New York City delivery workers have formed volunteer patrol groups in order to protect each other from armed thieves attempting to steal their bikes, and a new report from The Verge sheds more light on the ongoing efforts.
NYPD data revealed robberies and attempted robberies of delivery workers increased 65% in 2020. Approximately one-third of the thefts were violent, while others turned deadly.
Villalva Vitinio, a 29-year-old delivery rider for Uber Eats and Doordash, refused to give up his electric bike to an assailant this March. He was then shot and killed, according to police reports.
As the thefts continued, Cesar Solano, a 19-year-old delivery worker from Mexico, co-founded “El Diario de los Deliveryboys en la Gran Manzana” with his older cousin Sergio Solano, The Verge reported.
Translating to “The Deliveryboys in the Big Apple Daily,” the idea started out as a Facebook page documenting bike thefts and issuing warnings to fellow delivery workers.
According to The Verge, the Deliveryboys transformed into a civilian night patrol group, standing guard to protect riders who pass through notoriously dangerous areas like The Willis Avenue Bridge.
One night at around 1 am, the Deliveryboys stood watch as a rider appeared, his right arm bleeding from a knife wound. Per The Verge, a thief cut him while trying to steal his bike – but he got away just in time.
Solano told The Verge that having your bike stolen is economically crippling for New York’s riders. He said he purchased his own bike with savings on his birthday – having it stolen would cause him to lose that original investment and future wages, something that has happened to his cousin twice this month.
The risks don’t always outweigh the rewards. Solano told reporter Josh Dzieza that one night he rode from the Upper East Side, over two bridges, through Long Island City, and to Roosevelt Island just to deliver a singular slice of cake. The worst part – he arrived to no tip at all.
Sen. Joe Manchin of West Virginia indicated on Saturday he would not back including an extension of federal aid for gig workers and long-term unemployed Americans past Labor Day in a Democrat-only package.
“I’m done with extensions,” he told Insider. “The economy is coming back.”
Manchin went on: “Look guys, read your own print. Read your own print. The economy is stronger now, the job market is stronger. Nine million jobs we can’t fill. We’re coming back.”
The West Virginia senator’s opposition would effectively kill the renewal of those federal aid programs, given all 50 Senate Democrats need to back the party-line bill for it to clear the upper chamber. Democrats are drafting the initial bill, which will pass through the reconciliation process requiring only a simple majority vote sometime this fall.
Nearly 9.4 million people are currently receiving benefits through a pair of pandemic-era federal initiatives: Pandemic Unemployment Assistance (PUA), which expanded benefit eligibility to gig workers. Then Pandemic Extended Unemployment Compensation (PEUC) extended how long recipients could collect benefits for. Jobless people also qualify for a $300 federal weekly unemployment supplement.
The measures were extended in President Joe Biden’s stimulus law, but those will end on Sept. 6. A recent report from Andrew Stettner at the left-leaning Century Foundation projected that 7.5 million people would lose all their jobless aid if Congress didn’t step in.
The number of unemployment claims has steadily fallen as the economy regained jobs and people returned to work. New jobless claims slid to 385,000 last week in a fresh sign that the economy is recovering from the devastation of the pandemic. The latest jobs report on Friday showed the US added 943,000 jobs in July.
But concern is mounting among experts that the surging Delta variant of COVID-19 may harm the recovery. Jason Furman, formerly a top economist to Barack Obama, said in a recent interview that he supported extending the programs past Sept. 6 and “grandfathering” current recipients.
“I would also seriously consider extending the programs and possibly making them contingent on caseload and hospitalization numbers,” Furman, now a Harvard professor, said.
Other Democrats favor extending those programs, like Senate Finance Committee Chair Ron Wyden of Oregon. “We’re gonna put out all the stops,” he told Insider on Friday. “We’re gonna work on filling the immediate gaps of gig workers and others.”
Shortly before 9 p.m. on March 2, in Lakewood, Colorado, Drew Wajnert was rear-ended by a drunk driver who was going 85 mph, sending his car slamming into the median and fracturing his spine.
