Knock LA

Attorneys for Uber, Lyft, and DoorDash wrote the 2020 California ballot initiative known as Proposition 22. Contrary to the companies’ deceptive ad campaign and intimidating messages to their workers, Prop 22 does not preserve driver flexibility or save drivers from politicians. What Prop 22 does do is change current law so the companies can shift their costs to the driver and diminish or remove drivers’ rights, protections, and benefits. Prop 22 will also block drivers’ ability to organize so they can’t collectively bargain a contract. In addition, this proposition will block local governments from writing or enforcing protections for drivers, such as in a crisis like COVID-19, and will leave governments footing the bill for the basic health and welfare of drivers.

I should know. I have been a full-time rideshare driver for four years and an organizer with Rideshare Drivers United for three. Rideshare Drivers United is an independent, Los Angeles-based, driver-created and driver-led association of 19,000 California rideshare drivers. Our goal is to become a union and win a voice on the job, fair pay, and dignity for the work we do.

Before I explain why Prop 22 is bad for drivers and other workers, I want voters to keep in mind that Prop 22 essentially can’t be changed if it passes. Prop 22 will require an unprecedented 7/8ths vote of the legislature to amend or repeal it. Think about that. That’s an 87.5% majority vote required in both the State Assembly and State Senate to amend or reverse a corporate-sponsored ballot initiative. If it passes, that 7/8ths requirement will encourage corporate sponsors of future ballot initiatives to create similar provisions to keep their initiatives from being changed.

Background

From their start, the app-based companies’ business models have depended on using drivers like employees while treating them as independent contractors so that the companies can shift their costs to the drivers. This is why we have seen and heard so much in the news about class-action lawsuits against Uber and Lyft for misclassifying their drivers as independent contractors.

In 2018, the California Supreme Court ruled in favor of truck drivers who sued the Dynamex company for the same reason. The court adapted what’s known as the “ABC test” used by Massachusetts and New Jersey to determine that the truckers were in fact employees of the company, and so the “Dynamex” decision became the law of the land in California. In 2019, this test was written into a California bill called “AB5” to define what an independent contractor is. Uber and Lyft lobbied lawmakers for an exemption from AB5, but organizers from Rideshare Drivers United went to Sacramento three times to successfully lobby against the exemption. Once AB5 became law, these billion-dollar scofflaw companies could be brought to justice and their workers would still have a chance to have a voice on the job.

Enforcement

None of Prop 22 originated from workers or their elected representatives. In fact, because the companies have been ignoring current wage laws, Rideshare Drivers United built an online tool to help more than 5,000 California drivers file wage claims with the California Labor Commission against Uber and Lyft for unpaid wages, expense reimbursements, and damages totaling over $1.3 billion. This action was called “People’s Enforcement of AB5”. Because of this, the Labor Commissioner is now suing Uber and Lyft on behalf of all rideshare drivers in California to collect and distribute unpaid wages, reimbursement of business expenses, liquidated damages, and penalties owed to workers. Additionally, the California Attorney General and the City Attorneys of Los Angeles, San Diego, and San Francisco have also filed a lawsuit against the companies for failing to follow the law.

Belligerents

The Governor’s ink on AB5 wasn’t dry before Uber, Lyft, and DoorDash conceived and pledged $30 million each to fund a ballot initiative campaign (eventually Prop 22) determined to buy the special exemption from AB5 they could not get from lawmakers. Along with Instacart, Postmates, and other contributors, the companies are now spending a record $181 million on a campaign to deceive California voters into passing Prop 22. This is far more money than has ever been spent on any previous California ballot initiative, and more than twice that of any other 2020 initiative in the country.

