On November 3rd, California voters will decide on Proposition 22. The Proposition aims to allow app-based drivers to maintain their status as Independent Contractors by carving out a special exception to Assembly Bill 5. We talk to Goldman Alumna Rebecca Stack-Martinez and the Chair of the UC Berkeley Labor Center Ken Jacobs about the implications of Prop 22 on labor and the influence of money on the most expensive ballot initiative in California’s History.

• Gig Workers Rising
• Report- “The Uber/Lyft Ballot Initiative Guarantees only $5.64 an Hour,” Ken Jacobs and Michael Reich, UC Berkeley Labor Center

Transcript

Colleen: [00:00:00] Hey there, Talk Policy To Me listeners. Colleen and Reem here.

Reem: [00:00:04] Hello. Hello.

Colleen: [00:00:05] If you've lived in California in the last few months, you've likely heard or seen ads in support of Proposition 22 all over the radio, television, or even directly in your Uber or Lyft app.

Speaker 1: [00:00:16] I don't need a 9 to 5 job. I have that. I need an extra income. Rideshare allows me to do that.

Speaker 2: [00:00:22] App based drivers like me are retirees, students, real estate agents, hair stylists.

Speaker 3: [00:00:28] App-based driving–it changed my life. It's given me the freedom to be able to be there for them.

Reem: [00:00:33] The Yes on 22 ads feature everyday rideshare drivers, representatives of Mothers Against Drunk Driving and other community members vouching for the proposition as told by the commercials, drivers support Prop 22 because it gives them flexibility to work as independent contractors. The president of Mothers Against Drunk Driving supports Prop 22, alleging that ridesharing keeps California streets safer by keeping drunk drivers off the roads. But the reality is a little bit more complicated than just providing greater flexibility for drivers and safer streets for communities. A yes vote on Prop 22 would carve out an exception to Assembly Bill five for app based drivers. This means that drivers for Lyft, Uber, DoorDash, Postmates and Instacart would not have to be considered full time workers, as required by California Assembly Bill five.

Colleen: [00:01:23] Labor groups have advocated against Prop 22, claiming that it's a way for rideshare companies to skirt equal pay and health care benefits for their employees. Uber, Lyft and DoorDash, on the other hand, have each invested over $45 million into support for the ballot initiative. The political action committee that put Prop 22 on the ballot has spent $184 million on the proposition, making it the most expensive ballot initiative in California's history.

Reem: [00:01:52] Talk policy To Me reporter Noah Cole spoke with two labor experts in the Berkeley community to learn about the implications of Prop 22 on labor contract work and app based drivers in the state of California.

Colleen: [00:02:05] Noah first sat down with GSPP alumna, policy analyst, and former rideshare driver Rebecca Stack Martinez about her experience organizing with the Gig Workers Rising campaign to pass Assembly Bill five.

Reem: [00:02:18] Today on Talk Policy To Me, labor rights and regulations for app based drivers.

Rebecca: [00:02:28] My name's Rebecca Stark Martinez. While I was attending the Goldman School of Public Policy, I was driving for Lyft and Uber on the side as a way to make an additional income and help subsidize the high cost of living in the Bay Area while attending the Master's program. During my time driving for these app based ridesharing companies, I started noticing a lot of inequities and just frustrating parts being a driver. The Uber Lyft drivers were classified as independent contractors, and so it's important to understand the difference between being an independent contractor and an employee. When you're an independent contractor, you are responsible as the independent contractor for everything. So for providing your own like ride share addendum on your insurance, any mechanical issues or upkeep on your vehicle is on you. So as an employee, you now have a 40 hour workweek. You have weekends off. You have access to unemployment insurance. You have access to paid sick days. And as an independent contractor, rideshare driver, we did not have access to any of those benefits.

Colleen: [00:03:48] After experiencing inequities as a rideshare driver, Rebecca became involved with Gig Workers Rising, an organization that works to grant rideshare workers the same benefits earned by full time employees. The efforts of gig Workers Rising coincided with the passage of a workers rights bill. Assembly Bill five. You'll hear it called AB5.