“When he came up to me and asked me how I was,” Wajnert told Insider, “What he may have not seen was, not only did he rear-end me at 85 miles an hour, but I spun into the concrete divider at 50 miles an hour, and then spun to the shoulder to a dead stop.”
Emergency services arrived on the scene within minutes, taking Wajnert to nearby St. Anthony’s Hospital, where doctors performed surgery to install a titanium plate and four screws in his neck. Months after the accident, Wajnert – now in a special spinal-cord injury rehab center at Craig Hospital – still has braces on his neck as well as both hands and knees, and while he has regained some feeling, there is no guarantee he’ll ever walk again.
As a full-time Lyft driver, Wajnert spent much of his time helping keep drunk drivers off the road. Now he’s trying to prepare for the many physical and financial challenges ahead.
“I’m fighting as best as I can, but I am hospitalized and Lyft really isn’t doing anything for me,” he said.
“We are deeply saddened by this accident and our thoughts are with Drew and his loved ones during this difficult time. We’ve reached out to Drew and a member of his family to offer our support and stand ready to assist law enforcement in any way we can,” a Lyft spokesperson told Insider. (Wajnert’s attorney, Kurt Zaner, said Lyft reached out after Wajnert began contacting media outlets to share his story).
Zaner said Lyft dropped a driver insurance policy when the pandemic hit that he believes may have covered Wajnert’s medical bills. Those bills could amount to hundreds of thousands of dollars.
Wajnert is planning to sue the driver, Alexander Marakas, who has been charged with vehicular assault, and possibly any bars that served Marakas, which could also be found liable for damages under Colorado’s “dram shop” laws. Marakas, through his attorney, declined to comment.
Lyft told Insider that, in Colorado last year, it didn’t make any changes to the insurance policies that cover drivers when they’re waiting for Lyft’s algorithm to find them a passenger (the phase Wajnert said he was in at the time of the accident).
But regardless of whether that specific pre-pandemic policy would have covered Wajnert’s accident, his situation reveals the glaring gaps in driver protections that are a direct result of Lyft classifying drivers as independent contractors. That strategy allows companies like Lyft and Uber to provide minimal worker protections, and helps them avoid legal and financial liability when drivers like Wajnert get hurt on the job.
A patchwork of policies
For Wajnert, who drove taxi cabs for 10 years in New Jersey, Lyft wasn’t a casual, part-time side hustle. Lyft has been his only source of income since signing up in January 2020, and he typically drove between 40 and 70 hours per week throughout the entire pandemic, completing 4,135 rides last year.
Wajnert leased his car, a 2019 Hyundai Santa Fe, through Lyft’s Express Drive program, costing him roughly $240 per week. Lyft charged Wajnert $500 after his accident, the deductible for the insurance policy on the vehicle. (The company told Insider it has since refunded that charge as well as the deposit Wajnert initially paid to rent the vehicle).
When it comes to drivers, transportation companies carry a variety of insurance policies, and Wajnert said he was under the impression Lyft’s insurance policy would be sufficient in the event of an accident, so he didn’t take out his own policy on top of that. In reality, Lyft has a complicated three-tiered policy that only kicks in when drivers turn on their app, and only provides limited coverage if its algorithm hasn’t yet found them a passenger.
Many companies also carry what are called uninsured/underinsured motorist bodily injury policies (UM/UIM). These policies help pay for an injured driver’s medical bills and other expenses in the event that the driver who hit them doesn’t have enough insurance to cover those costs.
Before the pandemic, Lyft had UM/UIM policies that covered drivers. But on March 31, 2020, Lyft dropped those policies in Colorado and nearly every state where they weren’t required by law, according to documents seen by Insider, leaving drivers in a majority of states with no such coverage.
Wajnert said Lyft never told him about that change, however, or at least not in a clear way, and that he “absolutely” would have bought additional coverage on his own if he had known.
“There was no grand email or reachout, no phone call from the [Lyft] Hub or anything like that,” he said. “I can’t understand why Lyft would carry insurance for people that we injure, but not insurance for its drivers when a reckless drunk driver hurts us.”