Union Busting Tactics

In June of this year, the California Attorney General sought an injunction from the courts to force the companies to cease misclassifying their workers and comply with the law. Instead, in old-style union-busting fashion, Uber and Lyft began to incite fear in their workers and the public by threatening to close up shop in California if the injunction was granted, putting tens of thousands of drivers out of work. News outlets across the country lit up with sensational headlines that rideshare in California was facing imminent shutdown. “We’ll have to close the factory!” the company bosses said. In fact, on Monday, October 5th, Uber CEO Dara Khosrowshahi wrote that if Uber had to take on all of their drivers in the U.S. as employees, Uber would have to lay off 3/4ths of their drivers. Right.

This is nonsense. The companies have spent billions of dollars of investor money to build California and the U.S. into their biggest revenue markets. They are not about to disappoint their investors by walking away from the demand they created. Besides, even though the court granted the injunction, the injunction is suspended because the companies tied it up in the appeals process until the election is over. (Late on October 22, the California Court of Appeal ruled that the injunction was properly issued and that the companies have 30 days to comply with it. The companies have 10 days to file an appeal with the California Supreme Court, but that’s where the Dynamex ruling came from).

In the meantime, the companies have launched a massive misinformation blitz to promote their ballot initiative. Deceptive ads are showing up in every corner of mass media and electronic ad space you can find, including in the passenger and delivery customer apps. One TV and online ad features an actress as a busy young mother who is grateful for the flexibility of app-based driving so she can make money and still see her daughter. She blames Sacramento politicians for passing a law “making it illegal to work as independent contractors.”

I hope my plumber doesn’t find out.

She goes on to ask you to please vote yes on Prop 22 to protect app-based work and “hundreds of thousands of jobs.” The suggestion here is interesting: that there is some phantom law lurking about, ready to spring from the shadows at any moment to end hundreds of thousands of jobs for no known reason other than Sacramento politicians having a bad day, apparently.

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So, What’s in the Sausage?

In July 2020, the National Employment Law Project and Partnership for Working Families produced a 31-page analysis of Prop 22 called “Rigging the Gig” and a 2-page brief called “Top 10 Ways Proposition 22 Hurts Workers and Communities,” found here and here. In their estimation, Prop 22 “would close off decades of protective labor and anti-discrimination laws in California for their workers. The initiative…would grant app-based transportation and delivery companies a complete exemption from AB5, freeing them from complying with California’s labor laws (which they have flouted since their founding) and signaling that corporations can establish a permanent class of unprotected workers.” (On October 13, they released a four-page addendum titled “Prop 22 Rolls Back Rights for Women” which provides an expanded look at how Prop 22 will reduce protections for women both as passengers and drivers, found here).

Prop 22 would strip or severely diminish app-based rideshare and delivery drivers of our right to a minimum wage, overtime, expense reimbursement, healthcare, sick leave, workers comp, safety regulations, anti-discrimination, and the right to organize. But, it will still allow the companies to use us workers like employees because of the way they control us.

Let’s have a look at the earnings and healthcare aspects of Prop 22. Prop 22 eliminates basic workplace benefits and replaces them with a new, lower “earnings guarantee” and a “healthcare subsidy” payment designed to save companies from footing the bill for the expenses they would otherwise have under current law.

The “earnings guarantee” of pay would be equal to 120% of the minimum wage (that would be $15.60 in 2021 when the California minimum wage will be $13), but drivers would only be paid for “engaged time.” “Engaged” means “from when an app-based driver accepts a rideshare request or delivery request to when the app-based driver completes that rideshare request or delivery request.” Drivers would not be paid for time waiting for a ride request. Since part of the company’s business model is to saturate some areas with an oversupply of drivers, wait times can consume large parts of every hour a driver is on the road, including spending 30–45 minutes in the driver queue at Los Angeles International Airport.

“Per-mile compensation for vehicle expenses” under Prop 22 would be 30 cents per “engaged mile” until the end of 2021 and “adjusted annually to reflect any increase in inflation as measured by the Consumer Price Index for All Urban Consumers (CPI-U) published by the United States Bureau of Labor Statistics.” Again, if drivers are in a densely populated urban area that is saturated with other drivers and have few places to stop legally, like downtown Los Angeles on a weekday, drivers may find themselves constantly on the move with no fare or order to pick up and deliver. They will not be compensated for miles driven without a rider or delivery to pick up, even though they are waiting for the company to send them work.

