Uber, Lyft, DoorDash and other app-based ride-hail and delivery companies will have to reimburse California gig workers potentially millions of dollars for unpaid vehicle expenses between 2022 and 2023.
The back payments come from a provision in Proposition 22, the controversial law that classifies gig workers as independent contractors rather than employees and promises them halfhearted protections and benefits. For example, gig workers get a minimum earnings guarantee, rather than a guaranteed minimum wage, for the time they spend “engaged” in a gig, and not the time spent between rides.
Part of Prop 22 stipulates that drivers making the bare minimum get a reimbursement for vehicle expenses. Starting in 2021, when Prop 22 went into effect in California, drivers began receiving $0.30 per mile driven while “actively engaged.” The law also states that the rate should be raised to keep up with the pace of inflation. So, 2022’s 6.8% inflation raise should have bumped those payments to $0.32 per mile; and in 2023 it should have gone up another $0.02 to $0.34 per mile.
A couple of cents may not seem like a big deal, but drivers clock thousands of miles every year, so it can really add up. Especially when you consider that there are roughly 1.3 million gig drivers in California, according to industry reports.
(By the way, in line with the lackluster benefits afforded to gig workers under Prop 22, their vehicle mileage deduction rate is half the standard rate for business owners and employees, which in 2023 is $0.655 per mile.)
Pablo Gomez, a full-time Uber driver since 2019, noticed that his payments never went up past $0.30, according to The Los Angeles Times, which first reported the discrepancy. Now we know that no drivers received the increased payments, because none of the app-based companies implemented the adjustment.
Uber, DoorDash, Lyft and Grubhub all told TechCrunch that they didn’t adjust driver reimbursement fees because they were waiting for the California treasurer’s office to publish adjusted rates. According to Prop 22, the treasury is indeed tasked with calculating and publishing the adjusted rate each year and failed to do so in a timely manner.
After studying the language of Prop 22, Gomez tried reaching out to the state treasurer’s office on April 13 and was brushed off. He then tweeted directly at Fiona Ma, the California treasurer, asking why the rate hadn’t been changed yet. Sergio Avedian, a gig worker and senior contributor at The Rideshare Guy, boosted the tweet. On May 10, Ma replied saying the rate adjustment had finally been published. Uber and DoorDash immediately started sending backpay to drivers, lest they face a class-action lawsuit.
For his part, Avedian said he was ready to file suit if the companies didn’t agree to retroactively pay. “I had the law firm ready, and I was gonna be the lead plaintiff,” he told TechCrunch.
Lyft told TechCrunch it has now begun issuing backpay. Grubhub said it will start retroactively paying drivers, and Instacart didn’t reply in time to comment.
The state’s treasury did not respond in time to explain why it took so long — 18 months for 2022’s rates — to provide adjusted vehicle reimbursement rates. According to Avedian, the treasury had been holding off due to the uncertain status of Prop 22. The ballot measure had been ruled unconstitutional in August 2021, but in March, a California appeals court overturned that decision. Industry experts say that despite the lower court ruling saying Prop 22 unconstitutional, it was still the law of the land, and the treasury should have treated it as such.
I asked the app-based companies if they had reached out to the department in the past year and a half to push for an updated rate. Uber said it reached out once in January 2022, and DoorDash said it had made repeated requests for updated mileage rates “dating back to January 2022.” Lyft also said it reached out to the treasury for information, but didn’t specify when or how many times. I also asked the companies if they had alerted gig workers to the treasury’s delay to reassure them that they’d be reimbursed eventually. None of them had.
And that’s not surprising. App-based gig companies have yet to achieve true measures of profitability, even as they find new and exciting ways to extract as much work for as little pay as possible from workers. (See: algorithmic wage discrimination, tip hiding and tip stealing.) When I asked an Uber spokesperson why the company didn’t just make its own calculations for workers, he responded that “it’s up to the treasurer’s office to mandate that rate.”
It’s not quite a “better to ask for forgiveness than permission” argument, but it’s along the same lines. Better to hope that no one notices you’re not paying workers properly, than to proactively pay them properly.
Not every driver will end up receiving backpay. Many ride-hail drivers exceed the minimum rate, so they aren’t eligible for vehicle reimbursement fees. However, those who mainly drive for Uber Eats, DoorDash and other food delivery platforms tend to rely more on tips for income, so they should begin to see payments show up in their accounts.
Avedian, who drives part-time and cherry picks his gigs, said he got around $85 from Uber. His wife, who also works part-time, got more than $200 from DoorDash.
But what about the workers who drive full-time?
“If you’re a full-time DoorDash, Uber Eats, GrubHub driver, you’re driving a solid 5,000 miles a month. There’s no doubt about that,” he said. “They’re gonna end up owing a few hundred million. It’s gonna be a lot of money.”
None of the companies I spoke to shared how much money they expect to doll out to drivers, but some back of the envelope math suggests that, collectively, companies could end up paying in the millions.
Aside from Uber, Lyft, DoorDash, Grubhub and Instacart, other relevant companies that employ gig workers include Amazon Flex, Target’s Shipt and Walmart’s Spark.
Lack of transparency
Avedian has gathered screenshots of his own, his wife’s, and his podcast listeners’ backpay reimbursements. One of his major gripes is the complete lack of transparency from the companies regarding the calculation of these amounts. None of the companies provide drivers with a mileage breakdown.
Uber is the only company to even stipulate that the payment is a result of California Prop 22 benefits. DoorDash drivers just see a random payment appear.
“Everybody’s getting money, and these drivers are like, ‘Oh, I got 400 bucks. I got 800 bucks,’ but they don’t all know what it’s for.”
Avedian actually keeps a spreadsheet where he logs all his net earnings, miles driven, number of trips and Prop 22 adjustments. Per his calculations, Uber’s back payment to him was actually off by $3.
“I call this nickel and diming of the gig economy,” said Avedian. “$3 times a million people is 3 million more dollars. I mean, I’m not bitching and moaning that people are getting money, but all I’m saying is, why not be transparent?”
In May, a bill in Colorado that aimed to make gig worker platforms more transparent for workers was shut down.
“Millions of people are driving for these companies, and while they’re doing it, they’re getting ripped off because of a lack of transparency,” said Avedian. “You must have something to hide, otherwise you wouldn’t be afraid of transparency.”
Gig workers in California to receive millions for unpaid vehicle expenses by Rebecca Bellan originally published on TechCrunch