Lyft’s website still advertises that it provides UM/UIM coverage for drivers, in certain cases, with a small footnote indicating “coverage, where provided, may be modified to the extent allowed by law.”
Wajnert said he only found out about Lyft’s lack of coverage through his attorney, Zaner, after the accident.
“If this happened a year and a half ago, Drew would be able to make a claim with Lyft’s underinsured policy, most likely,” Zaner said. “Lyft carried $500,000 to $1,000,000 of underinsured coverage. It was a nice benefit that was pretty much expected in that industry; taxi cabs have the same kind of coverage, and they still do.”
Lyft said it carries third-party liability insurance in Colorado, a requirement of laws governing rideshare companies, as well as Medical Payments insurance, which it says results in faster payouts.
But the fact that Wajnert may still be left to foot the bill despite working for Lyft when he was hurt is ultimately a consequence of the company’s core business model.
The precarity of independence
As Uber and Lyft face growing calls from regulators and driver advocacy groups to pass laws reclassifying drivers as employees, the companies frequently defend their current business model by pointing to surveys saying the majority of drivers want to keep the flexibility they enjoy as independent contractors.
When employees are hurt on the job, they’re entitled to workers’ compensation, funded partly by their employer, which pays them for wages they missed out on because of their injury, and covers all of their medical bills. They can also qualify for occupational therapy to help them get back to work or, in cases like Wajnert’s, permanent disability if their injury prevents them from working.
“Workers’ compensation laws were written with automobile workers in mind,” Veena Dubal, a law professor at the University of California, San Francisco Hastings School of Law, who focuses on the intersection of technology and dangerous jobs, told Insider.
These laws emerged in the 1930s directly as a result of “widespread industrial injury and fatality, but particularly on railroads and as a result of automobiles,” she said, adding that they were written “precisely” to protect people like Wajnert who work in especially dangerous industries.
“It’s so incredibly tragic that he, and many, many, many hundreds of workers in this country … are in this situation where they essentially will no longer be able to work or support themselves as a result of how the companies choose to classify them,” Dubal said.
Companies face substantially more legal and financial liability for work-related accidents involving their employees than they do for contractors. For example, Amazon has relied on this model to minimize liability when its delivery drivers are injured (or injure others).
As a result, companies like Lyft and Uber have the legal flexibility and financial incentive to carry less extensive insurance.
If Lyft drivers were employees, according to Dubal, the company would likely have commercial insurance covering “all the time” drivers spend working, not just when they have riders in the car, which she said may be only 40-60% of the time drivers are on the road. Instead, Dubal said, what Lyft offers currently is “minuscule” compared what’s required of companies subject to commercial insurance laws.
And for drivers like Wajnert who come from jobs where their employers have more robust policies, the gaps in Lyft’s coverage can come as a surprise – and something they don’t realize until its too late.
“It’s horrible. I want to get the word out to Lyft drivers who are currently driving to be aware that they’re not covered [by UM/UIM policies],” Wajnert said, adding: “I basically was a full-time employee for them.”
Lyft does not classify its drivers as employees.
Wajnert is hospital-bound for at least another month, joined by his sister, Melissa, who had to move from North Carolina to stay with him due to Craig Hospital’s requirement that rehab patients have a caregiver with them.
While he’s trying to stay positive and his friends have started a GoFundMe campaign to help him make ends meet, Wajnert said it’s going to be a long road to recovery.
Shares of rideshare and delivery companies including Uber, Lyft, Doordash, and Grubhub all fell on Thursday after reports out of Reuters said US labor secretary Marty Walsh believes most gig workers should be classified as employees.
“We are looking at it but in a lot of cases gig workers should be classified as employees,” Walsh said in his interview with Reuters on Thursday.
“These companies are making profits and revenue and I’m not (going to) begrudge anyone for that because that’s what we are about in America… but we also want to make sure that success trickles down to the worker,” Walsh added.
