Grubhub is rolling out 6-wheeled autonomous robots developed in Russia to deliver takeout on 250 US college campuses

A women picking up her delivery from Grubhub's autonomous robot
Grubhub’s autonomous robots will deliver takeout to college campuses across the US

  • Grubhub and Russian tech firm Yandex are launching food-delivery robots across US college campuses.
  • The six-wheeled robots are autonomous and can navigate in dark, wet, and snowy conditions, Grubhub said.
  • Yandex has been testing out the food delivery robots in Russia since 2020.
  • See more stories on Insider’s business page.

American college students could have their takeout delivered by robots later this year.

Online delivery company Grubhub on Tuesday announced it was teaming up with the Russian-Dutch tech company Yandex to roll out food-delivery robots across 250 US college campuses in the fall.

The six-wheeled robots, about the size of a suitcase, are autonomous and can navigate pavements, pedestrian areas, and places inaccessible to cars, according to a statement by Grubhub, which has 33 million active users.

The robots can operate in the dark, and moderate snow and rain, the statement said.

Yandex said it had been testing out the robots commercially in Russia since 2020. The robots were also trialing food deliveries around Ann Arbor, Michigan, in April 2021, the company added.

Picture of Grubhub and Yandex's new six-wheeled autonomous robot driving on the pavement
Grubhub and Yandex’s new autonomous robot is the size of a suitcase

When the delivery robot is near its destination, the customer receives a Grubhub app notification with the robot’s location, Grubhub said in the statement. Once the robot arrives, the customer uses the app to open a hatch and collect the food, the company added.

The robot then moves on to its next delivery, Grubhub said.

Grubhub didn’t disclose financial terms of the partnership, or say which colleges would get the robots first. Gruhub told the Wall Street Journal on Tuesday that the campuses it would supply are big, with as many as 60,000 students.

Insider has reached out to Grubhub for comment.

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Grubhub is facing 14 lawsuits from angry investors who say it misled them about its $7.3 billion takeover by Just Eat Takeaway

grubhub
GrubHub CEO Matt Maloney (C) applauds after ringing the opening bell before the company’s IPO on the floor of the New York Stock Exchange in New York April 4, 2014. Shares of GrubHub Inc, the biggest U.S. online food-delivery service, rose as much as 57 percent in its market debut as investors scrambled for a piece of the fast-growing consumer internet company.

  • Grubhub said it faces 14 lawsuits alleging it misled investors about its Just Eat Takeaway merger.
  • The lawsuits claim Grubhub withheld key financial protections and executives’ conflicts of interest.
  • Investors want the court to invalidate the merger until Grubhub secures a better deal for them.
  • See more stories on Insider’s business page.

Grubhub disclosed in a regulatory filing Thursday that it’s facing 14 lawsuits from investors who say the company misled them about its plans to be acquired by Dutch food delivery giant Just Eat Takeaway.

The investors alleged that Grubhub executives and board members failed to disclose key financial details and massive payouts that they stood to receive as part of the merger, and that they failed to secure the highest possible price for Grubhub’s public shareholders, harming them financially as a result.

Frank Ferreiro, the lead plaintiff in the case, said in a lawsuit filed in New York last month that when Grubhub publicly announced the proposed merger, it withheld underlying financial data it had used to make assumptions about the companies’ future performance, as well as well as “golden parachutes,” job offers, and other lucrative perks guaranteed to Grubhub executives and directors.

Ferreiro’s lawsuit alleged that investors like himself – who would get roughly 0.67 share of Just Eat stock for each of their Grubhub shares regardless of either company’s stock price when the merger closes – lack the information to determine whether they’re getting a raw deal.

“Grubhub insiders are the primary beneficiaries of the Proposed Transaction, not the Company’s public stockholders,” the lawsuit stated.

Ferrerio also said that GrubHub didn’t try hard enough to get the best deal for public investors.