Rebecca: [00:04:07] So AB5 passes in November of 2019 becomes effective January 1st, 2020. Uber, Lyft, Postmates, DoorDash, Instacart and the Likes all refuse to comply with AB5, claiming their drivers and app workers are not employees, but in fact independent contractors. You see several lawsuits then come out beginning middle of the summer from the California attorney General, which were joined by the San Diego, San Francisco and Los Angeles attorney generals for an injunction to force Uber and Lyft to comply with AB5 and in fact, reclassify their drivers as employees. The judge says, yes, in fact, drivers are employees. And then Uber and Lyft, of course, appeal that or call for a stay in the injunction. And this is also the time when Uber and Lyft are threatening to leave California if this happens. Right. While in the 11th hour of that, a judge grants them a stay and says, okay, we'll hold off on forcing you to comply and change your drivers to employees until after the election. But there's conditions to that, right? One of the conditions was that at the beginning of September, the Uber and Lyft CEOs had to submit a sworn statement proving that they were ready to comply or make their drivers employees if their ballot prop doesn't win. Right. Prop 22 doesn't win. And so basically, the the court systems are saying, listen, we're already ready to go. We're going to charge. We're going to make you classify them as employees. We'll hold off to see if your ballot wins. But if it doesn't, I want proof that you're prepared to do it immediately. So no more messing around. You've had since 2018 to figure out a business model that would correctly classify your drivers as employees. Okay, So now here we're at with this Prop 22.

Noah: [00:06:15] So could you explain just for someone who might not be familiar, what is Prop 22?

Rebecca: [00:06:21] Okay. So Prop 22 is a ballot measure paid for by Uber, Lyft, DoorDash, Postmates and Instacart. Originally, they pledged 90 million. I think it's now close to 200 million that they're spending on this proposition. Prop 22 is basically carving out those companies. Uber, Lyft, DoorDash, Postmates, Instacart, only carving them out and exempting them from AB5 and writing their own substandard labor law for those gig workers. Proponents of Prop 22 say that if Prop 22 does not pass, that hundreds of thousands of gig work positions would be lost in California, that there would be higher fares for ridesharing apps, and that there would be less drivers on the road so longer wait times to get picked up, things like that, longer wait times to get your groceries delivered, whatever it may be. So that on the No side, the No on Prop 22, you have all your labor unions, your labor organizations, you have gig workers rising. You have the UC Berkeley Labor Center. You have all the Democratic presidential candidates had come out in support of not only AB5 back in the day, but also voting no on Prop 22. Everybody from Vice President Biden, Senator Kamala Harris, Senator Warren, Senator Sanders, Mayor Pete Buttigieg had all come out in support of voting no on Prop 22. So Prop 22 says 120% minimum wage. But in the fine print it says while engaged on the app. The percentage of time that you're engaged is only a portion of the time you're actually working. So while you're waiting for a ride to come through is not paid under Prop 22. So that means all that time, which is a considerable amount of your time throughout the day, is not paid and not subject to any minimum wage laws. Right. So based on that information, UC Berkeley Labor Center said that on Prop 22, once you include the accurate amount for expenses costs the 120% minimum wage while engaged. That actually comes out to $5.64 an hour, which is well below the state minimum wage in California.

Reem: [00:08:58] So here Rebecca is referring to a report coauthored by Ken Jacobs of the UC Berkeley Labor Center. Noah also spoke directly with Ken about how he estimated a 5.64% average minimum wage for rideshare drivers.