The US labor secretary also said that the Department of Labor will have conversations with companies that employ gig workers in the coming months to ensure they have access to “all of the things that an average employee in America can access,” Reuters reported.
Gig workers are independent contractors who enter into contracts with on-demand companies to provide services to clients.
The last decade has seen an explosion in the so-called “gig economy” with companies like Uber and Lyft fighting to maintain the independent contractor status of their workers.
In March, California voters approved a ballot measure that exempts companies that utilize the “gig economy” from having to treat workers as employees.
The measure freed companies like Uber and Lyft from a 2019 state law that entitled workers to overtime pay, sick leave, and unemployment benefits.
Now, these new comments from the US secretary of labor again call into question the longevity of the gig worker business model.
Walsh noted in his interview that if the federal government didn’t cover gig economy workers during the pandemic, they would “not only have lost their job, but they wouldn’t have had any unemployment benefits to keep their family moving forward.”
Gig workers received a reported $80 million in benefits from the US government during the pandemic, according to an analysis of government data by The Washington Post.
Shares of Uber and Lyft fell as much as 8.34% and 13.67% on Thursday after the news broke, while DoorDash and Grubhub saw their shares fall as much as 11.05% and 4%, respectively.
The International Brotherhood of Teamsters General Fund, an investor in Uber, sent a letter to other Uber shareholders Thursday urging them to vote for a proposal that would force the company to disclose more details each year about its lobbying efforts.
“Uber’s lobbying is not only substantial, geographically extensive and highly innovative, but is profoundly controversial and raises critical questions over the sustainability of the company’s business model,” Ken Hall, the fund’s general secretary-treasurer, wrote in the letter.
“It may be tempting to view Uber’s current disclosures as a good-faith effort to address concerns over the transparency of its lobbying activities; but this would be a mistake,” Hall added.
Uber investors will vote on the proposal – which would require Uber to publish an annual report disclosing its lobbying policies, how much it spent on direct, indirect, and grassroots lobbying, and which groups the money went to – during the company’s annual shareholder meeting on May 11.
Uber has urged investors to vote against the proposal, citing its “existing risk management practices and current high level of transparency and accountability around political and lobbying activities and expenditures.”
The ride-hailing company did not respond to a request for comment on this story.
Uber and other companies that depend heavily on cheap contract labor have ramped up their lobbying efforts over the past few years as federal and state regulators look to crack down on “gig” economy businesses that have for years operated in a regulatory gray area.
Uber spent a record $2.6 million lobbying the federal government in 2020, according to OpenSecrets. The company also contributed $30 million to a $200 million campaign to persuade California voters to pass Proposition 22, exempting it from a major state labor law, AB-5, and making Prop 22 the most heavily lobbied ballot measure in the state’s history.
A key aspect of that campaign was Uber’s indirect and “grassroots” lobbying through groups that helped the company broadcast its message to voters without telling them who the messenger was. In one case, an Uber-funded group sent mailers to California residents designed to trick them into believing progressive groups were supportive of Prop 22 (many prominent progressives actually opposed the measure).
In December, the Teamsters Union filed shareholder proposals at both Uber and Lyft, arguing both companies have failed to provide investors with sufficient information about the money they spend on lobbying – particularly grassroots lobbying, which is subject to less stringent disclosure requirements and often requires investors to dig through complicated and incomplete disclosures for each individual state.
The fund argued in its letter Thursday that Uber investors should push for more transparency so they can understand how much the company’s business model depends on its lobbying efforts being successful, and whether its reputation could suffer because of the positions it’s taking.
“Transparency is vital to understanding how Uber is navigating the acute reputational risks that come with lobbying around matters as emotive as wage theft and workers’ rights,” it wrote, adding: “But perhaps most crucially, disclosure is key to any evaluation of the long-term sustainability of a business model built around the heavy and controversial use of independent contractors.”
Uber announced Wednesday it plans to spend an additional $250 million on “boosted incentives and guarantees” to persuade drivers to get back on the road amid a shortage during the COVID-19 pandemic.
