Biden administration blocks Trump-era rule affecting gig workers’ employment

From today’s Reuters News Service:

The Biden administration on Wednesday blocked a Trump-era rule that would have made it easier to classify gig workers who work for companies like Uber and Lyft as independent contractors instead of employees, signaling a potential policy shift toward greater worker protections.

Shares of companies that employ gig labor such as Uber, Lyft and DoorDash immediately pared gains. At 2.15 p.m. ET (1815 GMT) Uber shares traded down 3.2%, Lyft was down 5.8% and DoorDash fell 5%.

“By withdrawing the independent contractor rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect,” Labor Secretary Marty Walsh said in a statement.

“Too often, workers lose important wage and related protections when employers misclassify them as independent contractors,” he said.

Walsh told Reuters in an interview last week that a lot of U.S. gig workers should be classified as “employees” who deserve work benefits. His comments hurt stocks of companies that employ gig labor.

Walsh said in the interview that his department would have conversations in coming months with companies that employ gig labor to make sure workers have access to consistent wages, sick time, healthcare and “all of the things that an average employee in America can access.”

An Uber spokesman acknowledged on Wednesday the current employment system is outdated.

“It forces a binary choice upon workers: to either be an employee with more benefits but less flexibility, or an independent contractor with more flexibility but limited protections.”

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Grocery chains nationwide ditching in-house delivery drivers in wake of Prop 22

From today’s Business Insider:

Albertsons and some of its subsidiaries, including Vons and Pavilions, are discontinuing their in-house delivery services in parts of California and other states starting in February. The grocery chains will instead rely more heavily on third-party delivery apps, including DoorDash, to handle grocery deliveries, local news outlet KNOCK reported Monday.

“In early December, Albertsons Companies made the strategic decision to discontinue using our own home delivery fleet of trucks in select locations, including Southern California, beginning February 27, 2021,” Albertsons spokesperson Andrew Whelan told Business Insider.

“We will transition that portion of our eCommerce operations to third-party logistics providers who specialize in that service. Our HR teams are working to place impacted associates in stores, plants, and distribution centers,” Whelan said.

Albertsons didn’t respond to questions about employees losing their jobs. In Texas, the company told the Dallas Morning News that it will also fire nearly 100 employees at Tom Thumb locations.

“With COVID-19 outbreaks spiraling out of control and overwhelming hospitals across California, it is stunning that Albertsons would fire these courageous and hard-working men and women keeping our food supply secure,” Marc Perrone, international president of United Food and Commercial Workers, a major union that represents many Albertsons workers, said in a press release, calling on Albertsons “to immediately halt these plans.”

The move comes weeks after a new California law went into effect that eliminated labor protections for app-based food delivery workers and rideshare drivers, which was authored and bankrolled by gig companies.

As DoorDash, Uber, Lyft, Instacart, and Postmates waged a $200 million battle last year to pass the bill, known as Proposition 22, they pointed to “independent” research claiming it would save as many as 900,000 jobs across the state (it turned out the companies had paid a combined $411,599 to the researchers behind the study).

Albertsons’ plans to cut in-house delivery and route new business to delivery companies like DoorDash, however, shows how Prop 22’s passage potentially pushes adjacent industries to consider cheaper labor options.

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What Prop. 22’s defeat would mean for Uber and Lyft — and drivers

From today’s Los Angeles Times:

One way or another, the business of summoning a ride from your phone is likely to look different in California after Nov. 3.

The future of gig work could hinge on the success or failure of Proposition 22, called the App-Based Drivers as Contractors and Labor Policies Initiative. Uber, Lyft and other companies bankrolling the initiative say it would improve workers’ quality of life, providing new benefits while preserving their autonomy. If passed, the measure would cement gig workers’ status as independent contractors, dealing a huge blow to a labor movement striving to bolster protections for workers at the margins.

Abstract illustration of an app-based driver in a car

Gig companies’ business models rely on hiring large numbers of workers cheaply as independent contractors to provide rides, deliver meals and groceries and perform other services. Assembly Bill 5, a state law passed in 2019, aimed to expand protections to these workers, requiring gig companies to reclassify them as employees.

