A Lyft driver was hospitalized after being hit by a drunk driver going 85 mph, now he’s battling Lyft over its pandemic-era insurance cutbacks.

Lyft
  • Lyft driver Drew Wajnert is unable to walk after being hit by a drunk driver while on the job.
  • But Lyft dropped an insurance policy during the pandemic that may have covered his medical bills.
  • One expert told Insider Lyft’s insurance, even with that policy when it was in effect, falls far short of what traditional employers must provide.
  • See more stories on Insider’s business page.

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.

Drew Wajnert, a Lyft driver in Denver, Colorado, was left unable to walk after being hit by a drunk driver going 85 mph.
Drew Wajnert, a Lyft driver in Denver, Colorado, was left unable to walk after being hit by a drunk driver going 85 mph.

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.

Setting aside repeated court rulings questioning just how independent drivers are, Wajnert’s case illustrates how that independence can also leave drivers on their own in a way that could be devastating.

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.

Read the original article on Business Insider

Lyft is a ‘buy’ despite the slide in its share price after earnings and a regulatory overhang, 2 analysts say

john zimmer lyft
Lyft’s John Zimmer in New Orleans in 2018.

  • Lyft got some analyst support on Wednesday after earnings with two top Wall Street analysts reiterating their bullish stances.
  • CFRA’s Angelo Zino reiterated his “buy” rating and $75 price target citing improved pricing.
  • Wedbush’s Dan Ives reiterated his “overweight” rating and $85 price target citing a demand rebound.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Lyft stock is a “buy” despite the slide in share prices after earnings, according to two top Wall Street analysts.

In a note to investors after Lyft reported earnings, Dan Ives of Wedbush Securities reiterated his “overweight” rating and $85 price target on shares of Lyft.

Similarly, CFRA Research’s Angelo Zino reiterated his “buy” rating and $75 price target.

Both analysts believe the market may be overreacting to regulatory overhang brought about by new pressure on the gig economy.

Lyft stock has been under fire since US labor secretary Marty Walsh said “we are looking at it, but in a lot of cases gig workers should be classified as employees,” in an interview with Reuters last Thursday.

Rideshare services like Lyft and Uber, among a slew of other companies, rely on gig workers’ independent contractor status to reduce labor costs.

On Wednesday things got even worse for Lyft after the Biden administration announced it would end the Trump administration’s “Independent Contractor” rule, which limited the ability of workers to argue that they were misclassified as contractors instead of employees.

The withdrawal of the “Independent Contractor” rule will be published in the Federal Register today, and become effective on Thursday, the Washington Post reported.

Despite the news, some analysts remain bullish on Lyft’s prospects amid the reopening of the American economy.

CFRA’s Angelo Zino said that Lyft is benefitting from improved pricing, rising sales, and a more favorable cost structure after the sale of its Level 5 autonomous vehicle business to Toyota.

Zino did note that there is a “regulatory overhang,” but overall said he was “optimistic” about Lyft’s prospects moving forward.

Dan Ives of Wedbush Securities added similar comments in his note to clients on Wednesday. The analyst said Lyft’s March results gave him “increased confidence” that the company is seeing a “clear demand rebound” heading into the June quarter.

Ives believes Lyft’s guidance for EBITDA profitability by September is reasonable as well.

“Lyft (as well as its stalwart brethren Uber) is set to see a ‘roaring 20’s-like’ rebound into 2H with the red ink soon in the rearview mirror,” Ives wrote.

Wedbush’s managing director of equity research added that he expects there will be a solution to the gig worker dilemma similar to what happened in California back in March.

California voters approved a ballot measure that exempts companies that utilize the “gig economy” from having to treat workers as employees in the first quarter, freeing Uber and Lyft from a 2019 state law that entitled workers to overtime pay, sick leave, and unemployment benefits.

“Management continues to be proactive in labor policy, and we continue to expect a California-like resolution to play out across the rest of the country as well,” Ives wrote.