“In 2020, many drivers stopped driving because they couldn’t count on getting enough trips to make it worth their time. In 2021, there are more riders requesting trips than there are drivers available to give them-making it a great time to be a driver,” Dennis Cinelli, the head of Uber’s US and Canada ride-hailing business, said in a blog post.
But Uber also warned the increased pay won’t last forever.
“We want drivers to take advantage of higher earnings now because this is likely a temporary situation. As the recovery continues, we expect more drivers will be hitting the road, which means that over time earnings will come back to pre-Covid levels,” Cinelli said.
Uber claimed in the blog post drivers in Philadelphia, Chicago, Austin, Miami, and Phoenix are currently earning pre-tip median incomes between roughly $26 and $31 per hour.
But during the pandemic, many ride-hailing and food delivery drivers have seen their pay dramatically increase, due to the way Uber’s business model works.
Uber’s ability to provide on-demand rides at low prices depends on having lots of drivers active when passengers are looking for a ride. If only one driver is competing for a passenger, that driver can refuse the job until Uber’s algorithm jacks up the pay – which is esssentially what some DoorDash drivers are doing to boost their pay for food-delivery gigs.
If 100 drivers are competing for that same job, Uber can offer much lower pay and one of them will still probably do it, and therefore Uber can charge the consumer less and still make more money itself.
But the pandemic caused a massive drop in the demand for rides, and has kept many drivers – who are especially concerned about getting sick because Uber doesn’t provide healthcare or sick pay – off the road, even as rider demand returns.
That’s a bad situation for Uber, which doesn’t want riders returning to the app only to find no drivers are online and that they’re waiting 20 minutes for a ride and still paying surge pricing.
So, Uber is effectively bribing drivers to get back on the platform until there’s enough competing for those returning passengers that Uber can start whittling down driver pay again.
In late 2019, California lawmakers passed AB-5, hoping to make it harder for companies like Uber to skirt labor laws and offload healthcare and unemployment insurance costs to taxpayers by misclassifying workers as contractors.
But Uber refused to comply, arguing that AB-5 didn’t apply to its drivers because they aren’t core to its business and that drivers really are independent because they’re “free from the control and direction” of Uber.
In an attempt to prove its independence argument, in January 2020, Uber gave California drivers more control by allowing them to set their own prices for rides and see passengers’ destinations before picking them up.
Regulators and courts didn’t buy it. But fortunately for Uber, a $200 million PR campaign around Proposition 22 successfully persuaded California voters to exempt it from AB-5, saving the company as much as $500 million per year, according to a 2019 estimate by Barclays analysts.
Now that Uber no longer needs to convince California authorities that its drivers are independent, the company plans to reclaim control, revoking the price-setting and passenger destination features it gave drivers barely a year ago, the San Francisco Chronicle reported Monday.
Uber’s reason for the reversal?
Too many drivers took advantage of the control Uber gave them, picking the most profitable rides while declining others, making it harder for customers to get rides and hurting Uber’s business, the company said. According to the Chronicle, one-third of drivers turned down 80% of rides.
Industry observers said the move is hardly surprising but it undermines Uber’s claim that the changes were ever about anything more than dodging regulation.
Uber did not respond to a request for comment on this story.
“It really shouldn’t be a shock to anyone,” Harry Campbell, who runs The Rideshare Guy, a popular blog among drivers, told Insider. “Since they passed Prop 22… there’s nothing holding them accountable for these changes.”
Campbell said that drivers likely won’t be happy given the popularity of the price-setting and passenger destination features, but added, “It’s kind of, unfortunately, a bit of a pattern that Uber specifically often gives drivers some things that they want and then ends up taking them away.”
“Is there a single Prop 22 promise that Uber hasn’t broken?’ Gig Workers Rising, which advocates on behalf of ride-hailing and food delivery drivers, tweeted in response to the Chronicle’s reporting, alluding to Uber’s history of misleading claims during its Prop 22 campaign.
But by revoking some driver-friendly features, Uber – which has yet to turn a profit – also revealed some of its post-pandemic priorities.