Proposition 22 represents the companies’ efforts to battle that law and the obligations that come with it.

Uber, Lyft, DoorDash, Instacart and Postmates (which was recently acquired by Uber) have jointly poured close to $200 million into the “yes” campaign, flooding the airwaves and their own apps with ads and making the measure the costliest in U.S. history.

At the heart of it all is a vicious fight to shape the prospects of hundreds of thousands of drivers and delivery workers across the state.

Here’s what you need to know.

What would happen if Proposition 22 passes?

For the companies sponsoring it, the short answer is: business as usual. For workers, it would bring some clarity, at a price.

The text of Proposition 22 assures drivers they would maintain flexibility as independent contractors. The measure offers some benefits similar to those conferred under AB 5, but significantly weaker.

Gig companies thus far have resisted compliance with AB 5, which went into effect Jan. 1. In early August, a judge ordered Uber and Lyft to convert their drivers to employees. At the 11th hour, the companies won a temporary stay of the order from a state appeals court, effectively pushing off the deadline until after voters have their say.https://datawrapper.dwcdn.net/Krp2r/6/

Uber and Lyft presented oral arguments before California’s 1st District Court of Appeal on Tuesday. The court has 90 days to decide whether it will uphold the lower-court ruling. But Proposition 22, if passed, would override protections granted by AB 5.

The measure instead would grant 120% of the minimum wage (state or local, depending on where the driver is). However, this minimum narrowly applies to “engaged time,” meaning the time a driver is on a trip with a passenger or en route to pick up a passenger. One study found drivers spend one-third of their time waiting between passengers or returning from trips, time that would not count toward the minimum wage.

Read the complete article here.

Will rideshare drivers get paid less than minimum wage under Proposition 22

From today’s Sacramento Bee:

Proposition 22 proposes that gig drivers for companies such as Uber, Lyft and Doordash will get paid 120% of the area’s minimum wage for the time they spend picking up and driving goods or passengers, plus 30 cents a mile.

Proponents of the proposition argue under its calculation, the drivers will get paid closer to $25 an hour after expenses, much more than the state’s minimum wage. But the initiative’s opponents cite a much-published study from the UC Berkeley Labor Center, whose researchers said Proposition 22 will guarantee only $5.64 an hour.

Amid an onslaught of advertisements, Proposition 22 still has a fundamental question to answer: How much will the gig drivers get under the initiative. A Sacramento Bee review found that the answer depends on how expenses and time at work are defined. But it is possible that workers would earn less than minimum wage under the measure.

In 2019, Ken Jacobs and Michael Reich at the UC Berkeley Labor Center published a report saying the gig drivers using Uber or Lyft will only be guaranteed a pay of $5.64 an hour under Proposition 22. They still stand by the number.

Under Proposition 22, drivers could get a pay cut from what they are paid now, Jacobs said. “The guarantee they claim to have,” he said of the gig companies. “is a false guarantee.”

Under Proposition 22, drivers will not be paid for the time they are waiting to give a ride, nor the time they spend preparing and cleaning their cars. That time accounts for some 33% of the drivers’ working time, Jacobs said, citing a 2019 study that looked at Lyft and Uber rides in six metropolitan areas across the country, including Los Angeles and San Francisco. “It’s impossible to do the work without having the time waiting for work,” Jacobs said.

Another report, “Rigging the Gig,” by the National Employment Law Project and the Partnership for Working Families found that drivers working 50 hours a week will be paid $175 to $210 less a week under Proposition 22 compared to the current minimum wage.

Read the complete article here.

Uber likely to shut down in California for over a year if new ruling not overturned

From today’s NBC News Online:

In new court filings Wednesday, a top Uber official said the company would “almost certainly need to shut down” ride services in California for “likely more than a year” if a judge’s groundbreaking ruling issued this week is upheld on appeal.