His lawsuit asks the court to invalidate the proposed merger agreement and force Grubhub to seek the “highest possible price” for any sale.

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Uber, Lyft, DoorDash and other gig companies said California’s Prop 22 would create opportunity for workers of color. A new study says it ‘legalized racial subordination.’

uber lyft protest drivers LOS ANGELES, CALIFORNIA - APRIL 16: A protestor displays a sign as Uber and Lyft drivers with Rideshare Drivers United and the
 Transport Workers Union of America prepare to conduct a ‘caravan protest’ outside the California Labor Commissioner’s office amidst the coronavirus pandemic on April 16, 2020 in Los Angeles, California. The drivers called for California to enforce the AB 5 law so that they may qualify for unemployment insurance as the spread of COVID-19 continues. Drivers also called for receiving back wages they say they are owed. (Photo by Mario Tama/Getty Images)
Drivers in California sued Uber and Lyft, claiming the companies owe them $630 million in back wages.

  • Gig companies said labor law exemptions would create better opportunities for workers of color.
  • Instead, California’s Prop 22 “legalized racial subordination,” a new research paper argues.
  • The law worked like 1930s “wage codes” that paid workers in mostly minority industries less.
  • See more stories on Insider’s business page.

Last year, Uber, Lyft, DoorDash, Instacart, and Uber-owned Postmates spent a record $203 million to convince California voters to pass Proposition 22, a company-authored ballot measure that let them avoid paying for new benefits the state had recently extended to their workers.

The companies said Prop 22, which created a new class of workers subject to different labor laws, would be a boon for workers of color and immigrants, who make up the vast majority of their drivers and delivery people.

But a forthcoming research paper by UC Hastings law professor and gig economy expert Veena Dubal argues that, despite the companies’ promises that Prop 22 would help achieve racial and economic justice for their workers, the law has had the exact opposite effect.

The new category of workers created by Prop 22, Dubal wrote, “is best understood as a new form of legalized racial subordination-lower wages and benefits for a people of color and immigrant workforce.”

Ride-hailing and food-delivery companies have pitched this hybrid employment status as an innovative “third way” to classify workers that offers the independence of being a contractor and some of the benefits that come with being an employee.

According to Dubal, such proposals are hardly innovative, and in fact look strikingly like discriminatory “wage codes” passed in the 1930s at the request of racist industrialists and plantation owners.

While those laws weren’t explicitly racist, their effects were. By exempting employers with mostly Black workforces, wage codes denied those workers minimum wage, workers’ compensation, unemployment insurance, and unionization rights enjoyed by workers in majority white industries.

Dubal argues that Prop 22 is a recycled version of those racialized wage codes, and that this time around, companies used social justice arguments to persuade people it would have the opposite result.

Uber, Lyft, DoorDash, Instacart, and Postmates did not respond to requests for comment on this story.

“There is a long history of systemic racism in traditional hiring practices, which is one of the reasons app-based work and the open access to earning opportunities it provides is valued by so many Californians,” Geoff Vetter, a spokesperson for the Protect App-Based Drivers & Services Coalition, told Insider. (PADS, formerly called Yes on 22, was created and funded by the above companies to generate public support for Prop 22).

Co-opting racial justice language

Last August, Uber plastered 13 major cities with billboards that read: “If you tolerate racism, delete Uber,” timed to its sponsorship of a march commemorating the 1963 March on Washington, where Martin Luther King Jr. gave his famous “I Have a Dream” speech.

In September, Lyft aired a commercial featuring Maya Angelou reading her poem “On the Pulse of Morning” to announce its plan to provide subsidized rides to underserved communities during the pandemic.

To gin up support for Prop 22 in California, the Yes on 22 campaign touted endorsements from civil rights groups and sent mailers to voters implying that progressives like Sen. Bernie Sanders supported the ballot measure.

“NAACP California, California State National Action Network, Hispanic 100, Si Se Puede Foundation, Black Women Organized for Political Action, and other trusted social justice leaders and civil rights organizations” supported Prop 22, Vetter told Insider.

