If you know someone who drives for Uber or Lyft or delivers for DoorDash or Instacart, labeling them as an “employee” who is subordinate to an “employer” would technically be incorrect. Under current policy, these transportation and delivery gig companies designate these positions as independent contractors, arguing that liberties such as adjusting one’s own work schedule gives them more power than the typical worker. While this may seem like a minor technicality, it actually results in a massive discrepancy between what these workers are entitled to in terms of overtime pay, wages, insurance and protections.
Why is this issue coming to the forefront as the upcoming election looms? The state of California recently implemented labor legislation last year that threatens gig company’s freedom to relegate workers to lower standards. The bill, titled AB 5, enforces a criteria called the ABC test, which distills the definition of an independent contractor to three qualifications: Contractors are not under direct control of the hirer, they perform work outside of their company’s primary business or they previously had an established independent trade, occupation or business.
Uber and Lyft’s model of worker blatantly violates these criteria. Even though they’ve been able to circumvent past legal obstacles to classify their workers as mere adjuncts, their defeat looked to be inevitable. Or is it? Now that California law mandates gig companies to entitle their workers to the same baseline of benefits, wages and protections as every other corporation, they aren’t going down without a fight, especially with an opportunity like the election coming.
Proposition 22 is a concession of sorts to the new law, but it still entails “app-based drivers” being classified as independent contractors and receiving benefits that severely pale in comparison to the ones prescribed in AB 5.
Five gig companies — Uber, Lyft, InstaCart, DoorDash and Postmates — have mobilized to spend a combined $199 million on lobbying and campaign efforts to get this initiative on the ballot in California. This is record spending on a ballot initiative in the history of California, signifying its importance even further in terms of precedent and legislative posterity. Currently, their investment has awarded them some hope that this could be passed. According to polls of likely voters, 46% approve, 42% oppose and a pivotal 12% are undecided. The proposition requires a simple majority to pass.
Digging deeper into why gig companies are fighting so assiduously to shortchange their workers, the motive is purely financial. According to Reuters, Uber and Lyft alone would save nearly $400 million in additional payroll taxes and workers compensation costs if this initiative gets passed. But there’s something deeply insidious about prioritizing tax expenditure over the welfare of laborers, especially when these gig companies have no shortage of venture capital at their disposal. DoorDash and the like are not only impervious to the economic effects of the pandemic (relative to the economy’s general decline), but it thrives during a time when people aren’t leaving their homes and relying on deliveries more than ever.
Mentioned earlier were the reduced benefits and protections, but how much less really is it?
The companies claim their initiative presents a marginal decrease in benefits but justifies it with the fact that workers have liberties in other areas like setting their own work schedule. This is a complete farce. These are still real people who are taking real risks every minute they complete a service request. Just like other corporate services that inherently present danger to the worker, gig companies should have to pay workers’ compensation. Under the proposal, they will provide occupational accident insurance to contractors, which typically costs the company much less than workers’ compensation. It’s also far less comprehensive coverage for the worker and depends highly on the quality of the insurance the company decides to buy — which, in essence, leaves the amount of money provided for medical expenses, lost income and disability to the discretion of Uber and not the state.
Other benefits that are substantially worse under this proposition include health insurance, which is whittled down to health subsidies that cover a measly 41% of the average premium in California for laborers who work below 25 hours. The absolute best subsidy is reserved for those who work above an average of 25 hours, which is still only 82% of the average employer-provided health insurance.
There is a guaranteed wage floor that appears to be unusually magnanimous at first glance, and that’s because it is. While the initiative guarantees 120% of the state’s minimum wage, plus 30 cents per mile driven, it only accounts for “engaged driving time,” which is delineated as the period between the acceptance of a service request and the completion of that request. A study commissioned by UC Berkeley found that after adjusting for these factors, including wear and tear on the vehicle, the value of a contractor’s wage under this initiative would be less than half of the state’s minimum wage of $13 per hour.
If Prop 22 is passed Nov. 3, it constitutes a devastating blow to not only workers in California, but the entire country’s working class. If a steadfast lobbying effort is all it takes for companies to push their agendas into democracy, all for the sake of their own economic welfare and eroding labor rights in the process, this is a precedent that endangers all Americans. For now, it affects just app-based drivers in the state of California. But if more corporate-sponsored initiatives manage to evade pre-existing law and end up dictated by a voting majority, Prop 22’s success story will be a main culprit.
Camden Gilreath is a senior studying journalism at Ohio University. Please note that the views and opinions of the columnists do not reflect those of The Post. Want to talk more about it? Let Camden know by tweeting him @camgilreath23.