Uber, Lyft, DoorDash and other app-based ride-hailing and delivery companies will potentially have to pay back millions of dollars to California gig workers for unpaid vehicle expenses between 2022 and 2023.
The back payments come from a provision in Proposition 22, the controversial law that classifies gig workers as independent contractors rather than employees and promises them half-hearted protections and benefits. For example, track workers get a minimum income guarantee instead of a guaranteed minimum wage for the time they are “engaged” in a performance, not the time between rides.
Part of Prop 22 stipulates that drivers who make the bare minimum will be reimbursed for vehicle costs. Beginning in 2021, when California’s Prop 22 went into effect, drivers began receiving $0.30 per mile driven while “actively engaged.” The law also states that the rate must be increased to keep up with the rate of inflation. So the 6.8% rise in inflation in 2022 should have pushed those payments up to $0.32 per mile; and by 2023, it should have increased another $0.02 to $0.34 per mile.
A few pennies may not seem like a big deal, but drivers drive thousands of miles every year, so it can really add up. Especially when you consider that there are about 1.3 million gig drivers, according to California industry reports.
(By the way, in keeping with the moderate benefits gig workers get under Prop 22, their rate deduction car kilometers is half the standard rate for entrepreneurs and employees, which is $0.655 per mile in 2023.)
Pablo Gomez, a full-time Uber driver since 2019, noted that his payments never exceeded $0.30, according to The Los Angeles Times, which first reported the discrepancy. Now we know that no driver received the increased payments because none of the app-based companies made the adjustment.
Uber, DoorDash, Lyft and Grubhub have all told JS that they have not adjusted driver fees because they were waiting for the California treasurer’s office to publish adjusted rates. According to Prop 22, the Treasury is indeed charged with calculating and publishing the adjusted interest rate annually and failed to do so in a timely manner.
After studying Prop 22’s language, Gomez attempted to contact the state treasurer’s office on April 13, but was rejected. He then tweeted directly to Fiona Ma, California’s treasurer, asking why the rate had not yet been changed. Sergio Avedian, a gig worker and senior associate at The Rideshare Man, reinforced the tweet. on May 10 Mom replied say that the rate adjustment had finally been published. Uber and DoorDash immediately began sending overdue payments to drivers lest they face a class action lawsuit.
For its part, Avedian said it was willing to sue if the companies didn’t agree retroactively. “I had the law firm ready and I was going to be the lead prosecutor,” he told JS.
Lyft told JS it has now started issuing delinquent payments. Grubhub said it will pay drivers retroactively, and Instacart didn’t respond in time to comment.
The state Treasury did not respond in time to explain why it took so long — 18 months for the 2022 rates — to provide adjusted vehicle reimbursement rates. According to Avedian, the Treasury had waited because of the uncertain status of Prop 22. The ballot measure had been declared unconstitutional in August 2021, but in March a California appeals court overturned that decision. Industry experts say that despite the lower court ruling that Prop 22 was unconstitutional, it was still the law of the land and the Treasury should have treated it as such.
I asked the app-based companies if they had contacted the department in the past year and a half to push for an updated rate. Uber said it reached out once in January 2022, and DoorDash said it repeatedly requested updated mileage rates “dated to January 2022”. Lyft also said it was contacting the Treasury for information, but did not specify when or how often. I also asked the companies if they had warned gig workers about the Treasury delay to reassure them that they would eventually be paid back. None of them had.
And that’s not surprising. App-based gig companies have yet to achieve real profitability, even as they find new and exciting ways to get as much work out of employees as possible for the least amount of pay. (To see: algorithmic wage discrimination, hide tips And steal tips.) When I asked an Uber spokesperson why the company didn’t just make its own calculations for employees, he replied that “it’s up to the treasurer to mandate that rate.”
It’s not really a “better to ask for forgiveness than permission” argument, but it’s along the same lines. It is better to hope that no one notices that you are not paying your employees correctly than to proactively pay them correctly.
Not every driver gets paid afterwards. Many ride-hail drivers exceed the minimum rate, so they are not eligible for vehicle reimbursements. However, those who primarily drive for Uber Eats, DoorDash, and other food delivery platforms rely more on tips for income, so they should see payments showing up in their bill.
Avedian, who drives part-time and picks his gigs, said he got about $85 from Uber. His wife, who also works part-time, received more than $200 from DoorDash.
But what about the employees who drive full time?
“If you’re a full-time DoorDash, Uber Eats, or GrubHub driver, you’re driving a solid 5,000 miles a month. There is no doubt about that,” he said. “They will end up owing a few hundred million. It’s going to be a lot of money.”
None of the companies I spoke to shared how much money they expect to spend on drivers, but some calculations suggest companies could collectively pay in the millions.
Aside from Uber, Lyft, DoorDash, Grubhub, and Instacart, Amazon Flex, Target’s Shipt, and Walmart’s Spark are other relevant companies that employ gig workers.
Lack of transparency
Avedian has collected screenshots of his own, his wife’s and his podcast listeners. One of his biggest complaints is the companies’ complete lack of transparency about the calculation of these amounts. None of the companies provide drivers with a mileage overview.
Uber is the only company to even determine that payment is a result of California Prop 22 benefits. DoorDash drivers just see a random payment appear.
“Everyone gets money, and these drivers say, ‘Oh, I have $400. I have $800, but they don’t all know what it’s for.
Avedian actually maintains a spreadsheet where he records all of his net income, miles driven, number of trips, and Prop 22 adjustments. According to his calculations, Uber’s overdue payment to him was actually $3 less.
“I call this nickel and diming the gig economy,” said Avedian. “3 times a million people is 3 million dollars more. I mean, I’m not whining and whining about people getting money, I’m just saying why not be transparent?”
In May, a bill passed in Colorado that aimed to make gig worker platforms more transparent to employees was closed.
“Millions of people drive for these companies, and as they do it, they get scammed because of a lack of transparency,” said Avedian. “You have to have something to hide, otherwise you wouldn’t be afraid of transparency.”