Read the original article on Business Insider

Uber is spending $250 million to persuade drivers to get back on the road so it can pay them less again

uber driver prop 22
Rideshare driver Teresa Mercado raises her fist in support as app based gig workers held a driving demonstration with 60-70 vehicles blocking Spring Street in front of Los Angeles City Hall urging voters to vote no on Proposition 22 on Oct. 8, 2020.

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.

Uber has been notoriously reluctant to share driver pay data, and some independent researchers have found drivers may earn as little as $9.73 per hour after acounting for expenses.

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.

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Uber gave drivers more control to prove they’re independent. Now the company is taking back control because drivers actually used it.

GettyImages 1176816141 (1) NEW YORK, NEW YORK - SEPTEMBER 24: Dara Khosrowshahi, CEO, UBER, speaks onstage during the 2019 Concordia Annual Summit - Day 2 at Grand Hyatt New York on September 24, 2019 in New York City. (Photo by Riccardo Savi/Getty Images for Concordia Summit)
Uber CEO Dara Khosrowshahi.

  • Uber is revoking California drivers’ ability to set prices and see trip destinations in advance, the San Francisco Chronicle reported.
  • Uber gave drivers more control in 2020 to avoid reclassifying drivers as employees under AB-5.
  • But it reversed course after Prop 22 exempted it from AB-5, saying drivers turned down too many rides.
  • See more stories on Insider’s business page.

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.”

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Uber ordered to pay $1.1 million to blind passenger who was denied rides 14 separate times

GettyImages 577083258  DENVER, CO - JULY 18: Mike Hess, who is blind, get a ride from an Uber driver after his lunch meeting in Cherry Creek, July 18, 2016. Hess relies heavily on Uber to get around. (Photo by RJ Sangosti/The Denver Post via Getty Images)
A blind passenger gets into an Uber in Denver, Colorado (Lisa Irving not pictured).

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.

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Lyft stock gains 6% as company marks best week for rides since the start of the pandemic

Lyft employee
  • Lyft shares picked up as much as 6% early Wednesday following an upbeat February-trends update. 
  • Rideshare volume toward the end of February had its best week since pandemic lockdowns began in March 2020. 
  • Lyft forecast an adjusted EBITDA loss of $135 million, which is narrower than its previous loss projection of up to $150 million. 
  • Visit the Business section of Insider for more stories.

Lyft stock rose early Wednesday after the company said it’s logged its strongest period for rides in nearly a year, since the US began a wave of lockdowns to curb the spread of COVID-19.

Ridesharing volume in the week ended February 28 “was the company’s best week since March 2020,” Lyft said in a February business update released late Tuesday.

Lyft shares rose as much has 6% in heavy, premarket volume to fetch $60.49 each. The stock so far this year has gained 16% and has climbed by nearly 42% over the past 12 months.

The update highlighted broadly held expectations that business conditions throughout the country will improve as COVID-19 vaccinations accelerate. More than 78 million people in the US have already received the vaccine, according to figures from the Centers for Disease Control and Prevention.

As well, economists have said direct fiscal stimulus payments to Americans have helped bolster spending. The US Senate is considering passing a $1.9 trillion stimulus package following its approval in the House last week. A $900 billion coronavirus relief bill was finalized in December.

Lyft said average daily rideshares in February increased 4% month over month. Excluding the week of February 21 during which severe weather storms hit a number of states, average daily rideshares were up 5.1% compared with January’s volume.

The company expects ridesharing volume beginning the week ending on March 21 to show positive year-on-year growth. “This growth trend is expected to continue through the duration of 2021 barring a significant worsening of COVID-19 conditions,” said Lyft in its filing with the Securities and Exchange Commission.

It also said it “can manage” its adjusted EBITDA loss to $135 million in the first quarter. That figure is narrower than its previous projection of a loss between $145 and $150 million.

The company plans to release financial results for the first quarter ending March 31 in early May.

Read the original article on Business Insider

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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