11 years after the first-ever rideshare app, Uber, ushered in a new era of transportation that expanded the gig economy, voters will determine whether to pass Proposition 22 during the 2020 election.
Proposition 22 is a direct response to a California bill passed in 2019 called Assembly Bill 5 (AB 5), which restricted which job positions could be defined as independent contractors. For big corporations such as Uber, Lyft, Doordash, etc., this new legislation served as a big blow to their finances. Why? Well, Voterguide explains it like this: “Drivers would have less choice about when, where, and how much to work but would get standard benefits and protections that businesses must provide employees.” To make this easier to understand, this article will go over the differences between independent contractors and regular employees, as well as their unique benefits.
Independent contractors are self-employed workers who are not subject to demands or control over the process of their work by their employer(s). Employees are under the direct supervision of their employers and can be instructed to go about their job in certain ways. According to Investopedia, “When a worker is an independent contractor, the employer can control only the quality or result of the job—not the method through which the work is done. When the worker is an employee, the employer can [but does not have to] mandate that the output occur in a particular place and at a certain time or pace.” For example, your dentist is most likely an independent contractor or business owner who can work as they prefer, without a superior breathing down their neck. However, the clerk at the grocery store who scans your items? They are an employee and thus have access to benefits supplied by their boss.
Investopedia goes on to explain that, “in return for this control over work specifics, the owner commits to provide the employee with several benefits. These include matching Social Security and Medicare contributions, providing the tools required to complete a project, the potential of employer-sponsored retirement plans such as a 401(k) or IRA, and giving the worker access to a workplace.” The same cannot be said for independent contractors; they “must provide benefits for themselves, including paying both the employee and employer portions of Social Security and Medicare payments, among other expenses.”
Thanks to AB 5, gig workers in California are considered to be employees, not independent contractors. Most experienced rideshare drivers consider this to be a good thing, as this means they will have to be paid according to minimum wage while having access to sick days, overtime pay, and so on. On the other hand, billion-dollar companies—such as Uber, Lyft, and Doordash—have put up quite the fight against this legislation. Thus, Prop 22 was born. Cal Matters provides statistics and summaries that give context to the situation and explain each side. According to Cal Matters, the three major donors behind Prop 22 have funneled tens of millions of dollars into this proposal.
On Oct. 14, I had the privilege of interviewing Barb Lloyd, a Chicago rideshare driver for the last 7 years and 3 months, who previously worked as a startup specialist until a severe hip injury forced her into early retirement. She first joined this line of work with enthusiasm—her love for conversation and the good wages are what drew her in. “Now, I’m in it for the battle,” Lloyd said in our interview. As one of the few drivers with so many years of service under her belt, Lloyd is acutely aware of the drastic change in pay and benefits for rideshare drivers and, while it may be more beneficial for her to quit this line of work, she also knows that inactive drivers are dismissed in negotiations for better treatment of workers. Over the past few years, users of apps like Lyft and Uber have seen only an increase in costs on their end; few are aware that while the price of rides has risen, the payment drivers receive has decreased dramatically, and the earnings are offset by the expenses.
Lloyd explained that the majority of rideshare drivers are on Medicaid and/or food stamps as they work for what is almost half of minimum wage. At the beginning of her career as a rideshare driver, Lloyd was satisfied with the compensation she received for her work. Now, she is disgusted by the state of the industry and the prevalence of corporate greed. “With what they have spent on lawyers and settlements, if they just put that money back into the app they wouldn’t be getting these lawsuits,” she said. “I make 20 percent of what I used to make.” She told me about the ever-worsening conditions of the job and stated that only one-fifth of rideshare drivers have been on the road for over a year. As she put it, “they just churn us and burn us.” With the constant flow of new workers driven by desperation for some form of income, rideshare drivers have come to realize that they are viewed by their parent companies as little more than capital. Lloyd said, “We have no value to these companies because they think we are replaceable.”
Should the Bill not pass, rideshare companies would not be exempt from AB 5 and would need to provide workers with healthcare, minimum wage and other employee benefits. However, Uber and Lyft have threatened to move their companies out of California if the bill is passed, a likely result of Uber forecasting that fares would increase 25%-111% if it were to comply with AB5.
If Prop 22 does pass, it would be difficult to change or overturn. Doing this would require a state legislature ⅞ majority vote, which is difficult to get in California. This may be an unprecedented power move on behalf of the rideshare companies. The Bill would let workers keep their status as independent contractors. As opposed to employees, they would not be provided health insurance, but rather stipends through Uber or Lyft.
With the state of our ever-evolving society and advancing technology, it is difficult to foresee how Prop 22 will be received and if it will face backlash should it succeed. If you are interested in voting either for or against this proposition, feel free to look further into the subject and solidify your opinions from sources supporting both sides, such as this website, which advocates against Prop 22, and this one that advocates for it.
Featured Image: Courtesy of Kyma.com