This article was produced by Capital & Main, which is an award-winning publication that reports from California on economic, political, and social issues. L.A. Taco is co-publishing this article.
In the runup to last November’s election, critics of California’s Proposition 22, which rideshare app companies spent an unprecedented $224 million to pass, said that it would encourage even more companies to reclassify employees or fire them in favor of gig workers. Now home delivery drivers who bring food directly to residents during the pandemic are finding these warnings to be prophetic.
Starting in late February, Vons, Pavilions and other Southern California stores owned by Albertsons Companies will begin replacing their delivery drivers with independent contractors using a third-party delivery service. Drivers under the Albertsons Companies umbrella in Northern California are unionized and will not be affected by the layoffs.
Amazon already outsources all of its approximately 75,000 drivers. “Imagine drivers for Fedex or UPS being reclassified,” said a labor spokesman.
In an email, Albertsons spokesperson Melissa Hill said that the decision to discontinue the company’s home delivery fleet in California and other states was “strategic,” and that Albertsons would work to place laid off drivers in other parts of the company.
“While we know that this move will help us create a more efficient operation, it wasn’t a decision we made lightly or without a great deal of consideration,” Hill wrote. “This decision will allow us to compete in the growing home delivery market more effectively.”
Although Albertsons isn’t saying the move was a direct result of Prop. 22, Steve Smith, a spokesperson for the California Labor Federation, said the new law gives cover to them and other companies to reclassify employees and “race to the bottom.”
“Prop. 22 opened the floodgates, and Albertsons layoffs are [an] ominous harbinger of things to come,” Smith told Capital & Main. “Lawmakers must engage on this issue to prevent a flood of job loss.”
Proposition 22, also known as the “App-Based Drivers as Contractors and Labor Policies Initiative,” classified drivers who work with Uber, Lyft, DoorDash and Instacart as independent contractors, essentially giving them a carve-out from the 2019 employment law Assembly Bill 5, which threatened their business model. But Prop. 22’s language doesn’t specify only those companies, but rather all “network companies,” which can include delivery network companies (DNC) or transportation network companies (TNC).
Smith fears that more companies will claim to be DNCs or TNCs to switch from employee drivers, who often enjoy higher wages and job benefits, to contractors, who don’t. “Imagine drivers for Fedex or UPS being reclassified,” he said. One of the largest delivery services, Amazon, already outsources all of its approximately 75,000 drivers.
Northern California drivers for the company unionized in 2019, with the help of United Food and Commercial Workers (UFCW), making it impossible under federal labor law to replace them with contractors. (Disclosure: The union is a financial supporter of this website.)
“We saw the writing on the wall when Prop. 22 was drafted,” said Jim Araby, director of strategic campaigns with UFCW Local 5.
Araby added that during the pandemic, with potentially months of stay-at-home orders in place, many companies may find it tempting to switch to app-based delivery. “Safeway said we need these other companies to meet demand. We said, fine, then increase your number of employees, and they did.”