The PR campaigns came amid a summer of uprising against police brutality and systemic racism, which in turn put pressure on companies to address racism within their own walls.

But the campaigns faced swift backlash from drivers and driver advocates who called them “gaslighting” and hypocritical.

The “delete Uber” language originally came from angry customers boycotting Uber for sending drivers to JFK airport during a taxi driver strike in protest of Donald Trump’s Muslim travel ban. Lyft cherry-picked Angelou’s words, omitting her lines critiquing exploitative labor practices (while research shows that Uber and Lyft reduce revenue for public transit, on which communities of color disproportionately rely).

The head of the California NAACP chapter stepped down amid revelations that the Yes on 22 paid her consulting firm $95,000. Sen. Sanders and other progressives denounced the both mailers and Prop 22. And Yes on 22 reportedly harassed Dubal, a woman of color, on social media over her opposition to Prop 22 (Vetter told Slate that Yes on 22 condemned the harassment).

But the bigger hypocrisy, Dubal argues, is that the companies were “highlighting particular forms of racial subjugation, while ignoring and profiting from others” – namely, the racial subjugation of their own workers.

“New racial wage code”

During the Great Depression, Congress established the first federal minimum wage law, social security benefits, and union rights in a major win for workers.

But “racist demands” from industrialists and plantation owners led Congress to exclude agricultural and domestic workers – the majority of whom were Black – from those laws, subjecting them to seperate and unequal workplace conditions, according to Dubal.

Those exemptions let companies pay primarily Black workforces 20% to 40% less than the minimum wage, Dubal found, citing research by historian Donna Hamilton, “undermining the economic stability of Black communities for decades to come.”

Prop 22 isn’t much different, Dubal argues, but this time, companies are masking their arguments in racial justice arguments and confusing legalese rather than openly racist terms.

In 2019, California passed AB-5, extending long-standing minimum wage, unemployment insurance, workers’ compensation, and other protections to gig workers. After regulators and courts rejected claims by Uber and Lyft that AB-5 didn’t apply to them, the industry banded together to pass Prop 22, touting it as a boon to workers.

“Prop 22 guaranteed all drivers would earn at least 120% of minimum wage plus 30 cents per mile compensation toward expenses,” Vetter told Insider, pointing to claims by Uber, DoorDash, and Instacart that drivers are making more under the new law. (Companies’ earnings claims are difficult to evaluate because they refuse to share detailed pay data with the media, regulators, and independent researchers).

Dubal argues the bigger issue is that Prop 22 provides far less than what those workers should already have been receiving as employees under AB-5.

Under Prop 22, companies can: pay workers for only some of the hours they work; refuse to offer overtime pay, sick leave, family leave, and paid time off; cover just a fraction of healthcare costs; reimburse vehicle costs at barely 50% of the rate guaranteed to employees; provide bare-bones insurance that can leave drivers hanging out to dry; and avoid paying into unemployment and disability programs, shifting the burden to taxpayers.

These “second-class” labor protections, as Dubal describes them, become more problematic given the demographics of the workers subject to them. Lyft estimates that 69% of its drivers are people of color; one study estimates that, among all ride-hailing and food delivery workers in San Francisco, 78% are people of color and 56% are immigrants.

Ultimately, with Prop 22, Dubal wrote, Uber, Lyft, DoorDash, Instacart, and Postmates “obscured the way in which the law created a new racial wage code, claiming instead to offer economic opportunities for people of color and concealing the exploitative conditions endemic to those ‘opportunities.'”

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Most executives say they want more contract and temp workers. A majority of those workers say that’s not good enough.

Prop 22 protest
Jorge Vargas joins other rideshare drivers in a demonstration in November 2020 urging voters to vote reject Proposition 22, a ballot measure that exempted companies like Uber and DoorDash from California’s AB-5 law.

