What’s inside Prop 22, Uber and Lyft’s $182M ballot measure on the fate of gig drivers?

Corporations have poured massive funds into the measure to classify drivers for app companies as independent contractors, forever

Listen to the full radio report here, first aired September 24, 2020:

 

By Ariel Boone (@arielboone), KPFA elections reporter

OAKLAND, CA – Ride-hailing and delivery companies Uber, Lyft, Doordash, Postmates and Instacart have spent at least $182 million in support of Proposition 22, which California voters will decide in November. 

At issue is the basic question: are drivers independent contractors, or should they be guaranteed all of the rights of employees, like minimum wage, overtime, workers compensation and unemployment insurance? Proposition 22 would permanently classify drivers for app companies as independent contractors.

“What Prop 22 would do is protect the ability of app based drivers to choose to work as independent contractors, with control over where, when, how long and for whom they wanna work,” says Geoff Vetter, a spokesperson for the Yes on 22 campaign. “What we know from speaking with rideshare and delivery drivers is that more than 70 percent say that they want the ability to remain independent contractors.”

Driver John Mejia disagrees. He drove for Uber and Lyft for just over four years, and he says the flexibility is a myth. He wants to be treated as an employee, in accordance with AB 5. For years, Mejia recalls, he would log into the Uber and Lyft apps to drive, and see a notice informing him his pay rate would decrease. Each time, he pressed “accept” — that was the only way to continue working.

“They’ve always controlled how much I make when, when I get paid the most and under their algorithms,” Mejia says. “Is that independence? Not really. Is that, is that flexibility? Not really.”

The workplace rights of John Mejia and thousands of other app drivers became a state policy fight in 2018, when the California Supreme Court issued a unanimous decision called Dynamex. It created a simple test to determine if a worker is an employee or an independent contractor. 

To pass the Dynamex ABC test and classify their its drivers as independent contractors, Uber, Lyft, Doordash and their industry would have to prove that, A – Their drivers are “free from the control and direction of the company”; B – that the driving they do would is “outside the usual course of the company’s business”; And C – That the driver is engaged in an independent trade or small business.

Though lawsuits are currently making their way through courts deciding the matter, labor experts tell KPFA that multiple federal judges have agreed that app companies fail the ABC test — and that drivers are employees. Assemblymember Lorena Gonzalez, the author of AB 5, a bill that incorporated the Dynamex decision into state law, agrees.

“There is no way for a delivery driver, an Uber driver, to fit into this idea of being a small business,” she says. “They don’t set their own rates. They don’t make their own decisions. they’re told where to go, when to go. there there’s just a lot of control in the entire aspect of it.”

“What I realized after driving with them almost for four and a half years, was that it was never about the relationship with the driver. It was really about their relationship to making money.” – John Mejia, driver for Uber and Lyft

Six weeks after Governor Newsom signed AB 5 in 2019, delivery and ride-hailing companies filed paperwork to put Proposition 22 on the ballot, and exempt themselves from the law.

Proposition 22 has support from police unions, multiple chambers of commerce, and the California Republican Party. In fact, the Yes on 22 campaign this month transferred $2 million to the California Republican Party to support campaigning efforts for the measure.

It’s opposed by labor unions, including the Teamsters, SEIU, United Food and Commercial Workers and the California Labor Federation as well as high-profile Democrats, like presidential nominee Joe Biden and senators Kamala Harris and Elizabeth Warren.

What’s inside Prop 22?

Prop 22 would would permanently classify drivers for the app companies as independent contractors, not employees. It also contains some things that look like worker protections:

It bars companies from stealing tips from drivers, a practice which is already illegal for employers to do to employees.

It mandates drivers rest after working for 12 hours — though drivers could easily flout the law by switching to a second app. 

It makes app companies pay a healthcare subsidy for drivers to buy insurance through Covered California. But the subsidy is based on the price of a “bronze” plan, known for high deductibles and fees. 

Plus, Prop 22 creates a minimum pay system, something drivers have long demanded, which the app companies say is a historic wage guarantee. The initiative promises 30 cents a mile and 120 percent of minimum wage for hours worked. But there’s a catch: labor attorneys say the companies found a way to undercount work hours.

