California ride-hail drivers held several protests in support of AB 5 throughout 2019.
James Martin/CNET
Gig economy companies, like Uber, Lyft, DoorDash, Postmates and Instacart, are in a major battle with California over whether their drivers should be classified as employees or independent contractors. And now that battle is heating up as the companies said Thursday that they got the signatures necessary to bring the issue to voters in November.
The whole ordeal began when a state law called AB 5 was passed last September. This law, which went into effect on Jan. 1, could force companies that use independent contractors to convert their workers into employees.
The purpose of the law is to ensure workers receive labor rights and benefits. But reclassifying drivers as employees is something many companies want to avoid because managing massive workforces can be unwieldy and expensive.
After AB 5 passed last fall, gig economy companies joined together to sponsor a ballot initiative for November 2020 that could exempt them from the law. Uber, Lyft and DoorDash have each chipped in $30 million to support the initiative, known as the “Protect App-Based Drivers and Services Act.” Instacart and Postmates have each added $10 million, bringing the total raised to $110 million.
To officially get on the ballot, the initiative needed to gather 623,000 signatures. A spokeswoman for the initiative announced Thursday that it hit 1 million signatures. That means California voters will see the initiative on the ballot when they head to polling stations in November.
The idea of the initiative is to create an alternative to AB 5 that would maintain drivers as independent contractors, while adding more worker protections. Those protections would include a minimum earnings guarantee, expense reimbursement, a health care subsidy and insurance to cover on-the-job injuries.
The “earnings guarantee” will be at least 120% of the minimum wage, the initiative says, while the expenses include 30 cents per mile for gas and wear-and-tear. The companies say that works out to about $21 per hour, when drivers have a passenger in the car.
Several economists, however, have said the proposal may sound better than it is. The University of California at Berkeley Labor Center factored in hidden costs, such as unpaid waiting time, unpaid payroll taxes and underpayment for driving expenses, and concluded the actual wage drivers will likely make is more around $5.64 per hour.
Part of the issue is that drivers will get paid only from the time when they accept a ride until they drop the passenger off. That means no pay when they’re waiting for rides, which averages out to about 70% of drivers’ time, according to the Labor Center. Uber disputes these findings.
The Protect App-Based Drivers and Services Act campaign still has to process the 1 million signatures and conduct internal validity checks before officially submitting the signatures to local county Registrar of Voters offices.
Assemblywoman Lorena Gonzalez, who sponsored AB 5, didn’t immediately return request for comment.