  • Contract workers “overwhelmingly” want to be permanent employees, according to a new McKinsey-Ipsos survey.
  • But executives say they plan to rely more heavily on contract labor, McKinsey previously found.
  • The findings reveal a huge divide between workers’ wants and those of their bosses.
  • See more stories on Insider’s business page.

Around a quarter of Americans say they work mostly in the gig economy, and 62% of those workers say that they’d rather not, according to a survey published Wednesday by McKinsey and Ipsos.

“Gig workers would overwhelmingly prefer permanent employment,” the survey found.

That preference is even stronger among immigrants and workers of color, who disproportionately make up the gig workforce.

Among those groups, 72% of Hispanic and Latino gig workers, 71% of Asian American gig workers, and 68% of Black gig workers said they’d rather be permanent or non-contract employees, as did 76% and 73% of first- and second-generation immigrants, respectively.

McKinsey and Ipsos surveyed 25,000 Americans over the spring of 2021, and 27% percent of those surveyed said their primary job at the time was as a contract, freelance, or temporary work.

But their resounding preference for the security, benefits, and legal protections that come with employee status could encounter some tough resistance: their bosses.

Globally, 70% of executives – mostly from large US firms – said they plan to ramp up their reliance on contract and temporary workers, according to a McKinsey study from September.

Corporate America has aggressively opposed efforts to reclassify contractors as employees, in many cases arguing that workers prefer the flexibility that gig work claim to offer. But McKinsey’s latest findings suggest that executives – often citing surveys that their own companies funded – may not be as in touch with workers’ needs and wants.

While companies like Uber, Lyft, DoorDash, Grubhub, Amazon, Facebook, and Google have played leading roles in familiarizing American consumers with the gig-based business model, they’re far from the only ones who have leveraged contractors to skirt labor laws and minimize their costs. (Insider has contacted the above companies for comment, and will update this story if they respond.)

Executives in the lodging, food service, healthcare, and social assistance sectors, are especially keen on relying more heavily on contractors, according to McKinsey.

As Insider previously reported, the COVID-19 pandemic exposed how the tech industry’s push to build their empires on the backs of contractors has failed American workers, who abruptly found themselves without healthcare, sick pay, workers’ compensation, and other benefits guaranteed to employees.

Read more: Biden could be the most pro-labor president in decades. These 81 government power players will take a major role in shaping policy during his administration.

That model also hit taxpayers hard, as they subsidized unemployment benefits for contractors laid off by multibillion-dollar corporations that, despite record profits, hadn’t contributed a dime to those funds on behalf of their workers. Taxpayers coughed up $80 million in pandemic assistance for around 27,000 Uber and Lyft drivers who lost their incomes.

State and federal lawmakers are increasingly considering ways to secure better pay, working conditions, and legal protections for contractors, from California’s AB-5 to recent talks between unions and app companies in New York, though experts say more wide-reaching labor law reforms are needed.

Read the original article on Business Insider

Uber, DoorDash and other gig-economy stocks fall after US labor secretary says most gig workers should be classified as employees

uber ceo dara khosrowshahi profile 2x1
Uber CEO Dara Khosrowshahi.

  • US labor secretary Marty Walsh said “in a lot of cases gig workers should be classified as employees” in an interview with Reuters on Thursday.
  • Uber, Lyft, Doordash, and Grubhub, along with other firms depending on the “gig economy” labor all fell after the news broke.
  • Walsh said gig workers should have “all of the things that an average employee in America can access,” per Reuters.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

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.

Read the original article on Business Insider

Georgia Gov. Brian Kemp says that voters waiting in long lines can order from Uber Eats

Brian Kemp
Gov. Brian Kemp (R-Georgia) speaks during an April 3 news conference in Atlanta about Major League Baseball’s decision to move the 2021 All-Star Game over the league’s objection to the state’s new voting law.