Companies like Uber and Lyft rely on flooding the market with drivers, who then face pressure to accept lower-paying rides and risk another driver getting the job or getting penalized themselves for turning down too many rides, even if those rides are unprofitable.
But during the pandemic, there has been a massive shortage of Uber and Lyft drivers, due to a drop in demand for rides and a concern among drivers about getting sick (the companies don’t provide healthcare or sick pay). And even as rider demand returns, many drivers are still staying home.
With fewer drivers on the road and Uber drivers able to freely reject unprofitable rides, they’re driving up their wages. That means higher prices and longer wait times for passengers, which Uber isn’t happy about.
“The companies, strangely, they care more about reliability than profitability at this moment in time,” Campbell said. “They want to make sure that the platform is working like everyone expects and if drivers are ignoring 80% of requests, that means that it literally is going to take longer for you to get matched with a driver.”
Campbell said Uber, Lyft, DoorDash, and other platforms are offering huge incentives to drivers – like a $250 bonus for completing 20 rides – as they struggle to get them back on the road.
As with past promises, those incentives and other driver-friendly features could just as easily disappear if the market becomes saturated with drivers again and companies regain the upper hand, but Campbell said that there needs to be a middle ground.
“If Uber is going to be able to get away with paying drivers like independent contractors, I think that’s kind of some of the control that they have to give up and find a way to make work.”
An independent arbitrator on Thursday ordered Uber to pay $1.1 million to a blind passenger for illegally discriminating against her after its drivers refused her rides on 14 occasions.
The arbitrator also rejected Uber’s argument it wasn’t liable for discrimination by its drivers because they’re contractors.
Uber said it strongly disagreed with the ruling.
Lisa Irving, a San Francisco Bay Area resident who is blind and relies on her seeing-eye dog, Bernie, to help her get around, brought the claim against Uber in 2018 after “she was either denied a ride altogether or harassed by Uber drivers not wanting to transport her with her guide dog,” according to the arbitrator’s ruling.
Uber drivers left Irving stranded late at night, caused her to be late to work (which eventually contributed to her getting fired), and on two occasions, verbally abused and intimidated her – and that the discrimination didn’t stop even after she complained to Uber, her lawyers told Insider in a statement.
“Of all Americans who should be liberated by the rideshare revolution, the blind and visually impaired are among those who stand to benefit the most. However, the track record of major rideshare services has been spotty at best and openly discriminatory at worst,” Catherine Cabalo, one of Irving’s attorneys, said in the statement.
“The bottom line is that under the Americans with Disabilities Act, a guide dog should be able to go anywhere that a blind person can go,” Cabalo added.
“We are proud Uber’s technology has helped people who are blind locate and obtain rides. Drivers using the Uber app are expected to serve riders with service animals and comply with accessibility and other laws, and we regularly provide education to drivers on that responsibility. Our dedicated team looks into each complaint and takes appropriate action,” Uber spokesperson Andrew Hasbun told Insider in a statement.
But the arbitrator found Uber employees who investigated possible incidents of discrimination were “trained … to coach drivers to find non-discriminatory reasons for ride denials” and even to “‘advocate’ to keep drivers on the platform despite discrimination complaints.”
Under the Americans with Disabilities Act, it’s illegal for transportation businesses that are subject to the law to refuse to transport people with guide dogs, but Uber tried to shift the blame to its drivers, arguing it wasn’t responsible for any ADA violations because its drivers are independent contractors.
The arbitrator disagreed, ruling Uber was also liable for ADA violations because of its “contractual supervision over its drivers and for its failure to prevent discrimination by properly training its workers.”
However, classifying drivers as contractors is a strategy that has allowed Uber to avoid legal liability in other contexts, such as when a pedestrian alleged that she nearly lost her leg after being struck by an Uber.
The strategy has also allowed Uber to avoid paying drivers’ health insurance, sick pay, and unemployment insurance, shifting those costs to taxpayers – who paid $80 million last year to keep Uber and Lyft drivers afloat during the pandemic, making the companies one of the largest beneficiaries of a subsidy program aimed at small businesses.
