UC Berkeley finds gig workers could earn $4.82 per hour if MA ballot proposal passes

A coalition of app-based delivery and ride-hail companies like Uber, Lyft and DoorDash recently filed a ballot proposition in Massachusetts to continue classifying gig economy workers as independent contractors, rather than employees. If the measure makes it to the November 2022 ballot and passes, drivers could end up earning as little as a quarter of the minimum wage, according to a University of California-Berkeley study published on Wednesday.

The UC Berkeley Labor Center researchers, Ken Jacobs and Michael Reich, identified multiple loopholes that would change the guaranteed pay from $18 per hour to $4.82 for a typical 15-hour week driver and $6.74 per hour for a typical 40-hour week driver receiving a health stipend. The MA Coalition for Independent Work, the group responsible for the initiative, claimed UC Berkeley was pushing “false and misleading information about the ballot question that are not only at odds with the facts, but don’t stand up to scrutiny when compared with the success of Prop 22 in California,” according to a statement released by the coalition.

The MA initiative, which was recently given the green light to start collecting signatures needed to get it on the ballot, is modeled after Proposition 22 in California. Prop 22 passed in November 2020, but in August a superior court judge ruled the law unconstitutional, a decision that will very likely be appealed.

As with Prop 22, the disagreement between advocates and opponents of the MA proposal comes down to the definition of “engaged time” and whether drivers have the right to earn pay outside of those hours. Engaged time is defined as the time when drivers are actively engaged in a gig, like when a delivery driver is driving to pick up food and drop it off. The proposed initiative would guarantee drivers an earnings floor equal to 120% of the MA minimum wage, which would be about $18 per hour in 2023 before customer tips, but only while drivers are actively engaged in a gig. It is this type of calculation that DoorDash drivers who recently protested outside the home of CEO Tony Xu said leads to inadequate pay.

“Much of the drivers’ time between paying rides is spent driving and cruising,” wrote Jacobs and Reich. “Drivers may be returning from a low demand drop off site to an area where they are more likely to pick up a ride, or they may be circling in downtown areas where there is no place to park.”

“Uber’s own data indicate that engaged time amounts to only 67% of the drivers’ actual working time,” the researchers continued. “The companies would not pay for the approximately 33 percent of the time that drivers are waiting between passengers or returning from trips to outlying areas. But such time is a necessary part of drivers’ work… Not paying for that time would be the equivalent of a fast-food restaurant or retail store paying the cashier only when a customer is at the counter. We have labor and employment laws precisely to protect workers from this kind of exploitation.”

Meanwhile, Uber has said drivers could have the app on while rejecting or ignoring dispatches, completing trips for other apps or just running errands, and essentially shouldn’t be paid for that time.

The proposed ballot question would also guarantee drivers at least $0.26 per mile to cover the cost of vehicle upkeep and gas, according to the coalition. Jacobs and Reich found that not only is this $0.30 less than the IRS reimbursement rate, but it also, again, only accounts for the time a driver is “active,” which means drivers wouldn’t be reimbursed for vehicle costs accrued in between rides. Using Uber’s studies, the researchers found 6.6 of the miles driven each hour incur costs that would not be reimbursed under the ballot proposal.

Also included in the coalition’s proposal are a series of new benefits including paid sick time, paid family and medical leave, occupational accident insurance and healthcare stipends for those who work at least 15 hours per week. In some cases, a company may require a driver to also submit proof of current enrollment in a qualifying health plan in order to be eligible for the stipend. Most drivers do spend an average of 15 hours per week on the app, say the researchers, but since a third of that time is spent unengaged, a driver would actually have to work 22. hours to be eligible for the stipend. Finding drivers who work those hours and already have insurance coverage would rule out the majority of drivers from qualifying for health stipends, according to Jacobs and Reich.

Finally, because independent contractors are required to pay both employer and employee shares of payroll taxes, drivers would end up having to pay up to 11.8% of their total income, another cost which app-based companies are not offsetting with the current language of their proposal.

“These numbers are completely ridiculous – I wouldn’t be doing this job if I wasn’t making well above minimum wage,” said Luis Ramos, a Lyft driver from Worcester, in a statement from the MA Coalition for Independent Work. “Every driver I know prefers this work because they make good money and they do it whenever they want for however long they want. That’s what we’re trying to protect with this ballot question.”

Massachusetts and California aren’t the only ones debating worker’s rights with app-based companies. In March, Uber lost a legal battle in the United Kingdom over similar driver classifications and had to reclassify drivers as employees, and earlier this month, Dutch courts ruled that Uber drivers are employees not freelancers.