Under current law, however, workers must be reimbursed for mileage at the standard IRS mileage reimbursement rate, which for 2020 is calculated at 57.5 cents per mile and isn’t restricted to “engaged miles” when calculating reimbursement.

Drivers also know from experience that the companies will not compensate us for downtime caused by the need to stop work to clean after a messy trip, to file an emergency report in the app, or to respond to a company error or false complaint against us that has caused a loss of income, a suspension, or wrongful termination.

UC Berkeley Labor Center’s wage assessment of the ballot initiative found that “after considering the multiple loopholes in the initiative, the pay guarantee estimate for Uber and Lyft drivers is actually to be the equivalent of a wage of $5.64 per hour.” The authors say, “Not paying for [logged in but not “engaged”] time would be the equivalent of a fast food restaurant or retail store saying they will only pay the cashier when a customer is at the counter. We have labor and employment laws precisely to protect workers from [this] kind of exploitation.” Prop 22 means workers would have to work longer shifts just to earn a living wage — putting in more than 40 hours a week with no overtime pay.

Let’s look at this the way a driver like me does — basic. How much will I get paid for a fare from LAX to San Clemente at night? A quick “ask Google” and it’s 65 miles to San Clemente and one hour in no traffic. I know from experience that an Uber X fare like this pays out at roughly $52. (Pretty lousy for the distance).

The exact fare I’d get paid would be $51.65, because the Uber X fare in Los Angeles is at a rate of $0.60/mi and $0.21/min (or $12.60/hr) for the time when a passenger is on board.

If Prop 22 passes and it’s now 2021, that same fare would pay me at a rate of $0.30/“engaged mile” and $15.60/“engaged hour” (or $0.26/“engaged minute”). Again, “engaged time” is from when I accept a ride request until I drop off the passenger.

Now, I work mostly at LAX. Under Prop 22’s new queue system, I would find more money lying on the ground than what I’d get paid to drive into the passenger pick-up zone during Prop 22 “engaged time.” But, for the sake of this exercise, let’s say I would travel about one mile from the holding lot and it would take about 10 minutes until I had my passenger on board if someone’s waiting at the curb. At Prop 22 rates, that part pays $2.90. The part where I have a passenger on board and drive all the way to San Clemente at Prop 22 rates? That pays $35.10. So the total payout for the same ride from LAX to San Clemente at Prop 22 rates is $38 or $13.60 less than current Uber X rates.

Under current law, drivers have the right to be compensated for all on-the-clock time, reimbursed for work-related mileage at more than double the Prop 22 rate, and reimbursed for work related expenses. As employees, we have the right to organize and negotiate a contract for better than the bare minimum.

The Healthcare Subsidy and Racial Justice

If Prop 22 passes, the app companies would replace health insurance coverage with their smaller “healthcare subsidy” payments designed to save the companies money at the expense of their workers’ health and safety. After sifting through the convoluted language of Prop 22 on this health benefit, we find that the companies have defined the maximum subsidy that any one of them will pay a worker as just 82% of “the average statewide monthly premium for an individual … for a Covered California bronze health insurance plan.”

So, what does that mean and how do I get it? In short: who knows and good luck!

That’s actually a serious answer.

Covered California is where you shop for “Obamacare”. The lowest costing insurance plans are in the “bronze” tier where you find plans with the lowest premiums, but highest deductibles and the least coverage. There are 12 bronze plans, but who you are and where you live can have a dramatic effect on what your premium is. So, how do you figure out the average for the whole state across 12 bronze plans? Someone at Covered California needs to figure it out because Prop 22 is going to require them to publish it. Until then, we don’t know what we’re voting for.