Uber, Lyft, and other ride-hailing and food delivery companies have aggressively fought efforts in multiple states and countries to reclassify drivers as employees, which would add significant additional costs to their already unprofitable business models. Earlier this week, UK-based food delivery company Deliveroo’s initial public offering tanked by 30% after investors expressed concerned about how it had exploited its drivers.
Back in 2019, I predicted that California Assembly Bill 5 (AB5), which upset the independent contractor world by reclassifying freelancers in hundreds of occupations as employees unless they could prove they’re not, would be seen by other lawmakers as a road map, rather than a cautionary tale. And here we are: a new bill working its way through Congress, the Protecting the Right to Organize Act of 2021 – or PRO Act – should give independent contractors across the country reason to worry, though not necessarily because of the intent of the legislation.
The ABC test
What made AB5 so problematic was its reliance on the ABC employment test to classify workers. ABC says a freelancer should be an employee, unless:
“A) The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
B) The worker performs work that is outside the usual course of the hiring entity’s business; and
C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”
The worker must meet all three. Part B is where many independent contractors went through the buzzsaw: If you’re in the same business as a client, you must be an employee, and, presumably the company would hire you, even if you’ve only been putting in a few hours a week for them. Yet, instead, most employers are just not working with California freelancers anymore.
ABC is also the basis for reclassification in the PRO Act, which passed the House of Representatives earlier this month with bipartisan support. However, there’s one big difference: While AB5 reclassified employment status for workers in California, the PRO Act reclassifies freelancers nationally, but only for the purpose of collective bargaining rights. That’s all – or so it states. Supporters say it “levels the playing field” for unions, to give more people the right to vote in union elections.
I spoke with Professor Michael LeRoy, an expert in labor law and labor relations at the University of Illinois Urbana-Champaign, to find out whether freelancers should worry about the PRO Act. He said there’s been some hyperbole and misunderstanding about it.
“Does [the PRO Act] force you to be in a union? No. If 10 million [freelancers] are classified as employees, a certain amount will want to form one or join one, but they could also vote no,” he told me.
I’d be okay with more people being able to collectively bargain if they want. Freelancers I spoke with aren’t apoplectic about theoretical pressure to join a union, either. What does concern us greatly is the ABC test being used to reclassify independent contractors for any reason. Almost everyone I spoke with feared the ABC test would be misapplied by companies who read the reclassification part of the law, but miss the part about unions. Freelancers also worry that the ABC test will set a precedent for future legislation. It already has: Several states used AB5 as a model when proposing new “gig worker protection laws.”
Fred Topel, a Los Angeles-based entertainment journalist and co-leader of California Freelance Writers United (CAFWU), implored national lawmakers to not use the ABC test. “If you take out the ABC test, I think a majority of [CAFWU] members would support it. We’ve seen no evidence that AB5 worked as lawmakers intended, but plenty of evidence of unintended negative consequences from the ABC test,” he said.
Robert Sette, a freelance translator in Denver, predicted that any big change to labor laws using the ABC test would make hiring companies think twice about using independent contractors. “Many won’t see [the PRO Act] as only for labor organizing. They’ll see this as a risk management issue. To avoid possibly running afoul of the law, they’ll cut loose freelancers.”
That did happen in California. The Facebook group Freelancers Against AB5 has been compiling personal stories of independent contractors in California who lost work and income directly as a result of that law, well before the COVID-19 crisis. Based on dozens of “no Californians need apply” notices citing AB5 as the reason, it appears that many companies were so bewildered by the law and scared of fines for possibly violating it, they simply gave up on California independent contractors.
The road to career hell was paved with good intentions
After AB5 passed, I joined CAFWU and other advocates in California to petition state representatives to amend the law. We succeeded in getting exemptions for some professions.
Through the process, we learned that most lawmakers had no clue about the scope of the independent contractor world, and assumed most people deriving an income were either employers, employees, or exploited would-be employees. The bill’s biggest proponents said, in so many words: Don’t worry if you lose work because all your clients will hire you full time, with benefits! We explained that’s not how it works, emphasizing that most independent contractors are thriving professionals.
