On November 3, Californians approved an Uber-sponsored ballot measure to undermine workers’ rights and transform labor law.
Proposition 22 exempts app-based transportation and delivery companies from another law in the state that requires certain businesses to reclassify their workers as employees instead of independent contractors. Unlike employees, independent contractors do not receive a minimum wage, overtime, workers compensation, unemployment insurance, healthcare, discrimination protection, or protections to form a union.
Tech corporations—including Uber, Lyft, Instacart, DoorDash, and Postmates—spent a record-breaking $200 million to convince voters that Prop. 22 would help workers by providing new benefits and preserving the flexibility that draws people to gig work. But in reality, the law sets a dangerous precedent for employers to legally evade decades of hard-fought worker protections and misclassify more workers as independent contractors. (The Open Markets Institute, my employer, has publicly criticized Prop. 22.) An unprecedented provision in the proposition also will require a 7/8ths vote from California legislatures to change the law, making it nearly impossible to amend without another ballot initiative.
While car service drivers have been at center of the Prop. 22 discussion, many food delivery workers, including the people picking up your groceries or biking over your favorite noodles, will also be impacted. And the ramifications expand beyond California; tech corporations want to take their Prop. 22 victory nationwide with legislation to permanently classify gig workers as independent contractors, opening the door for a new, codified class of under-protected workers across the country.
“We’re disappointed in [this] outcome, especially because this campaign’s success is based on lies and fear-mongering,” said the Gig Workers Collective, a national group of Instacart and Shipt shoppers, in a post-election statement. “Gig work is real work, and gig workers deserve fair and transparent pay, along with proper labor protections.”
The gig economy benefits from an idyllic techno-utopian veneer. In the middle of the Great Recession, tech companies promised new, accessible opportunities for people to work whenever they wanted, for as long as they wanted. Undiscriminating platforms could particularly open doors for marginalized workers, experts posited. But over time, gig work has proven to be a new way to avoid labor laws and shortchange workers who are disproportionately immigrants and people of color.
For instance, when Instacart first launched, it attracted many workers with earnings as high as $25 or $30 an hour. But after drawing people in, changes to Instacart’s compensation and tipping policies have dramatically cut shoppers’ take-home pay. After factoring in the unpaid time shoppers spent waiting for gigs, a survey by The Washington Post estimated the average Instacart worker made just $7.15 per hour in 2019.
Many food delivery workers also struggle with declining conditions and sub-minimum wages. Drivers and cyclists juggle demanding deliveries from multiple apps just to make ends meet. One survey found that nearly one-third of delivery cyclists in New York City missed work due to work-related injuries, but as independent contractors they are not provided health insurance or workers comp. A recent court ruling did find that some New York gig workers are entitled to unemployment insurance, however.
COVID-19 only exacerbated these issues. Grocery and food delivery workers have reported even longer unpaid wait times and lower wages as many newly unemployed people turn to food delivery work during the pandemic. One recent survey found some Instacart workers are using bots and other measures to automate the process of claiming highly sought-after shifts. Fewer health and safety protections also put gig workers at greater risk of getting sick on the job.
Without employee status, Instacart workers who organized strikes and boycotts protesting poor conditions and unpredictable pay cuts, and risk retaliation for organizing. Prop. 22 threatens to permanently keep things this way.
Gig workers have argued that they don’t qualify as independent contractors because they are not, well, independent. Tech corporations determine workers’ pay and assignments with black box-algorithms. Workers may be terminated or temporarily deactivated for a poor review, rejecting too many orders, or seemingly no reason at all. Apps even use behavioral psychology to coerce workers to work at certain times, in certain places, or in a certain way. Instacart, for instance, uses obtrusive sounds and penalties to pressure workers to accept low-paying orders they might otherwise reject.
Some of these legal challenges to this misclassification have succeeded. DoorDash reached a $5 million settlement with delivery drivers in 2017. Most critically, in 2018, the California Supreme Court determined that, based on a multi-part employment test, Uber and Lyft drivers appeared to be employees, not contractors.
This ruling paved the way for a California law, AB5, which created a new test for classifying workers as independent contractors. AB5 would have reclassified an estimated 64 percent of California’s independent contractors as employees, including most gig workers, providing millions with essential wage protections and benefits. Worker reclassification would also require some of America’s wealthiest corporations to pay their fair share of payroll taxes to support public programs such as Social Security, Medicare, and unemployment insurance.
But when AB5 went into effect January 1 of this year, tech corporations refused to comply, threatened to pull business out of California, and introduced Prop. 22 to exempt themselves. Uber, Lyft, and Instacart used their apps to blast pro-Prop. 22 messages and even required workers to include Prop. 22 promotions in food deliveries.
Tech corporations claimed Prop. 22 would help workers by protecting the flexibility that makes gig work appealing, while offering new benefits, including pay guarantees and a health care stipend. In reality, the supposed tradeoff between employee protections and flexibility is a false choice. There is nothing about AB5 or employee status that prevents employers from maintaining flexible schedule structures. Berkeley researchers also estimate that Prop. 22’s wage guarantee only amounts to $5.64 per hour when you consider unpaid wait times and workers’ personal overhead expenses, such as gas.
Following election day, executives from Lyft, DoorDash, Postmates, and Uber all suggested that they want to nationalize Prop. 22. Executives said they will seek “third way” compromises with legislators and large labor unions to extend some protections and benefits to gig workers, while keeping them independent contractors and avoiding certain taxes and liabilities. Even before Prop. 22, tech companies backed numerous state laws and even a federal law to try and secure permanent independent contractor status for gig workers and other labor law exemptions. Such a compromise on the federal level would preempt future state-level efforts, which are already brewing in New York, New Jersey, and Illinois.
Food system workers already face exceptional barriers to unionization and special carve-outs from basic worker protections. Farmworkers, for instance, are exempt from aspects of the National Labor Relations and Fair Labor Relations Acts. Creating new exceptions for gig workers allows corporations to deny standard labor protections to another disproportionately BIPOC and immigrant workforce in the food system.
“Food worker exploitation is deeply set into U.S. laws and structures,” said Sonia Singh, co-director of Food Chain Workers Alliance, in a statement. “When we see how far massive corporations will go to suppress worker organizing and avoid even basic protections—like the millions poured into Prop. 22—we know that supporting worker organizing is more critical than ever.”
It doesn’t help that federal enforcers have used antitrust law to crack down on gig worker organizing, even as they allow tech corporations to merge and amass more power to squeeze workers and bankroll efforts like Prop. 22.
In 2017, the Justice Department and Federal Trade Commission both weighed in favor of a lawsuit by the U.S. Chamber of Commerce (on behalf of members Uber and Lyft) against the City of Seattle for granting ride-hailing drivers the right to organize. Yet just this week, the Justice Department approved a merger between Uber and Postmates that will put food delivery service in the hands of three national giants with high levels of regional dominance. This level of consolidation means delivery workers cannot readily work for a different company if they feel shorted.
New technology is not a pass for gig companies to avoid regulation and control workers without responsibility. All workers that do the work of employees should have the rights of employees. That means ending misclassification of constrained gig workers as independent contractors, but also closing historic loopholes that exclude farmworkers from basic worker protections.
While gig corporations hope to get their way on the federal level, this debate is far from over. It still remains to be seen if other states will be able to do what California could not and stand up for food workers against powerful tech titans.