Otherwise, there are two subsidy tiers you have to work for to earn: either 41% of that bronze average, or 82% of that bronze average. Which one you earn depends on whether you maintain an average of at least 15 “engaged hours” or at least 25 “engaged hours” of work, per week, for 3 months, respectively. If you miss both you could get nothing. All of these are paid to you quarterly. You can earn a subsidy from more than one company, but there is no provision for combining hours from them to reach 15 hours or 25 hours of “engaged time”. The other conditions are: you must get and provide proof of your own insurance with you listed as the policyholder (not necessarily through Covered California, apparently), it cannot be sponsored by an employer, and it can’t be Medicare or Medicaid.

[I’m thinking of the part-time retirees who will be paid less for their work but get no health benefit in return. Remember how much less I would make on that fare to San Clemente under Prop 22?]

The authors of “Rigging the Gig” found “as recent studies (funded by the industry) have indicated, drivers spend as much as 37 percent of their time logged into a transportation app, but without a passenger.” This means that most drivers would have to log an extra 37% more time on the app — more than 39 hours per week — to qualify for the top tier benefit of 82%.

So, you will have committed yourself to paying for an insurance plan that they will help you pay for if you work enough hours (many of them unpaid), but you have to pay for it yourself until you get your quarterly payment from them — if there is one. God help you if you decide to go on vacation/your car breaks down for a few days/you have a family emergency or you get injured and are unable to work. Not only will you have no paid vacation, reimbursement for repair expenses, or bereavement leave or sick leave, you could also lose your premium assistance, not for just one month but a whole quarter.

Looking at Prop 22’s “healthcare subsidy” as an experienced rideshare driver, I immediately see another big problem. I’m used to Uber’s and Lyft’s performance-based bonus incentives, and I’m also used to circumstances beyond my control causing me to miss them. I still remember being out driving at 3 a.m. on a Monday needing just two more L.A. fares before 4 a.m. to score a big bonus, and then catching one deep into Orange County. Or worse, knowing that I did earn a bonus, but someone at a call center refused to give it to me over a location discrepancy between the map display in the app and their GPS records. So, now we’re going to play that game with my healthcare? Right. I stopped chasing bonuses a long time ago because they are unpredictable and unreliable as a source of income.

This is Uber, Lyft, DoorDash, Instacart, and Postmates’ idea of healthcare. Cross your fingers and take your best shot. These are not rules for a new program they are rolling out. This is what they are trying to put into law. Their message: “If you want a stable healthcare subsidy, try a taxpayer-funded one from Covered California.”

If you’ve ever heard the term “portable benefits”, this is what that will look like for employees who get dropped from employee status to a category such as the one that Prop 22 will create, sometimes called a “dependent worker.”

This is the future of work.

Keep all of that in mind as you read ahead.

The COVID-19 crisis has made conspicuous the injustice communities of color and immigrants face when it comes to healthcare, especially for app-based rideshare and food delivery workers who are a majority of that workforce. In a May 2018 report released by the UCLA Labor Center, of the 260 rideshare drivers UCLA surveyed from around Los Angeles, 38% were Latino, 23% were Black, and 35% were foreign-born. Two years later, a description of the app-based workforce in San Francisco emerged in a study published by UC Santa Cruz Institute for Social Transformation. In their survey of 643 app-based workers, 29% were Asian, 23% were Hispanic, 12% were Black, 13% identified as multiracial or other, and 56% were foreign born.

The Centers for Disease Control finds that COVID-19 is taking a greater toll on those communities because they have less access to healthcare, sick leave, safe work environments, and workers compensation. California, unfortunately, is a potential case study. In a July 15th article, the Los Angeles Times published an analysis of statewide data finding that “for every 100,000 Latino residents, 767 have tested positive. The Black community has also been hit particularly hard: for every 100,000 Black residents, 396 have tested positive. By comparison, 261 of every 100,000 white residents have confirmed infections.” L.A. County officials were quoted as saying, “The underlying reasons why communities of color are disproportionately impacted by worse outcomes of COVID is also related to longstanding structural and systemic issues, including racism and historical disinvestments, that L.A. County is working to address and mitigate amidst this pandemic.”