  • Gov. Brian Kemp suggested that voters waiting in long lines could order food from delivery apps.
  • “They can order a pizza,” he said. “They can order Grubhub or Uber Eats, right?”
  • Kemp then accused Democratic-led jurisdictions of mismanaging their elections.
  • See more stories on Insider’s business page.

GOP Gov. Brian Kemp of Georgia suggested in a Newsmax interview earlier this week that voters waiting in line to vote could order food from online delivery apps like Grubhub or Uber Eats, as he continues to face blowback for the 2021 MLB All-Star Game leaving the state over its newly-enacted voting law.

The law, known as the Election Integrity Act of 2021 or SB 202, tightens election rules in the state by limiting drop boxes, strengthening voter identification requirements, and banning water and food from being distributed by volunteers to voters waiting in line, among other measures. It has been slammed by prominent Democrats including President Joe Biden and former Georgia state House Minority Leader and potential 2022 gubernatorial candidate Stacey Abrams.

Several major companies – including Coca-Cola and Delta – have spoken out against the bill or voter suppression more broadly, which has upset Kemp and most statewide Republicans, who say the law is being distorted.

Kemp addressed one of the more contentious aspects of the law, which bars volunteers from distributing water or food to voters in line.

“They can order a pizza,” Kemp said of voters waiting to vote. “They can order Grubhub or Uber Eats, right?”

He added: “The county officials can provide water stations. This is just within 150 feet of the precinct. If you’re 151 feet, campaigns can set up tables, food trucks … they can hang up flyers and set up signs. This is all they [Democrats] have to grasp at.”

Read more: Introducing Todd Young, the most important senator you’ve never heard of

Kemp then accused Democratic-led jurisdictions of bungling their own election administration.

“The question too that you need to ask … Why are voters standing in line that long?,” he said. “It’s because it’s in Democratic-controlled counties. They need to do a better job of running their elections and moving people through the lines so that they’re not standing out there so long. Voters should be furious that that’s the case.”

Last year, a ProPublica and Georgia Public Broadcasting investigation found that the cause of the state’s voting issues were the state’s population growth, which has been accelerated by new residents in the blue-trending Atlanta suburbs, along with a failure to increase the number of polling precincts.

The report showed that while the state’s voting rolls had increased by 2 million people since 2013, polling locations have declined by 10 percent, especially in the populous Atlanta metropolitan region.

GOP Secretary of State Brad Raffensperger asked for additional resources and polling precincts after being elected in 2018, but was unable to push legislation through the GOP-led legislature before the 2020 presidential election, which saw Biden win the state by roughly 12,000 votes.

During the Democratic presidential primary held in the state last June, The Guardian spoke with Simone Alisa, an Atlanta voter who waited for five hours to vote after initially expecting that she might only have to wait 30 minutes.

“Something’s wrong with this picture,” she said after finally casting her vote.

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A year into the pandemic, Uber and Lyft drivers say gig companies are still failing them. They blame Prop 22.

GettyImages 1218814557 NEW YORK, NY - APRIL 14: A driver pauses as city employees fill-up cars with take-away meals to be delivered to the elderly and those that can not leave their housing due to the coronavirus at a community center in Brooklyn on April 14, 2020 in New York City, United States. The National Guard joined other New York City city agencies in loading up taxi's, Uber's, Lyft's and other 'for hire' vehicles which have joined the effort in delivering meals across the city. New York has been the hardest hit city in the nation from the COVID-19 outbreak. (Photo by Spencer Platt/Getty Images)
Rideshare and food delivery drivers working for companies like DoorDash, Uber, and Instacart have complained the companies aren’t providing PPE or pay for the time it takes them to properly clean their vehicles.

  • Uber and Lyft rideshare and food delivery drivers plan to protest Wednesday at Uber’s headquarters.
  • They say the companies won’t provide PPE or pay them for the time it takes to clean their vehicles.
  • San Francisco supervisor Matt Haney plans to propose a law that would require companies to do both.
  • Visit the Business section of Insider for more stories.

