How Proposition 22 Could Decimate Driver Earnings

In this week’s roundup, senior RSG contributor John Ince covers news on Proposition 22, the Protect App-Based Drivers and Services ballot initiative designed to exempt gig companies from stricter rules regarding independent contractors. Plus, the latest news and Canadian drivers finally get Express Pay!

Uber-Backed California Ballot Initiative “Would Create a Permanent Underclass of Workers” [Mother Jones]

Sum and Substance:  The California ballot measure backed by Uber, Lyft, and Doordash and slated to appear on the ballot this November would exempt gig companies from a new law tightening the rules on who is and isn’t a contractor.

Proposition 22 would also “create a permanent underclass of workers,” according to a new report by the Partnership for Working Families and the National Employment Law Project. …

The backdrop of the debate is AB 5, which, at least in theory, forced gig companies to consider their drivers as full employees, not contractors, and thus eligible for overtime pay, health benefits, and paid time off—a historic victory for workers in tech’s backyard. In exempting rideshare and delivery companies from AB 5, the initiative, called the Protect App-Based Drivers and Services Act, does not repeal the law but sidesteps it. …

In carving out gig delivery workers, Prop 22 guarantees a number of new benefits to contractors to make up for non-employee status: discrimination protections, health benefits, and an earnings floor. …

My Take:  This article lays out what Prop 22 would do.  It’s not what one would think from a reading of the law.  

Remember, AB5 was passed to help the gig worker.  Uber and Lyft have not respected that law.  Prop 22 is just another step in the path toward an underclass of workers… and we need to get that clear in our head. 

Uber, Postmates Agree on $2.65 Billion All-Stock Deal [Bloomberg]

Sum and Substance:  Uber Technologies Inc. has agreed to acquire Postmates Inc. in a $2.65 billion all-stock takeover expected to be announced as soon as Monday morning in the U.S., according to people familiar with the matter….

The takeover would help Uber gain ground against privately-held DoorDash Inc., the current market leader in U.S. food delivery. While Postmates hasn’t kept pace with DoorDash, it maintains a strong position in Los Angeles and the American Southwest, both of which could be valuable to Uber Eats.

My Take:  Well, Uber didn’t acquire GrubHub, but it did catch Postmates as a consolation prize.  It doesn’t give Uber that much in terms of profitability.  Postmates market share isn’t anything to scream about (37% combined) either.  However, it is something.  

Expect Uber to acquire more companies, especially if it can do the deals in stock rather than cash. Read more about the Postmates deal here.

Uber’s deal for Postmates shouldn’t distract investors from its troubled ride-sharing business [CNBC]

Sum and Substance:  Uber shares rose 6% on Monday after the company announced the $2.65 billion all-stock purchase of Postmates.

While Uber is picking up market share in the fast-growing food delivery business, its main ridesharing unit faces plenty of uncertainty with Covid-19 cases rising in 36 states. 

By one analyst’s estimate, Uber counts on work commuters for 25% of rides bookings. …

Nothing Uber does in food delivery can conceal a critical quandary facing the company — Covid-19 is wreaking havoc on its core business.

My Take:  Yes, there is a downside to the Postmates acquisition. This article gives that view.  We’ll see, soon enough, about this acquisition.

Column: Pressure builds on Uber and Lyft under California’s gig worker law [LATimes]

Sum and Substance:  If there were any doubt that California Atty. Gen. Xavier Becerra and his fellow regulators were getting fed up with the continued flouting by Uber and Lyft of the state’s new gig worker law, it was dispelled by their recent legal motion to force the companies into compliance.

In their June 24 filing, Becerra and the city attorneys of Los Angeles, San Diego and San Francisco asked a state judge in San Francisco to issue a preliminary injunction ordering the companies to immediately classify their drivers as employees rather than independent contractors.

That’s what’s required by the state’s gig worker law, known as AB 5. “It’s time for Uber and Lyft to own up to their responsibilities and the people who make them successful: their workers,” Becerra said the day the motion was filed.

My Take:  This is a thorough article that goes pretty deep into what the world would look like if Prop 22 becomes law.  Harry Campbell, The Rideshare Guy, is quoted extensively.

Uber drivers to set own rates in parts of California [SF Chronicle]

Sum and Substance: Uber is letting drivers in Southern California and Sacramento set their own fares, a feature it will soon bring to the Bay Area and the entire state.

It’s part of the San Francisco ride-hailing company’s attempts to show that drivers are independent, and therefore should not be classified as employees under AB5, California’s new gig-work law. AB5 makes it harder for companies to claim that workers are independent contractors, the business model that Uber relies on.

My Take:  This is an interesting innovation.  It’s going to take awhile to get used to it and learn how to play the game right. But one can’t help considering the context.  This change comes just as those in California are considering how to vote on Prop 22.  We’ll see come November how the vote comes out.

Read more about the new Uber set your own rates feature.

Express Pay is now available in Canada  (Lyft)

Sum and Substance:  As stay-at-home orders lift and people begin to return to work, we’re looking for ways to ensure you can access your earnings as soon as you need to. 

That’s why we’re happy to let you know Express Pay is now available in Canada. With Express Pay, you’re in control. Instead of waiting for your weekly payout, you can now use Express Pay to cash out easily — up to five times a day.

Editor’s Note:  Canadanian Lyft drivers can now access Express Pay! A $0.50 fee applies, but now drivers in Canada can cash out anytime there’s $5.50 in their account.

Readers, what do you think of this week’s round up?

-John @ RSG