In California, rideshare and delivery workers actually do have a right to healthcare, sick leave, safe work environments, and workers compensation under current California law. They also have protections against discrimination. The problem is, Uber, Lyft, DoorDash, Instacart, and Postmates are trying to evade their responsibilities to these workers. A “Yes” vote on Prop 22 will help them accomplish that.

Meanwhile, drivers who are not eligible for unemployment benefits or still need to work and continue to drive have been forced to risk their health and that of their families in order to make a living. That is a choice that no worker should have to make. Rideshare Drivers United lost one of our own activists in San Diego to COVID-19 in this way, and 28 other members reported having been sick in an internal poll. Even though COVID-19 prompted Uber and Lyft to offer some compensation for active drivers diagnosed with COVID-19, the funds were less than what workers comp would have paid, were voluntary, and were difficult to actually receive. It was under threat of a judge’s pen that the companies took steps to improve their response.

Early in the crisis the companies had been slow to provide drivers with protective equipment needed during the pandemic, including face masks, sanitizer, disinfectant, and barriers between drivers and passengers. The situation would be much different if the companies would follow the law.

Unemployment

The COVID-19 crisis has shown just how critical unemployment insurance is to app-based rideshare drivers and delivery workers. Since early this year, the vast majority of rideshare drivers have been put out of work due to the steep drop in demand for their services and the health risks associated with continuing to drive. Thanks to current law, California drivers were able to access state unemployment insurance (UI) benefits despite Uber and Lyft refusing to acknowledge their workers as employees and comply with their responsibilities under the law.

In a press release following the California Attorney General’s filing of a lawsuit against Uber and Lyft for refusing to cease misclassifying their workers as independent contractors, the AG said, “The companies deny that their drivers are entitled to state unemployment insurance, as well as state-mandated paid sick leave and other employee benefits. The companies are thereby shirking their obligations to their workforce and shifting the burden onto drivers and taxpayers at a time when they are most vulnerable.”

Shortly after the COVID-19 crisis began, it became apparent to lawmakers in Washington, D.C., that a package of rescue legislation was necessary and should provide money to people who were put out of work. At that time, Khosrowshahi lobbied Congress to provide some kind of relief to his rideshare and delivery workers. Ultimately this would come in the form of what is known as Pandemic Unemployment Assistance (PUA), a federally funded form of unemployment insurance designed to get money to non-employee workers who lost their income as fast as possible.

The PUA unemployment benefit Khosrowshahi lobbied so hard to “get” for his rideshare and delivery workers is calculated on a worker’s net income, whereas in California the unemployment insurance (UI) benefit is calculated on gross earnings. Since app-based rideshare and delivery drivers have such high expenses (that the companies are supposed to reimburse drivers for but don’t) our net income is much lower than our gross earnings. This means that our federal PUA benefit would be much smaller than our state UI benefit.

Like California, other states have laws allowing their labor departments to independently make a determination of a worker’s classification for the purpose of administering unemployment benefits. So, after having been hit with a bill from the New Jersey labor department for $630 million in unpaid unemployment taxes in November, Khosrowshahi’s lobbying efforts at the beginning of the COVID crisis were likely opportunistic. He certainly anticipated a tsunami of COVID-related UI liabilities from numerous states headed Uber’s way and looked for a way to — you guessed it — deflect that wave to taxpayers instead.

If rideshare drivers and app-based delivery workers applied for the fast, federal, taxpayer-backed PUA benefit and not the state, employer-backed UI benefit, this would help get Uber off the hook for not paying into state UI funds, even though Khosrowshahi knew it meant his workers in states like California would get a lot less money. That didn’t work in New York or, ultimately, in California where Rideshare Drivers United not only worked to help thousands of drivers navigate California’s overwhelmed unemployment insurance system to get their state UI benefits, but also engaged with labor advocates to cajole the state labor department into reforms.