Rideshare and food delivery drivers are planning to protest Wednesday outside Uber’s headquarters in San Francisco, California, over what they say is gig companies’ continued failure to protect them nearly a year into the COVID-19 pandemic.

Drivers for Lyft, Instacart, Uber, and Uber subsidiary Postmates said in a press release announcing the protest that the companies aren’t providing adequate PPE and have refused to pay them for the time it takes to clean their vehicles.

They said that Proposition 22 – an industry-backed law passed in California in November that classified rideshare and food delivery drivers as contractors, excluding them from certain labor protections and restricting the ability of local governments to regulate gig companies – is largely to blame.

“Eleven months into this pandemic and workers are still asking for the most basic life saving protections for themselves, their families and their communities,” Cherri Murphy, a Lyft driver and organizer with Gig Workers Rising, a co-organizer of the protest, said in a statement. 

“It’s really stressful – I’m always being timed when I’m driving for these companies and if I don’t get places quickly, I can be punished. It’s like the companies don’t care about making sure I have enough time to wash my hands, clean my car, and wipe down surfaces,” Lucas Chamberlain, Instacart driver and member of We Drive Progress, another group behind the protest, said in a statement.

Under Prop 22, drivers aren’t paid for the time they spend waiting for Uber or Lyft to find them a ride or delivery order or sanitizing their vehicles in between jobs. Some gig economy researchers have estimated that loophole could allow companies to pay drivers for just 67% of the hours they actually work. 

“Since the COVID-19 crisis began, Lyft has provided tens of thousands of face masks, cleaning supplies and in-car partitions to drivers at no cost to them, and continue to provide access to these supplies today. Our most active drivers also received a free safety kit, consisting of a reusable cloth face covering, sanitizer and disinfectant,” a Lyft spokesperson told Insider, adding that Lyft doesn’t profit off PPE.

Uber told Insider that it has allocated $50 million toward safety supplies for drivers and said it has provided 30 million masks and other cleaning supplies to drivers worldwide.

But while California law requires most companies to provide PPE and sick pay to their employees and to pay into the state’s unemployment insurance program, Prop 22 classified drivers as contractors, allowing gig companies to save far larger amounts by not having to cover those costs. Uber and Lyft drivers last year claimed they’re owed $630 million in back pay as a result of the misclassification. One study found that between 2014 and 2019, the two companies should have paid $413 million into California’s unemployment insurance fund.

Uber spokesperson Kayla Whaling told Insider the company “has tried to do everything we can to support [independent contractors] while they support our communities, including distributing PPE free of charge, providing financial assistance for those who were diagnosed with COVID-19, helping connect them to new work opportunities on Uber or elsewhere, and consolidating information to help them apply for PPP loans or federal unemployment assistance.”

Still, Uber hasn’t always delivered on those promises, and when it has, it’s often only done so following backlash from drivers, regulators, courts, or the media.

Insider reported last April that, despite Uber’s claims it would pay drivers who tested positive for COVID-19, the company had denied legitimate claims and even locked out drivers who requested sick pay.

In July, a federal judge in New York ruled that Uber and Lyft had delayed the state’s ability to pay drivers unemployment benefits because they had played “games” with its requests for earnings data.

Wednesday’s protest – which Gig Workers Rising and We Drive Progress said will include a socially distanced rally – comes as some lawmakers in California are already pushing for more accountability for gig companies who rely on rideshare and delivery drivers.

San Francisco supervisor Matt Haney said he plans to introduce legislation that would require companies like Uber and Lyft to provide PPE and pay drivers for time they spend cleaning their vehicles.

“In the midst of this devastating pandemic, workers have gone above and beyond to protect themselves and our communities by purchasing protective equipment and cleaning supplies and spending their personal time sanitizing their cars to save lives. It is outrageous that while delivery app corporations continue to rake in profits, workers are forced to shoulder these burdens while struggling to make ends meet,” Haney said in a statement.

