Uber has proposed a new minimum wage for drivers after years of protests, but it comes with a catch (UBER, LYFT)


Uber Lyft drivers protest San Francisco

  • Uber has offered a $21 minimum wage for drivers as it fights against a California bill that could devastate its business. 
  • But there’s a catch: the wage floor would only apply while drivers are on a ride, which is less than half of their time. 
  • Assembly Bill 5 as it’s currently drafted could classify drivers as employees — not contractors — meaning Uber and Lyft would be required to provide certain protections like overtime and collective bargaining rights. 
  • Uber and Lyft say they’re not opposed to these benefits, but note that many drivers could lose the flexibility they value in working for the platforms. 
  • Visit Business Insider’s homepage for more stories.

As a California bill that could devastate Uber and Lyft’s businesses inches toward becoming law, the ride-hailing companies are ramping up lobbying efforts to destroy it once again. 

In an email to drivers and riders in the state on Wednesday, Uber laid out its own proposals to give drivers the benefits and protections they’ve been asking — and demonstrating and striking — for over recent years:

Here’s the key part of the email:

Uber is advocating for a brand-new policy that would strengthen protections for rideshare drivers by

  • Ensuring drivers would earn a minimum of approximately $21 per hour while on a trip, including the costs of their average expenses
  • Providing drivers access to robust new benefits, such as paid time off, sick leave, and compensation if they are injured while driving with Uber
  • Empowering drivers to have a collective voice with rideshare companies, and the ability to influence decisions about their work

The email echoes Uber’s previous comments since the bill, sponsored by California Assemblywoman Lorena Gonzales was first drafted earlier this year, but adds a new specific with the minimum wage figure.

However, that number applies to a very specific portion of time, and would only apply while a driver has a passenger in their car and is performing a ride on the app. That’s only about 40% of the time, research by a former New York City transportation official found in 2018. The rest of the drivers’ time is often spent between fares, when the minimum wage would not apply, based on the email.

New York City, the United States’ largest and most important ride-hailing market, tried to address this problem when it instituted a pay scale based on how much time a driver spends actually providing a ride. This formula was met almost immediately by backlash from Lyft, which argued Uber, through its larger size, could easily game this ratio higher and therefore pay drivers less.

(The company did, however, say it’s committed to a minimum wage calculated other ways — and eventually lost its lawsuit against the city.)

Read more: Uber and Lyft rides are down in New York City thanks to a minimum-wage rule that drove up prices. Analysts say it could have been even worse.

Assembly Bill 5 is was passed by the legislative body in May, and now depends on the Senate’s appropriates committee to bring it before a full vote of the second chamber, The Verge reported.  The bill would enshrine a current three-part test as law when determining a workers status as a full-fledged employee or independent contractors. These are the parts:

(A): The worker is “free from the control and direction” of the company that hired them while they perform their work.

(B): The worker is performing work that falls “outside the hiring entity’s usual course or type of business.”

(C): The worker has their own independent business or trade beyond the job for which they were hired.

Uber and Lyft have been open in admitting it could be disastrous for their bottom lines, as discussed by three executives in a high-profile op-ed published in the San Francisco Chronicle in June. Wall Street analysts agree, noting legislation of this kind is one of the biggest potential headwinds to the entire industry.

Lyft ab5 push notification

“We agree with the bill’s goal to protect workers, but we don’t agree that this protection should come at the cost of the flexibility our community relies on to supplement their income, support their families, and set their own schedules,” Lyft said in a blog post sent as a push notification to riders and drivers on Wednesday. 

“After talking with thousands of California drivers and listening to experts in labor laws, we’re proposing a revision that protects driver earnings and the flexibility to earn when and how you want. Our proposal includes additional workplace protections for drivers and a minimum earnings floor.”

Read more:

  • Uber and Lyft are fighting tooth and nail against a California bill that could make some drivers employees and bankrupt both companies
  • Pete Buttigieg joined a demonstration with Uber and Lyft drivers fighting for a minimum wage while his campaign spends heavily on the ride-hailing apps

SEE ALSO: A former Uber and Google executive has been indicted on accusations of stealing self-driving-car tech

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