“The ballot proposition would only pay drivers for about two-thirds of the time that they’re actually working, because it only pays them for engaged time,” says Rey Fuentes, a legal fellow at the Partnership for Working Families. 

“The companies funded research that clearly indicates drivers spend about a third of their time waiting, logged on, engaged to work — or essentially engaged to wait. And that time is compensable. Under California law, you should be paid for that time.”

Another study by UC Santa Cruz researchers suggested the unpaid waiting time for San Francisco gig drivers could be closer to 20-24 percent of their working time. Whatever the proportion, under Prop 22, waiting time would remain uncompensated. 

The Yes on 22 campaign told KPFA that they intentionally limited driver pay to this so-called “engaged time” to prevent drivers from double dipping, earning money to wait on two apps at the same time.

But two drivers told KPFA they feel the apps keep them waiting without pay on purpose to “maximize profits” and increase the availability of instant rides and deliveries for customers.

Another thing Proposition 22 does: restrain lawmakers. If the state legislature wants to give app drivers a legal right to unionize or collectively bargain, they have to amend Prop 22, and that requires a seven-eigths supermajority vote. The part of the measure that makes drivers independent contractors could never be amended, Rey Fuentes says.

Assemblymember Lorena Gonzalez says she’s “never” seen a ballot initiative with a seven-eighths threshold. “Sometimes it requires a three fourth vote of the legislature, but seven-eighths is almost laughable.”

Geoff Vetter, the Yes on 22 spokesperson, says it’s intentional. “We think it’s important that the voice of drivers and voters be protected, so that if Proposition 22 passes in November, the legislature can’t come back in January and completely undo it.”

No sick leave, and a raging pandemic

Another impact Prop 22 might have: keeping drivers on the job while they’re sick. Independent contractors don’t get the paid sick leave that state and local laws require for employees. 

Labor rights lawyer Rey Fuentes says this means Proposition 22 would even override more generous local laws in places like San Francisco, where employees are currently guaranteed access to up to nine days of paid sick leave. “The ballot proposition would make that law inaccessible to workers for companies like Doordash and Uber and Lyft, and leave them with zero paid sick leave,” he says.

KPFA spoke with a driver named Edan Alva, who had no legal protections or sick leave when he fell seriously ill with the flu in January. Driving has been Alva’s primary source of income since 2018, and seeing a doctor would have cost him $120, which he could not afford. 

“I had to work sick, putting myself and my passengers at risk,” he says. “And I hated myself for doing that. But the choice was between working sick and losing the roof over my head. I worked as much as I could just until I earned enough money to pay my rent. And then I just physically couldn’t work or really move much anymore.” 

Edan Alva now volunteers for a group called Gig Workers Rising, which is campaigning against Prop 22. He stopped driving when the pandemic started, and says he won’t go back unless he feels safe. The CDC currently recommends companies pay for worker sick leave — so they don’t go to work sick, and possibly spread a deadly disease.

Thousands of drivers have also struggled to access pandemic unemployment insurance, because Uber and Lyft have declined to report driver earnings to the state. John Mejia filed for pandemic unemployment insurance, but the companies wouldn’t confirm to the state that he worked for them, even though he had his earnings documented on a 1099.

“They made it difficult for me,” Mejia says. “I actually got some unemployment insurance, but it took me just under six months before I saw any money from them.”

The UC Berkeley Center for Labor Research and Education conducted analysis that found Uber and Lyft would owe the state of California’s unemployment insurance fund $413 million, if they had classified their drivers as employees. For now, California is continuing to pay out, despite the companies not paying in.

Rebecca Smith of the National Employment Law Project says, “if you are an employee, you’re entitled to all of those things. You’re entitled to minimum wage, and overtime, and health and safety protections, and paid sick days. And in California, paid family leave and unemployment benefits when you lose your job and workers’ compensation when you’re injured, much of that is taken away by this initiative and it’s taken away permanently.”

A 2020 study from UC Santa Cruz of gig drivers in San Francisco said 45% of the workers couldn’t handle a $400 financial emergency without having to borrow money. The study also estimates that up to 1 in 5 drivers might be earning nothing at all once expenses are accounted for.

 

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