I recognize that some independent contractors do want full-time work, and that many other workers are truly misclassified and exploited. There should be protections from misclassification, except – there already are laws covering that. Any worker can sue for misclassification right now – albeit with difficulty.
We don’t need new laws that help some, but also legislate hundreds of thousands of successful careers out of existence. LeRoy agreed the ABC test is a blunt tool that “oversimplifies” the labor force and would need “significant refinements” and exemptions if kept in place. A potential solution could be a multi-factor balancing framework to determine who’s an employee, one like the IRS uses.
In order to prevent the ABC test from wreaking havoc on more independent contractors’ lives, constituents must start conversations with their representatives, starting with the Senate subcommittee members that will be discussing it. They could point to surveys showing that 30% of the US workforce is either self-employed or hired by the self-employed and estimates that freelance income is nearly 5% of GDP.
Stripping the ABC test from the PRO Act could prevent lawmakers from proposing more damaging bills, like the one written last year by Democratic Senators Patty Murray of Washington and Sherrod Brown of Ohio. Their bill gives some benefits to temp and gig workers, but, like AB5, it uses the ABC test to sweep all professions into its net.
This shouldn’t be a partisan issue, but sadly it is. Many Republicans insist any labor protections will hurt business and therefore can never be considered. Based on comments from AB5’s proponents, many Democrats assume what’s good for unions surely benefits everyone. Labor classifications must be more nuanced than that because today’s labor market is complicated.
Pro-labor lawmakers need to understand that freelancers are not necessarily suffering gig workers, or getting by until they land a “real job.” They should either toughen enforcement of existing laws or make sure new laws explicitly help workers who need protections, but not hinder independent contractors’ ability to earn a living. Labor law shouldn’t be a zero sum game.
Uber and Lyft then asked the court to toss the case, arguing the state hadn’t done enough to prove drivers were denied benefits and that there wasn’t a legitimate legal dispute over the issue. The court denied both companies’ requests, allowing the case to proceed.
Uber and Lyft did not respond to requests for comment on this story, while labor and driver groups praised the ruling.
“This court order is a complete rejection of Uber and Lyft’s position and a big win for working people,” Massachusetts AFL-CIO president Steve Tolman told Insider in a statement.
“Every worker should be able to earn a decent wage, take care of their health, and protect against harassment and discrimination on the job. We thank Attorney General Healey and her team for holding Uber and Lyft accountable for following the same rules that apply to every other company,” Tolman added.
The two ride-hailing giants have faced an increasing number of legal challenges in recent years over how they classify workers amid growing evidence many drivers are paid less than the minimum wage, and have struggled – particularly during the pandemic – without access to health care, labor protections, and unemployment benefits guaranteed by law to employees.
While companies are typically required to pay into state and federal programs benefiting their workers, Uber and Lyft have passed those costs on to taxpayers. A recent Washington Post analysis found more than 27,000 Uber and Lyft drivers received a combined $80 million from the US government to help them get through the pandemic.
The companies have argued drivers should be considered contractors because they’re able to choose when they can work and which rides they accept, claiming the companies are simply technology platforms that connect drivers and riders.
But a UK court recently rejected that argument, finding Uber and Lyft exercise significant control over drivers – much like a traditional employer – by setting their rates, assigning them rides, and using a rating system to determine their ability to get work on the platform. Uber responded by reclassifying its drivers as “workers,” a category under UK law between employment and contractor, in order to head off further legal disputes with drivers.
California regulators and courts also rejected the arguments put forth by Uber and Lyft, but the companies – along with a coalition of food-delivery companies including DoorDash and Instacart – avoided having to comply with those rulings by spending a combined $200 million to persuade voters to pass a law they wrote that keeps drivers as contractors.
The Biden administration’s proposed PRO Act, which wouldn’t automatically reclassify gig workers but would make it easier for them to unionize, has elevated the discussion around which rights and benefits rideshare and food-delivery workers should have – and who should bear those costs.