In the summer of 2019, Uber, Lyft and other companies that use contract drivers faced a crisis in California. The State Legislature was poised to pass a law that would effectively require them to treat their drivers as employees, meaning the gig companies would have to pay drivers a minimum wage, cover their expenses and contribute to state unemployment — all significant new costs.
Desperate for a way out, the companies pushed legislators to exempt their drivers from the new law, saying they faced huge economic losses. But they wanted the backing of the state’s unions for the exemption, and promised to extend some new benefits for drivers if the unions got on board.
So Uber brought in a team of high-powered consultants, including one whose connections with organized labor were unimpeachable: Laphonza Butler, the former president of California’s largest union, a branch of the Service Employees International Union.
Ms. Butler, working through a prominent California consulting firm, advised Uber on how to deal with unions like the Teamsters and S.E.I.U., and sat in on several face-to-face meetings between the gig companies and union representatives, according to those familiar with the negotiations.
The overture to labor divided union activists, some of whom bristled at negotiating with the companies, and ultimately, it failed. But Ms. Butler’s chapter with Uber proved to be a pivotal moment in her career, moving from labor activism to the world of high-powered political consulting, which also involved a role in advising Vice President Kamala Harris in her 2020 presidential campaign.
On Sunday, Gov. Gavin Newsom of California announced that he was naming Ms. Butler as the state’s next senator, replacing Dianne Feinstein, who died last week. Many Democrats cheered the appointment of Ms. Butler, the third Black woman to serve in the Senate and a prominent figure in Democratic politics for more than a decade who most recently served as president of Emily’s List, the political action committee that works to elect women and candidates who support abortion rights.
But the appointment has also drawn ire from labor advocates, who have not forgotten Ms. Butler’s work consulting with Uber, which some saw as an uncomfortable reversal from her history in the labor movement and the values she promoted there.
“The sense was she was betraying her commitment to working people,” said Veena Dubal, a professor at the University of California, Irvine, School of Law, who has argued that Uber’s drivers should be classified as employees. “She sold out in a really big way.”
The negotiations Ms. Butler was involved in eventually fell apart, and the gig companies turned to a ballot initiative with similar provisions, Proposition 22, that voters passed the following year.
Supporters of Ms. Butler said her time consulting for Uber was scarcely a blip compared with her long history of labor advocacy, which includes organizing hundreds of thousands of workers in nursing homes and home-based care and successfully pushing for a statewide $15-per-hour minimum wage.
“Labor hasn’t had a union leader in the Senate in 60 years — let alone a union president who spent nearly two decades leading successful campaigns to raise the minimum wage and help workers organize,” said Jeffrey Lerner, the acting chief of staff for Ms. Butler. “That’s Senator Butler’s résumé and those are her values.”
Ms. Butler declined to be interviewed for this article but told The San Francisco Chronicle this week that she believed gig drivers “should have the protections of employment,” and said her role with Uber “was one that was consistent with my résumé.” Uber also declined to comment.
In 2019, Mr. Newsom’s administration encouraged the gig companies and labor unions to work out their differences over the issue, several people involved in the discussions said. Uber and Lyft wanted to persuade the unions to back a bill they could bring to the Legislature that would exempt their drivers from Assembly Bill 5, which would treat many categories of gig workers, like freelance writers and janitors, as employees for the purposes of employment law.
In exchange for the exemption, the gig companies would agree that the drivers could receive some limited benefits and join “network driver advocacy organizations” in which the state’s unions would represent them and negotiate for some labor rights.
Ms. Butler was brought in as well, with Uber paying the team at the consulting firm where she worked, SCRB Strategies, now known as Bearstar Strategies, $185,000 in 2019 and 2020. She was seen essentially as a translator, helping company managers understand the subtleties of labor leaders’ positions and frame arguments in ways that would appeal to the unions, according to several people familiar with the discussions, who declined to be identified because they were not authorized to discuss internal Uber issues or did not want to air internal conflicts in the labor movement.
One person said Ms. Butler was expected to take on other tasks as well, including talking with her former union colleagues about a possible compromise. It was also expected that she might help with a public relations strategy to persuade lawmakers and the general public that AB-5 could have negative effects on gig workers, though it was not clear whether she agreed to do so.
