 22, or AB5?

ADAM SHAPIRO: AB5 is now toast as far as it applies to Uber and Lyft drivers. So how would your former boss-- what would he say? What he approve of that?

ANTHONY FOXX: Well, I can't speak for him. You know, I can tell you that as Transportation Secretary, I've worked with labor unions, I've fought for things like buy America and other aspects of the fight for workers rights that are important to people across this country.

I think what has unfortunately happened is that folks don't understand that we agree that this work ought to have a safety net structure around it. And I think the place of disagreement has to do with the category of the worker itself. And I think if we can get over the fact that this is independent work, we're giving people an opportunity to work when they want to, where they want to, how they want to, if we can get over that part I think there's actually a world in which labor and companies like ours come together and actually can take solutions to political leaders to get them codified. So I'm hopeful that that happens. But obviously, that did not happen in California and now we have a way forward.

SEANA SMITH: Anthony, so two questions here. One, what would those solutions look like? What are some of those details, just in terms of what Lyft is willing to put forward and something that you think lawmakers will be able to agree on? And then I also want to ask you just about ridership princes. Because I think if you're going into this that if Prop 22 was rejected and you guys were not victorious on this, then ridership fees would rise as a result of that. Is that no longer the case?

ANTHONY FOXX: Well, taking the second question first, what would have happened had this measure not passed is, I think, something on the order of 80% of drivers would have been locked out of the platform. And the reason for that is that if you tell us today that now all the time that a driver even turns on the application has to be monetized, we're now telling drivers when they can come in, and we're telling them where they need to go to get the rides, it becomes much more like a, you know, a Starbucks job or a McDonald's job than what it is today.

So I think it's been incredibly important that that classification has been preserved. And then as I said before, under the traditional legal strictures, the more you do to provide safety net for people who are independent workers, the more it looks like employment. And so what California now has is a pathway for independent work to actually have benefits that are associated with it.

So I forgot the other question. But that's the answer to your second one.

ADAM SHAPIRO: Anthony Foxx, unfortunately we're out of time. And I should point out that you were the Secretary of Transportation from 2013 to 2017 and the mayor of Charlotte, North Carolina. So you come with a wealth of experience. Thank you for joining us here in your new job, not so new, actually, as Lyft's Chief Policy Officer.