Ken: [00:09:13] So how did we get to $5.64 an hour? The ballot initiative says that drivers would receive 120% of the California minimum wage, but they would only be paid for what they call engaged time. That is, our driver has accepted that they're going to pick up a ride is on their way to get that person or has that person in the vehicle. What they won't be paid for is the estimated one third of the drivers time that they're waiting between rides. So you can't do this work without having lots of waiting time. You drop somebody off, then it might be driving in circles. If it's a busy downtown area where there's no parking or parking someplace if you can. Or if you're an outline area drivers coming back to a more populated area where they're more likely to get a ride. That's an essential part of the work under their model that that time is not paid. So we have a waiting time. We have expenses driving during waiting time and we have. The overall, but they have a very low reimbursement rate per mile. And then finally, you need to calculate in the value of the benefits you get as an employee. So if a driver is an employee, then the companies pay the employer's share of payroll taxes for Social Security and Medicare. If you are an independent contractor, you pay those taxes yourself.

Noah: [00:10:41] What has been the general response to the report?

Ken: [00:10:46] Well, the report has got or has received a decent amount of attention. It's received and cited in the L.A. Times and The New York Times, both in both of their editorials that came out against the ballot proposition. So it's received quite a bit of attention. And of course, the companies have attacked it. But interestingly, they never take on when they attack it. They've never taken on directly the question that we raise in the report, which is what's the value of the guarantee? They always try to change the subject. And I think that's because they have very little to stand on in terms of what it is the issues that we're raising.

Noah: [00:11:25] Why is it that companies like Uber, Lyft, DoorDash, Instacart, all the companies that would be impacted by this, why are they so invested in this fight to get Proposition 22 passed?

Ken: [00:11:40] They have a model which allows them to bring in very large amounts of money that is based on paying their drivers as little as possible and importantly, shifting risks and costs onto the driver. Sort of the brilliance, if you could call it that, of this model is we'll have all these people do this work for us, but they take the risk. They cover most of the costs. The companies have very little capital investment costs. All of that investment is done by the drivers and then they're not fully reimbursed for those investments. What is transformative, if Proposition 22 fails, is the companies will be responsible for the waiting time. And what that does is it creates an incentive for them to actually focus on efficiency. Because right now it's in their interest to have as many drivers out there as possible. And if they're all sitting, if lots of people are sitting around with their engines running, not doing much work, drivers lose because they earn less, the community at large loses because we have lots of vehicles on the road and we have greater congestion, and our planet loses because we have greenhouse gases going into the air. Once they're responsible for that waiting period. Then they have an incentive to make sure that they are not wasting drivers time to the degree that they currently are. So when we put all this together, drivers come out way, way ahead. If Prop 22 fails, so obviously the companies have a huge financial incentive in. Beating this law. And that's why they're spending $200 million, the most expensive ballot campaign in history, to pass the law in California, which means, you know, they've got a lot of money in it. They're running a lot of commercials. So they're trying to use their power in the marketplace to try to win this initiative, which effectively carves them out of the law. It says basically the message this sends is if you've got enough money. The law doesn't apply to you.

Colleen: [00:13:53] Rebecca also reflected on the massive funding disparities between the different parties implicated by Prop 22.

Rebecca: [00:13:59] You know, I think there's a couple other things that I feel is important to point out in relation to Prop 22. One is the disparity in the amount of money for the proposition versus the opposition. So the proponents is the Uber, Lyft, DoorDash, Instacart, almost $200 million spent on. Yes, on Prop 22. And they're going up against labor and other social justice organizations that have spent less than 1 million. Right. And so there's a huge disparity in the amount of money available to really get out the true word and the message of what Prop 22 actually does. So you have 200 million being spent on company propaganda promoting narratives that all drivers want this, that they've surveyed all the drivers. These app based companies are so invested in this Prop 22 because their business model is on the line. They've come in claiming innovative tech. When really it's age old exploitation. Right? They've taken the exploitation of workers from what was happening back in the thirties and forties and spun it into an app and claimed that that's innovative. Their whole business models are based on the ability to exploit their workers to increase their bottom line. You read their Uber and Lyft IPO filings. It very clearly says in there that one of their risks are drivers becoming employees because it upends their entire business model. These companies haven't even turned a profit yet. They're bleeding money left and right. They're running out of VC funds. This is their last ditch effort to hold on to some sort of semblance to ensure that their stockholders are taken care of. That's really what this is. And they're willing to spend almost $200 million to ensure that their bottom line is secure without regard to the dignity of the workers who are providing them with that capital in the first place. If they're willing to spend 200 million not to pay minimum wage, not to provide benefits, not to provide unemployment insurance. That just goes to show how much money they're getting away with, not paying their drivers. Right. So if drivers are as employees entitled to those things, a minimum wage benefits, unemployment insurance. That must cost them much more than $200 million to provide those simple, basic labor standards to their drivers that they're willing to spend 200 million not to be able to spend that money.