Do you work at Uber, Lyft, or another food delivery or rideshare app company? We’d love to hear how your company is navigating challenges brought on by the pandemic. Contact this reporter using a non-work device via encrypted messaging app Signal (+1 503-319-3213), email (tsonnemaker@insider.com), or Twitter (@TylerSonnemaker ). We can keep sources anonymous. PR pitches by email only, please.

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Uber and DoorDash are hiking food delivery and rideshare prices for Californians to pay for new driver benefits

DoorDash Biker
DoorDash Biker

  • Uber and DoorDash are raising prices on customers in California in order to pay for new driver benefits guaranteed under Proposition 22.
  • Uber will introduce a flat fee between $0.30 and $2, while DoorDash will slightly increase its service fees. 
  • Drivers will still receive substantially fewer benefits under Prop 22 — a law written and bankrolled by Uber, DoorDash, and other gig companies — than they would have been under the state’s gig work law, AB-5.
  • As a result, the companies’ labor costs won’t increase as much, meaning they likely won’t increase prices as much for consumers, at least initially.
  • Visit Business Insider’s homepage for more stories.

Uber and DoorDash are raising prices for customers in California in order to pay for new benefits guaranteed to rideshare drivers and food delivery couriers under a new statewide law that’s set to go into effect this week.

Uber said Monday it’s introducing a flat fee per purchase that will vary based on customers’ location and the service – between $0.30 to $1.50 for rides and between $0.99 and $2 for Uber Eats deliveries.

DoorDash, rather than a flat fee, will roll out slightly higher service fees starting Wednesday, and may adjust certain promotions, such as DashPass, that could also lead to higher prices, a spokesperson told Business Insider.

The surcharges are intended to help cover the costs of minimum earnings, per-mile expenses, healthcare stipends, accident insurance, and other benefits that rideshare and food delivery companies will soon be required to pay workers.

Those perks became enshrined in California law after voters in November passed Proposition 22 – a controversial law that Uber, DoorDash, Lyft, Instacart, GrubHub, and Postmates authored and spent more than $200 million trying to pass.

The law exempts companies from having to provide rideshare and food delivery drivers with basic employment benefits guaranteed to other Californians under the state’s gig work law, AB-5, and denies certain labor protections to those workers.

Read more: California voters approved Proposition 22, keeping ride-share and food delivery drivers as contractors – here’s what that means for companies like Uber, Lyft, Instacart, DoorDash and their workers

That’s a major victory for rideshare and food delivery companies, which were facing substantially higher labor costs under AB-5 – Uber and Lyft gained a combined $13 billion in market value following Prop 22’s passage. Under Prop 22, those companies are required to provide a smaller array of benefits and often at a lower cost than what they would have had to under existing laws. 

For example, drivers will soon be guaranteed 120% of the minimum hourly wage, but they are only paid for “engaged” hours when they have an active ride or delivery, not the hours they spend returning from long trips or waiting for Uber or DoorDash to match them with a job. According to one study, that could result in drivers not being paid for up to a third of their day.

Drivers will also be compensated $0.30 per-mile for vehicle expenses during engaged time, just half of the $0.58 that the IRS estimates it costs to operate a vehicle per mile. Healthcare subsidies are similarly tied to engaged time and lack significant benefits that come with typical employer-based healthcare.

After AB-5 went into effect this year, Uber, Lyft, and other companies refused to reclassify drivers as employees as required by the law, meaning they never provided the benefits it guaranteed.

As a result, while the partial benefits guaranteed by Prop 22 will cost companies less than those guaranteed under AB-5, they are nonetheless new costs the companies hadn’t previously incorporated into their pricing – thus, the new surcharges from Uber and DoorDash.

Uber has yet to turn a profit in its more than 10-year history, and while DoorDash turned a surprise $23 million profit during the second quarter of 2020, the company said that it expected costs to increase and that it “may not be able to maintain or increase profitability in the future,” which may help explain why the companies are passing off part of these new costs to customers.

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