In a new four-page declaration, Brad Rosenthal, Uber’s director of strategic operational initiatives, said that if the company has to reclassify the bulk of its workforce as employees rather than contractors, it will “force Uber to dramatically restructure its entire business model and its relationships with drivers and riders.”

In a call with investors Wednesday, Lyft CEO John Zimmer said the company would likely also suspend operations in the state for similar reasons.

Earlier Wednesday, Uber CEO Dara Khosrowshahi said the company would halt service in its home state of California for a few months if a judge’s groundbreaking ruling this week is upheld on appeal.

“We will have to shut down until November,” Khosrowshahi told MSNBC’s Stephanie Ruhle in an interview.

On Monday, Judge Ethan Schulman of the San Francisco County Superior Court found that there was an “overwhelming likelihood” that both Uber and Lyft had misclassified drivers as contractors rather than employees. Drivers make up the bulk of those companies’ labor forces.

The ruling was the latest twist in a lawsuit brought against the companies in May by the state’s attorney general. Schulman put a hold on enforcement of his ruling for 10 days pending appeal.

In the new filings, both companies asked the judge to at least extend this hold period beyond 10 days while they begin the appeals process. Schulman is set to hold a hearing on this issue Thursday.

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California Sues Uber and Lyft, Claiming Workers Are Misclassified

From today’s New York Times:

California’s attorney general and a coalition of city attorneys in the state sued Uber and Lyft on Tuesday, claiming the companies wrongfully classified their drivers as independent contractors in violation of a state law that makes them employees.

The law, known as Assembly Bill 5, requires companies to treat their workers as employees instead of contractors if they control how workers perform tasks or if the work is a routine part of a company’s business.

At least one million gig workers in the state are affected by the law, which is supposed to give them a path to benefits like a minimum wage and unemployment insurance that have been traditionally withheld from independent contractors.

Although A.B. 5 took effect on Jan. 1, Uber, Lyft and other gig economy companies that operate in California have resisted and are not taking steps to reclassify their drivers. Uber, Lyft and DoorDash have poured $90 million into a campaign for a ballot initiative that would exempt them from complying with the law. Uber has also argued that its core business is technology, not rides, and therefore drivers are not a key part of its business.

The lawsuit also claims the ride-hailing companies are engaging in an unfair business practice that harms other California companies that follow the law. By avoiding payroll taxes and not paying minimum wage, Uber and Lyft are able to provide rides at “an artificially low cost,” the suit claims, giving them a competitive advantage over other businesses. The suit seeks civil penalties and back wages for workers that could add up to hundreds of millions of dollars.

“California has ground rules with rights and protections for workers and their employers. We intend to make sure that Uber or Lyft play by the rules,” Xavier Becerra, California’s attorney general, said in a statement. The city attorneys of San Francisco, Los Angeles and San Diego joined in the lawsuit.

California’s move is a significant threat to the gig companies and could influence other states with similar laws to take action against them, labor experts said.

Read the complete article here.

Opinion: You Call It the Gig Economy, but California Calls It “Feudalism”

From today’s New York Times:

Labor leaders cheered in the balcony and lawmakers embraced on the floor of the California Senate on Tuesday as it passed a landmark measure that defines employees, a move that could increase wages and benefits for hundreds of thousands of struggling workers.

Image result for uber

But the bill is as much a starting point as an endgame: It will drive a national debate over how to reshape labor laws fashioned in the industrial era of the 1930s to fit a 21st-century service and knowledge economy.

With the measure, which Gov. Gavin Newsom says he will sign, California will lead in a shift that will likely redefine the roles of governments, unions and worker organizations. Just as federal labor laws were promulgated to help the country recover from the Depression, the imperative to extend basic guarantees like a minimum wage stems from the staggering income inequality in California, the state with the highest poverty rate in the country.

The new paradigms will need to fit not the relatively stable industrial work force of the last century but a gig economy in which workers are increasingly likely to hold multiple jobs or report to no workplace at all. California lawmakers took a major step in constructing the foundation of such a model with the new measure, which presumes workers are employees, entitled to all concomitant protections and benefits, unless they meet strict criteria as truly independent contractors.

Read the complete article here.