Uber, Lyft, DoorDash and other app-based ride-hailing and delivery companies will have to reimburse temporary service workers in California for potentially millions of dollars in unpaid vehicle expenses between 2022 and 2023.
The late payments come from a provision in Proposition 22, the controversial law that classifies gig workers as independent contractors rather than employees, and promises them half-hearted protections and benefits. For example, gig workers are guaranteed a minimum earnings, rather than a guaranteed minimum wage, for the time they spend “taking in” the gig, not the time they spend between rides.
Part of Proposition 22 states that drivers who make the minimum amount of money are reimbursed for vehicle expenses. Starting in 2021, when Prop 22 took effect in California, drivers began receiving $0.30 per mile while driving “while they are actively engaged.” The law also states that the rate must be raised to keep pace with inflation. So, a 6.8% increase in inflation in 2022 should have pushed those payments to $0.32 per mile; And in 2023, it should have increased by another $0.02 to $0.34 per mile.
A couple of cents might not sound like a big deal, but drivers log thousands of miles each year, so it can really add up. Especially when you consider that there are approximately 1.3 million gig drivers in California, according to industry reports.
(By the way, in keeping with the paltry benefits afforded to workers at work under Proposition 22, the vehicle mileage withholding rate is half the standard rate for business owners and employees, which was $0.655 per mile in 2023.)
Pablo Gomez, a full-time Uber driver since 2019, noticed his payment never exceeded $0.30, according to the Los Angeles Times, which first reported the discrepancy. We now know that no drivers receive the increased payments, because none of the app-based companies have implemented the amendment.
Uber, DoorDash, Lyft, and Grubhub all told TechCrunch that they didn’t adjust reimbursement fees for drivers because they were waiting for the California cashier’s office to post the revised prices. According to Exposition 22, the Treasury is already tasked with calculating and publishing the revised rate each year and has failed to do so in a timely manner.
After studying the language of the 22nd offer, Gomez attempted to communicate with the state treasurer’s office on April 13 and was ignored. He then tweeted directly to Fiona Ma, the California treasurer, asking why the price hadn’t changed yet. Sergio Avidian, a gig worker and senior contributor to The Rideshare Guy, reinforced the tweet. On May 10th Amma answered Saying that the price adjustment has finally been posted. Uber and DoorDash immediately began sending drivers late payments, fearing they would face a class action lawsuit.
For his part, Avidian said he is willing to sue if the companies do not agree to pay retroactively. “I had a law firm ready, and I would be the lead plaintiff,” he told TechCrunch.
Lyft told TechCrunch that it has now started issuing deferred payments. Grubhub said it would start paying drivers retroactively. Instacart did not respond in time for comment.
The state treasury did not respond in time to explain why it took so long — 18 months for 2022 rates — to provide revised vehicle repayment rates. According to Avidian, the treasury was held up due to the uncertain status of Proposition 22. The ballot measure was ruled unconstitutional in August 2021, but in March, the California Court of Appeals overturned that decision. Industry experts say that despite a lower court ruling saying Proposition 22 was unconstitutional, it was still the law of the land, and the Treasury should have treated it as such.
I asked the app-based companies if they had contacted the department in the past year and a half to push for an updated price. Uber said it reached out once in January 2022, and DoorDash said it made repeated requests for updated mileage rates “dating back to January 2022.” Lift also said it reached out to the Treasury for information, but did not say when or how often. I also asked the companies if they had informed gig workers of the treasury delay to reassure them that they would eventually be compensated. I didn’t have any of them.
And this is not surprising. App-based financial services companies have yet to achieve real measures of profitability, even as they find exciting new ways to extract as much work for pennies as possible from workers. (See: Algorithmic wage discrimination, tip concealment and tip theft.) When I asked an Uber spokesperson why the company didn’t just do its own calculations for workers, he replied that “it’s up to the cashier’s office to determine that rate.”
It’s not better to ask for forgiveness than permission, but it’s all the same. It is better to hope that no one will notice that you are not paying your workers properly, than to pay them correctly.
Not every driver will end up receiving their payment. Many ride-hailing drivers exceed the minimum fare, so they don’t qualify for a vehicle compensation fee. However, those who drive primarily for Uber Eats, DoorDash, and other food delivery platforms tend to rely more on income tips, so they should start seeing payments appear in their accounts.
Avidian, who drives part-time and picks up his own cars, said he gets about $85 from Uber. His wife, who also works part-time, earned more than $200 from DoorDash.
But what about workers who drive full time?
“If you work at DoorDash and Uber Eats and GrubHub full time, you’re driving 5,000 miles a month. There’s no question about that,” he said. “They’ll end up owing a few hundred million. There will be a lot of money.”
None of the companies I spoke with shared how much money they expected to pay drivers, but some backdoor accounts suggest that, collectively, the companies could end up paying millions.
Aside from Uber, Lyft, DoorDash, Grubhub, and Instacart, other related companies hiring gig workers include Amazon Flex, Target’s Shipt, and Walmart’s Spark.
Lack of transparency
Avidian collected screenshots of himself, his wife, and his podcast listeners. One of its main weaknesses is the complete lack of transparency on the part of the companies regarding the calculation of these amounts. None of the companies provide drivers with mileage details.
Uber is the only company to even stipulate that payment is a result of California Prop 22 benefits. DoorDash drivers see a random payment appear.
“Everybody gets the money, and these drivers are like, ‘Oh, I got my $400.'” I got $800, “but they don’t all know what it’s for.”
Avedian actually keeps a spreadsheet where he records all of his net earnings, miles traveled, number of trips, and Prop 22 adjustments. According to his calculations, his Uber late payment was actually less than $3.
“I call this a nickel and dread the gig economy,” Avidian said. “3 times a million people is $3 million more. I mean, I don’t frown and groan about people making money, but all I’m saying is, why not be transparent?”
In May, a Colorado bill aimed at making temporary work platforms more transparent to workers closed.
“Millions of people drive for these companies, and in the process of doing so, they get robbed because of a lack of transparency,” Avidian said. “You have to have something to hide, otherwise you won’t be afraid of transparency.”