UBER Uber Technologies Inc

By Christine Mai-Duc 

After losing a difficult battle in Sacramento last year over a law that could classify their drivers as full-time employees, Lyft Inc. and Uber Technologies Inc. are signaling they are ready to spend big against California legislators who opposed them.

Lyft has placed $2 million in a campaign account taking aim at Tyler Diep, an Orange County assemblyman who was the sole Republican to vote for the law, known as AB5, according to campaign-finance records. Uber has contributed $200,000 to a PAC that opposes Mr. Diep, who faces a contested primary election on Tuesday, a company spokesman said.

The Lyft-backed committee, called Californians for Independent Work, has received all of its funding from the ride-hailing company and has spent more than $328,000 on activities including polling, digital ads and mailers. One mailer called Mr. Diep's AB5 vote "a mockery of his campaign pledge to roll back regulations and promote jobs."

It is by far the largest share of outside spending in the race. Mr. Diep's campaign has spent only a little more in total so far, $458,649, while his best-funded primary opponent, fellow Republican Janet Nguyen, has spent $277,777.

But political experts said it is the $2 million deposited in the account that is garnering the most attention.

"Throwing down seven figures just shows the rest of the community that they take this seriously and that they could do more," said John Thomas, a GOP political consultant who is unaffiliated with any of the campaigns in Mr. Diep's race. He added that "$2 million is probably just the tip of the iceberg."

Mr. Diep declined to comment. Ms. Nguyen in a Facebook post called AB5 "one of the worst and most devastating antibusiness and antijobs laws that has come out of Sacramento."

Dave Gilliard, a spokesman for Ms. Nguyen's campaign, said Lyft's spending has helped even the playing field. "We're very grateful for their support," he added.

The top two vote-getters in the primary, regardless of party, will advance to the November election.

Lyft, Uber and other Silicon Valley companies have argued that AB5, passed by a Democratic-controlled legislature and signed by Democratic Gov. Gavin Newsom, could take away flexibility for drivers and force them to work pre-scheduled shifts. Both ride-hailing companies have maintained their workers are properly classified and not made them employees since the law took effect Jan. 1.

"AB5 has put the livelihoods of hundreds of thousands of Californians at risk," said Lyft spokesman Adrian Durbin. "It is a broken law, and we are giving a louder voice to those who want to protect their ability to do independent work."

Mr. Durbin said the spending against Mr. Diep should be considered just the beginning of Lyft's efforts in contested legislative races and that it is weighing additional targets for the future.

Uber, meanwhile, has also given $100,000 to a committee called Keep California Golden, which is spending against several legislative candidates this cycle. A company spokesman declined to comment on the spending.

Previously, Lyft had given money directly only to support legislative incumbents, a traditional route frequently used to seek influence in California's capital.

"Giving money to sitting elected officials is more of a thank you. It's a carrot, not a stick, and now they've pulled out the stick," said Mr. Thomas.

He added that targeting Mr. Diep, whose district political consultants consider safe for the GOP, wouldn't likely upset Democratic leaders who control the state's legislative agenda.

Still, the money Lyft has invested hasn't gone unnoticed by Democrats.

"We assume that they're trying to send a message to all legislators, Republican or Democrat...to say they're not happy about how the legislature voted on the issue," said Bill Wong, who manages political strategy for Assembly Democrats.

Lyft, Uber and several other companies are pushing a November ballot initiative to exempt themselves from AB5, amassing more than $110 million for what promises to be a bruising fight with labor unions. Proponents say they have already collected more than one million signatures, nearly double the number required to qualify for the November ballot.

Uber and food-delivery company Postmates Inc. also have filed a lawsuit challenging the law.

Meanwhile, talks over crafting a compromise to amend AB5 have stalled in the state legislature. Mr. Durbin and others said that no negotiations are currently happening between legislators and companies including Lyft and that none are scheduled.

(END) Dow Jones Newswires

March 02, 2020 10:23 ET (15:23 GMT)

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