Uber's Prop 22 Movement Must End

The only thing worse than California voters passing Proposition 22 – a measure to enable all app-based drivers to be considered independent contractors and not employees – is the subsequent speculation by analysts and observers and the stated intention of Uber leadership to attempt to foist this travesty as model legislation upon other U.S. states and in international jurisdictions.

Let’s be clear. Proposition 22 was intended to exempt gig workers in the ride hailing and food delivery markets from California’s AB 5 legislation which would require these and other freelance workers to be considered employees – entitled to benefits and legal protections. AB 5 was flawed and, in many cases, unpopular legislation because it has jeopardized freelance work across a variety of fields.

Rather than seeking to either overturn AB 5 entirely or work with legislators to modify the legislation, Uber, Lyft, Doordash and other gig economy employers sought to pass the Proposition 22 exemption (after failing to achieve their ends in court). Their success, after spending nearly $200M on opposition activities, has left the flawed AB 5 legislation in place while giving gig employers free rein to continue to abuse non-employee employees.

This is probably the worst of all possible outcomes given that the core impetus of AB 5 was to “help” app-based drivers, who are now exempt. Californians are now left with the rump portion of the legislation which jeopardizes freelance workers state-wide and leaves out the app-based driver community for which it was intended.

The most likely reason the legislation failed is an even uglier reality. Voters clearly opted for cheap ride hailing and food delivery service at the expense of drivers’ rights. It was a classic no-brainer for the voting public: Do you want cheap rides or would you prefer to pay more?

Anyone who had or took the time to read the provisions of Proposition 22 was likely to get a headache, vomit, or fall asleep. Let’s take a look at the provisions of Proposition 22 and their likely “impact”:

Proposition 22 enacts labor and wage policies that are specific to app-based drivers and companies, including:

• payments for the difference between a worker's net earnings, excluding tips, and a net earnings floor based on 120% of the minimum wage applied to a driver's engaged time and 30 cents, adjusted for inflation after 2021, per engaged mile; Reality: App-based employers will continue to have great flexibility in manipulating compensation to their own ends and that includes taking advantage of ambiguities in the calculations such as the definition of “engaged time” or “engaged mile.” These employers also control when drivers are considered “engaged.” It remains unclear as to how this measure will be policed or enforced.
• limiting app-based drivers from working more than 12 hours during a 24-hour period, unless the driver has been logged off for an uninterrupted 6 hours; Reality: App-based employers will continue to be “in the driver’s seat” when it comes to determining when drivers have been working for more than 12 hours. Will this be determined by ambiguous and manipulatable “engaged time” metrics? By whom and how will this be enforced?
• for drivers who average at least 25 hours per week of engaged time during a calendar quarter, require companies to provide healthcare subsidies equal to 82% the average California Covered (CC) premium for each month; Reality: This is not specifying the extent and nature of coverage which raises the specter of so-called “junk” insurance ushered in by opponents of the Affordable Care Act in the form of high deductible policies. The employers have to “provide” this, but app-based drivers may not avail themselves of this provision.
• for drivers who average between 15 and 25 hours per week of engaged time during a calendar quarter, require companies to provide healthcare subsidies equal to 41% of the average CC premium for each month; Reality: See above. A minimalist gesture not targeted at addressing the specific needs of app-based drivers and providing no coverage guarantees.
• require companies to provide or make available occupational accident insurance to cover at least $1M in medical expenses and lost income resulting from injuries suffered while a driver was online (defined as when the driver is using the app and can receive service requests) but not engaged in personal activities; Reality: Need to “make available” this insurance – but, like health insurance, not paying for it. This, too, is practically meaningless.
• require the occupational accident insurance to provide disability payments of 66 percent of a driver's average weekly earnings during the previous four weeks before the injuries suffered (while the driver was online but not engaged in personal activities) for upwards of 104 weeks (about 2 years); Reality: Again, sounds like something app-based drivers are paying for – one way or another. Uber determines when driver is "engaged."
• require companies to provide or make available accidental death insurance for the benefit of a driver's spouse, children, or other dependents when the driver dies while using the app; Reality: See above. Meaningless, well-intentioned nonsense. Uber determines "when the driver is using the app."

Uber CEO Dara Khosrowshahi claimed that Proposition 22 offers drivers the best of both worlds: flexibility and protection. The flaccid worker protections enacted by Proposition 22 were vehemently opposed by drivers who were seeking both fair compensation and real protections.

The voices of those drivers, who protested loudly and publicly in the streets of Los Angeles and San Francisco while Uber, Lyft, et.al. flooded television and radio with pro-Proposition 22 advertising, were drowned out by the votes of their passengers wanting cheap service. It was part of a wider wave of conservative leaning voter behavior last week which also rejected an affirmative action measure in the state.

On Uber’s earnings call this past week, Khosrowshahi proudly touted the electoral win and the company’s plans to take its “IC-plus” (independent contractor plus benefits) model forward. “We were the first to come forward with this IC-plus model, the idea that drivers deserve flexibility plus benefits,” he told analysts. “I wrote a New York Times op-ed about this. We want to have a dialogue with governments and other states.”

Workers throughout the world should be nervous, indeed, over Uber exerting its political influence to re-write employment law and the definition of adequate benefits and protections for employees. Not since the rise of farm workers during the Delano Grape Strike of 1965 has such a worthy cause arisen on the employment front.

It is worth noting that compensation isn’t the only fraught issue for app-based employers. Uber’s earnings continue to reflect the heavy negative impact of the COVID-19 pandemic as the damage wrought by ongoing economic shutdowns and passenger and driver safety concerns continue to depress the recovery of ride hailing operations.

Here, too, Khosrowshahi has taken a hard line offering no-mask, no-ride as the single pandemic compensation measure to protect drivers and passengers. Uber, amazingly enough, has refused to invest a nickel of its billions of dollars on the distribution and installation of in-vehicle partitions for Uber drivers. Global rivals such as DiDi, Yandex, Bolt, and even Lyft have spent millions of dollars to make partitions available to their drivers. Not Uber.

Uber is not interested in protecting drivers. Uber is interested in protecting its bottom line and now appears poised to lead a global movement to undermine worker protections. The ride hailing industry is looking for its Cesar Chavez. Is he or she out there somewhere? The Proposition 22 Movement must be stopped before it starts.