Ms. Butler participated in occasional conference calls with the company’s public affairs team, according to two people with knowledge of the calls. She answered their questions and advised Uber to use fewer vague tech industry buzzwords and be more straightforward in communicating with the unions.
Ms. Butler told the Uber employees that she would help them as long as it did not betray her values, one of the people recalled.
Still, Ms. Butler’s presence on the other side of the negotiating table rankled many of the state’s most prominent labor unions, several union officials said, although they did not want to discuss the matter publicly because they did not want to cross Mr. Newsom and Ms. Butler.
The months of discussions stretched from consultants’ offices in Sacramento to hotels in Oakland and the headquarters of Uber and Salesforce in San Francisco. They included large group negotiations, forums for drivers to share their views with labor organizers and smaller sit-downs between the unions’ top negotiators and gig company executives, including John Zimmer, the former president of Lyft, and Tony West, Uber’s chief legal officer and the brother-in-law of Vice President Harris.
Ms. Butler’s role during the meetings she attended was minimal, according to several people. She sat on the sidelines listening, exchanged brief niceties with the union leaders she knew and once made introductions during a meeting in which drivers gave their perspective to the two parties.
Leaders of S.E.I.U., the union where Ms. Butler had formerly worked, were the most amenable to cutting a deal, according to two people involved in the discussions. But many other unions were strongly opposed, fearing they were bargaining away crucial employment rights for vulnerable workers. The talks fizzled out.
Assembly Bill 5 passed that fall and took effect the following year, but Uber and Lyft eventually got what they wanted anyway, joining DoorDash to spend more than $200 million on Prop. 22, passed by voters in 2020, which maintained gig drivers’ status as independent contractors and provided them limited benefits, like a wage floor and some health insurance stipends. The measure is currently facing a legal challenge.
Ms. Butler was not involved in the Prop. 22 campaign and left the consulting firm in 2020 to become a director of public policy at Airbnb, the short-term home rental company launched in San Francisco.
Like Uber, Airbnb has faced regulatory heat in Democratic, union-friendly strongholds like New York, where the company was being blamed for pushing up rents for working class residents and hurting hotel jobs. (Airbnb has said many other factors have caused rents to rise in New York and that its business model has helped drive down lodging costs for consumers.) One of the company’s chief adversaries in New York had been the Hotel Trades Council, a powerful union.
Mary Kay Henry, S.E.I.U.’s international president, said Ms. Butler was a “transformational” labor leader and suggested that her pro-worker voice being part of Uber’s negotiating team may have been a benefit for workers.
“She’s who I’d want in the room helping corporations understand what workers want and need,” Ms. Henry said.
But the animosity Ms. Butler engendered among organized labor remains, and supporters of those running for the permanent Senate seat — who include Representatives Adam Schiff, Barbara Lee and Katie Porter — have been quick to resurrect the issue. If Ms. Butler runs for a full term, the unions will have to decide whether to support her. Some, including a firefighters’ union, a film set workers’ union and a public transit union have already endorsed Mr. Schiff.
The deadline to seek the endorsement of the California Democratic Party was originally Oct. 13, but the party decided this week to push back that date to Oct. 27 to give Ms. Butler time to apply if she decides to run, said Rusty Hicks, the state party’s chair.
For some Democrats, Ms. Butler’s appointment draws attention to a deeper messaging problem within the Democratic Party. Mr. Newsom might get credit for appointing an L.G.B.T.Q. Black senator, but her consulting work, to some, highlights the party’s ties to big businesses.
“This is why many working class voters have this distaste for the Democratic Party and a lot of them went to Trump,” said Larry Cohen, the former president of the Communications Workers of America, which represents hundreds of thousands of workers at companies like Verizon and AT&T.
Mr. Cohen is now chairman of Our Revolution, a progressive advocacy group that recently endorsed Ms. Lee.
But Anthony York, a spokesman for Mr. Newsom, defended the governor’s appointment. “Anyone casting doubt on Senator Butler’s record of fighting for working families either doesn’t know what they’re talking about or has some sort of political ax to grind,” he said.