Multimillion dollar CA ballot measure could decide the future of gig work

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• Hari Sreenivasan: We’re continuing our series, “Roads to Election 2020,” today with a look at the state of California, where 21 million ballots, more than any state in the country, will be mailed to registered voters by tomorrow. On that ballot will be a decision on the future of “gig” work. Companies, like Uber, Lyft and DoorDash who want their rideshare and delivery drivers to be classified as “independent contractors.” But a new state law categorizes them as “employees.” In response, Uber, Lyft and other gig companies are funding the most expensive ballot measure in the state’s history, and putting it to California voters to decide. NewsHour Weekend’s Laura Fong has the story.
• Laura Fong: App-based drivers have organized across the state from Los Angeles to San Francisco, calling on the gig companies to start treating them as employees under a new state law that went into effect earlier this year. Last year, the California state legislature and Governor Gavin Newsom passed a law known as AB 5 that narrows the definition of an independent contractor. It codified a California Supreme Court case against a same-day delivery company called “Dynamex” that ruled in favor of workers who claimed they were “misclassified as independent contractors.” The AB 5 law requires that a worker must meet three factors under the so-called “ABC test” in order to be considered an independent contractor: the person must be free from the control and direction of the company, performs work that is outside the usual course of the hiring entity’s business, and is engaged in an independently established trade, occupation, or business. Under the AB 5 law, rideshare and delivery apps would have to give employee protections to their driver, such as paid sick leave, unemployment insurance and overtime. But Uber, Lyft and other app-based companies have fought AB 5 in the courts and before the bill came into effect, they drafted an opposition ballot measure Prop 22 that lets voters decide the issue this November 3rd. Yes on Prop 22 Ad: Prop 22 is the solution we need; 22 would allow drivers to continue working as independent contractors.
• Laura Fong: Prop 22 overrides AB 5 and creates some new benefits for app-based drivers, including an “earnings guarantee tied to 120 percent of minimum wage” and a “health care subsidy” starting at 15 hours a week. But critics of Prop 22 say it doesn’t offer as many benefits as employee status and the benefits only cover the “engaged time” when drivers have passengers.
• Doug Mead: I am an app-based driver in Palm Springs California.
• Laura Fong: App drivers like Doug Mead and Elizabeth Clews support Prop 22. They say that the flexibility of being an independent contractor gives the ability to set their own schedule. Clews is a single mother of two young children and in college. She began working for DoorDash as a delivery driver this year when she lost a waitressing job during the height of the pandemic. She says the schedule and pay is better than what she made as a waitress.
• Elizabeth Clews: I like being able to cash out immediately. I mean, I have kids, you know, they have immediate needs that just pop up, you know? They need diapers. I don’t necessarily have cash. I can go do two deliveries and I can go buy diapers.
• Doug Mead: I started part-time. Originally just to kind of get out of the house for a few hours a day.
• Laura Fong: Doug Mead drives for Uber Eats and Postmates and has a heart condition. He says the job allows him to take the breaks that he needs.
• Doug Mead, Uber Eats: If I decide after two and a half hours that I’m a little tired and I need to just take a rest, I can just simply turn the apps off. As an independent contractor, I’m essentially running my own business. And if I’m running my own business the right way, then I’m able to put aside money for health care. I’m able to put aside time for sick leave or for vacations.
• Laura Fong: Rideshare apps Uber and Lyft and delivery apps DoorDash, Instacart and Postmates have collectively put more than $181 million dollars towards the Yes on Prop 22 campaign, making it the most expensive ballot initiative in California history. The opposition campaign, meanwhile, has a little over $5 million, primarily from union groups.
• Cherri Murphy: There are stories of drivers who have lost their lives, yet our companies once again were nowhere to be found.
• Laura Fong: Cherri Murphy and Edan Alva are Lyft drivers who oppose Prop 22 and have organized actions with worker advocacy groups such as Gig Workers Rising. This one is outside the house of Uber CEO Dara Khosrowshahi.
• Cherri Murphy: Gig Workers Rising is in an organization that advocates for fair wages and protections, labor protections.
• Laura Fong: Murphy began driving three years ago while she was in graduate school to become a minister.
• Laura Fong: The idea of a flexible work situation was attractive to you.
• Cherri Murphy: So it seemed like an answer, a godsend, a job with a future that allows you to make money after completing a sermon or paper. They were also able to provide you with a real rental vehicle. Over the years, as the number of bonuses decreased, while the demands to complete rides increased, making major cuts to take-home pay, it was becoming increasingly difficult to sustain a living.
• Laura Fong: For Edan Alva, he began driving for Lyft part-time six years ago as a way to supplement his income. But two years ago, he lost his primary job with benefits and turned to Lyft full time.
• Edan Alva: The moment I started doing Lyft as a primary source of income and did rides according to their schedule, not mine, that’s when the problems began. They kept cutting and cutting and cutting their pay until it dropped below minimum wage, when you deduct expenses.
• Laura Fong: Alva said that even though he got sick with the flu in January, he could barely afford to take days off. As an independent contractor, he had no paid sick leave.