Noah: [00:16:58] So essentially, if I'm an Uber executive looking at this proposition, I'm figuring that the $50 million that I'm spending to get this pass is going to be significantly less than the amount of money it would take to invest in making sure that the people driving for my company are paid sufficient wages and considered employees.

Rebecca: [00:17:22] Exactly. Because this isn't just about California. If it happens in California, if ab5 sticks and they're forced to do it. You better believe California's not going to be the only state jumping on that. There's already other states involved in passing stricter ABC tests like AB5 and moving forward with those kind of labor laws and regulations. Right. And so Uber and Lyft see California as the catalyst or the hump that breaks the camel's back with Prop 22 to stop it from going to other states as well, and countries. The whole world is watching this.

Noah: [00:18:03] Do you think voters will pass Prop 22?

Rebecca: [00:18:06] I think especially in this day and age, we're in the middle of a pandemic. Our economy is struggling. People are struggling. People are waking up to the fact that corporations don't always have their employees or workers interests, best interests at heart. And I think the veil has been lifted from these wonderful tech companies and all the mushy press that they would get. And people are waking up to the fact that there's issues in Silicon Valley. There's issues with privacy and data and all these other things, but also with the way that their workers are treated. My hope is that the voters in California will see through the propaganda that's cost these companies almost $200 million to put out there And think about what this means for the future of work for the next generation of workers, how this would set a terrible precedence for workers rights, not only in California, but across the country and across the globe. If Prop 22 passes. It has the potential to set a precedent not only in California, but all over the place, that if you have enough money and you can afford to, you can by the law or bend the law in your direction as an organization or a company and avoid any sort of. Liability and protection for the workers that you employ. And so this is an important moment for the future and what the future of work looks like, not only for our generation, but for the next generations to come as the future of work shifts and changes.

Ken: [00:19:55] I think the biggest misconception among voters is that you can't have both the protections of the law and flexibility, and that's one the companies have really been putting out strongly to drivers and to the public. And I think there's just no reason to think that there is nothing in California employment law that would not allow the companies to maintain flexibility. While still meeting the basic standards that are required in terms of minimum wage paid sick leave and the other basic benefits required under the law, $200 million is just we've seen nothing like this. And so it it really is a it leaves a difficult fight for the drivers to overcome all of that noise. But we will soon know what happens.

Reem: [00:20:46] Next week, on November 3rd, California voters will decide on 12 ballot initiatives, including Prop 22. The results of the initiative will have wide ranging implications for the future of labor and app based driving.

Colleen: [00:21:07] Talk Policy To Me is a co-production of UC Berkeley's Goldman School of Public Policy and the Berkeley Institute for Young Americans.

Reem: [00:21:14] Our executive producers are Bora Lee Reed and Sarah Swanbeck.

Colleen: [00:21:18] Editing for this episode was done by Noah Cole with support from Elena Neale-Sacks and Michelle Pitcher.

Reem: [00:21:25] The music you heard today is by Blue Dot Sessions and Pat Mesiti-Miller.

Colleen: [00:21:29] I'm Colleen Pulawski.

Reem: [00:21:30] I'm Reem Rayef.

Colleen: [00:21:32] Catch your next time.