• Edan Alva: I had no choice. I had to continue working. I worked just until I earned enough money to pay my rent and then I physically just couldn’t work anymore. And I still couldn’t see a doctor because I couldn’t afford it. I, luckily, have the friends and the family that’s helped me in that situation. But over the years I’ve been doing this work. I’ve met plenty of drivers who do not have the system of support that I happen to have and wind up homeless or living in their cars because of regular mishaps that happen to them.
• Laura Fong: In April, Alva said the earnings were so little and the health risks were so high to work in a pandemic that he decided to quit.
• Edan Alva: Disinfecting the car and buying disinfectants for the car and buying protection gear for myself.
• Laura Fong: In May, after unemployment claims skyrocketed due to the pandemic recession, California’s Attorney General Xavier Becerra and city attorneys from San Francisco, San Diego and Los Angeles sued Uber and Lyft for “misclassification of drivers” and claimed the companies have “…exploited hundreds of thousands of California workers…” for years. A University of California Berkeley study estimated that Uber and Lyft “…would have paid $413 million into the state’s unemployment insurance fund” over the past five years if their workers were treated as employees.
• Cherri Murphy: I know what it’s like to be misclassified and having to struggle for three months to get unemployment in the middle of a pandemic.
• Laura Fong: Cherri Murphy, like other gig workers, found she couldn’t get unemployment insurance because Lyft didn’t classify her as an employee. She says the fight over this ballot measure is critical for worker protections.
• Cherri Murphy: It’s a smoke and mirrors attempt to convince voters to be complicit with stealing and cheating their way of that responsibility. And so I know that there are a number of voters who are voting to hold Uber and Lyft and Doordash accountable by voting “no” on Proposition 22.
• Hari Sreenivasan: Reporter Sam Harnett covers tech and labor for public media’s KQED. I spoke with him for more on California Proposition 22 and what it can get done if it passes.
• Sam Harnett: So Uber and Lyft want to continue classifying the workers as contractors, which means they need to pay for things like unemployment insurance, overtime. They have guaranteed minimum wage. So they put this proposition on the ballot, which gives Californians the ability, California voters the ability to to vote on it. And if the ballot Proposition 22 passes, these workers will be labeled as contractors. And the only way to get rid of that then will be for 7/8th of the California legislature to overturn the proposition. So it’s a huge book. So if this passes and the drivers are going to be contractors for the foreseeable future.
• Hari Sreenivasan: So what has a pandemic done in the middle of this eight-year-long struggle to figure out if somebody is an employee or a contractor? Here comes this unforeseen event that changes how we live and work and more important for this business, move abou,t right to be dependent.
• Sam Harnett: There are two really big things. First thing it did was suddenly, you had all these Uber and Lyft drivers that didn’t have work anymore but they couldn’t collect unemployment because Uber and Lyft, by classifying their drivers as contractors, have not paid one cent into the state unemployment. Then suddenly you got tens, tens of thousands of drivers going, like, I can’t get a ride. Can I get some money? And the California unemployment fund is like, we don’t have any money for you. So I think that really motivated California lawmakers to move on it because there was a real monetary issue. The second thing that it did is Uber and Lyft have consistently relied on their consumers, on their riders for them to basically put pressure on regulators. Basically, they’ve gone to, you know, riders love Uber and Lyft because it’s very cheap, because the companies don’t pay their workers that much. So they ride on consumers. And in the past, that’s been very successful again in places where they threatened to leave. Consumers have been really upset and politicians have been helped, Uber and Lyft get the regulations that they wanted. But with the pandemic, suddenly people aren’t riding as much. So Uber and Lyft have lost a little bit of that leverage because people simply aren’t taking as many rides. And that’s sort of opening the door for for the attorney general to sue these companies and not risk public backlash from consumers.
• Hari Sreenivasan: And for this basically issue to come to us, we talk about Uber and Lyft, but this is really a bellwether for the entire gig economy. There’s lots of other companies as DoorDash or TaskRabbit or other companies that have sprung up with the same business model. Is there any indication that there are other states watching what happens in this election and then really that that it could have an impact much bigger than just the ride sharing economy?
• Sam Harnett: Absolutely. So, you know, this the issue that’s playing out in California over where, how to classify these drivers is playing out in every other state in the country and actually global and different in different countries around the world. So everyone is looking to California to see what’s going to happen. Now, the thing is that the way the propositions were written is that it only applies to people working on platforms, doing delivery or transportation companies like Uber, Lyft, also Postmates, DoorDash. So it’s limited in who it’s targeting now. But if you create this precedent of having a basic third option between employee and contractor, this kind of contractor, and we didn’t explain this, but the proposition would give them contractor status with slightly improved benefits, slightly better wages, some health supplements, some insurance to drive a certain amount of hours. So the point is, if you create that third category, the worry is that a bunch of other corporations are going to be like, hey, you know, that’s a great way to save money. Let’s maybe create an app for trucking service or delivery service. And then we can instead of paying the workers as employees, we can use the kind of contractor-plus model. And again, if you look at the history of the company, an independent contractor in America, this was added. The independent contractor model was added as a caveat for various specific kinds of situations. And then you saw corporations over time moving more of their work force from employees, which are expensive because they have protections over the contractors, which are cheaper. So, again, the worry is you make this third kind of third way. And companies are going to find a way to exploit it. *By Laura Fong via PBS News*