Are drivers in California really getting back pay? Apparently, they are, thanks to a driver whose sharp eye and math skills discovered lines in the law leading to more compensation.
In this post, we’ll tell you exactly why California drivers are receiving months of back pay due to a stipulation in Proposition 22, and what that might mean for the future of drivers there and in other places where similar laws are being proposed. Here’s what we’ll cover:
- What were drivers promised in Proposition 22?
- Did drivers get everything that was promised?
- What’s happening now?
- What Uber news and Lyft news can we expect in other parts of the country?
What were drivers promised in Proposition 22?
When Proposition 22 was passed in November 2020, and became law in 2021, drivers for Transportation Network Companies (TNCs), such as Uber, Lyft, DoorDash, and Shipt, would be exempt from another California law that entitled gig workers to the benefits given to employees. Read more about what Proposition 22 contains in this Gridwise blog post.
While drivers gave up the full benefits of being employees, qualifying drivers did get benefits such as a healthcare subsidy and a minimum earnings guarantee for the time they were actively on a rideshare or delivery run. A reporter named Pablo Gomez studied the law in detail and discovered a provision that many drivers might not have noticed. After comparing notes with driver Servio Avedian, some very interesting information came to light.
According to the law, any drivers who were making the bare minimum would receive a small reimbursement for vehicle expenses. In 2021, the rate for this was 30¢ per each mile driven while engaged in rideshare or delivery trips. This benefit might not sound like a lot, but for drivers who are earning the minimum rate, which is calculated at 120% of the applicable minimum wage, it can add up.
This is especially true for delivery drivers who depend on tips to boost income. With a greater likelihood of failing to meet the minimum hourly wage, they certainly benefit from this provision. For the past two years, the benefit has been paid out by the TNCs at the 30¢ per-mile rate to qualifying drivers, but that isn’t what was supposed to happen, according to the law.
Did drivers get everything that was promised?
Within the law is a provision for an inflation increase on the 30¢ per-mile compensation. The increase was never allocated to the drivers who qualified for it, so they didn’t get exactly everything that was promised.
Drivers should have received, based on the inflation rate of 6.8% in 2022, 32¢ per mile. As inflation has continued in 2023, the rate should now be 34¢ per mile. It turns out that these increases were never accounted for in the sums that were paid to drivers to compensate for vehicle use.
Meanwhile, customers have been paying a fee of $0.75–$1.00 for California driver benefits on top of what they already pay for each ride or delivery. TNCs collect this money to cover items such as compensation for vehicle use when drivers make the bare minimum or less while driving.
Drivers and others who question the TNCs’ diligence wonder how much they have made by investing the money that was owed to drivers rather than paying it to them. The TNCs claim they were not responsible for arbitrarily raising the per-mile rate.
Indeed, according to the law, the California treasurer’s office was responsible for calculating and publishing the new rate each year, and had not done so. The TNCs point this out as the reason why they didn’t change it. No matter which party is at fault, this resulted in 18 months’ worth of missed inflation adjustment on drivers’ per-mile compensation.
What’s happening now?
Once Gomez contacted the state treasurer’s office, and after a rather long exchange of phone calls and posts on Twitter, the treasurer’s office insisted they had indeed posted the rates, but the TNCs dispute this. The rates were posted for 2023, but 2022 was skipped over entirely.
The treasurer’s office says they didn’t post the rates right away because of the controversies surrounding Proposition 22. Read this Gridwise post to get the details about the latest outcome of court battles surrounding the law. The TNCs maintain that the law stipulates the treasurer’s office is responsible for posting the rates; and in the law, it clearly states that is the case. You can read the portion of the law that pertains to the mileage compensation here.
Whether the rates were posted on time or not, and regardless of the disputes surrounding it, Proposition 22 states that drivers are entitled to that inflation adjustment. Most TNCs jumped on doing the right thing once the adjustments were finally posted and it was clear money was owed.
Some drivers, especially those who do delivery full time, can expect to get as much as $1,000 as a result of this situation, according to Avedian’s calculations. Furthermore, the TNCs’ total payout could come to something like $100–200 million. So far, Uber and Lyft, along with DoorDash, have been sending drivers back pay, but there are other TNCs that have yet to comply.
The treasurer’s office has promised to publish the adjustments every January from now on, despite the disputes that might continue in the courts. Those who are not big fans of Proposition 22 are quick to point out that the law is confusing, and that this stipulation about the treasurer’s office could have been deliberately put in to make the process surrounding these payments somewhat less than clear.
Whether this is true or not, the experiences California is having with Proposition 22 will affect drivers there and wherever people are making their money with driving gigs.
What Uber news and Lyft news can we expect in other parts of the country?
California isn’t the only place in the country where driver pay has become a bone of contention for the TNCs and government entities to gnaw on. New York City was among the first to enact minimum wages for drivers, and Seattle has similar stipulations. Massachusetts has seen some attempts at making minimum payment for drivers the law, and you can read in this Gridwise post about legislation in MInnesota. which was vetoed by the governor when Uber threatened to leave the state.
It seems that the battles between governments and TNCs will continue, but the experience in California will cause other states to change their strategies. For example, is it easier to approach the idea of a minimum wage than to address the issue of classifying drivers as employees? They might have thought so in Minnesota, but the power of the TNCs, largely due to people’s dependence on them, thwarted the government’s attempt to push them too far.
Let’s face it. People everywhere depend on rideshare and delivery services, and changing the way they do business anywhere would be a big deal. Drivers also depend on the TNCs for a flexible and comparatively easy way to earn money. Read this Gridwise article to see what it might mean if drivers were to be classified as employees. There are benefits, but drivers would have to give up some of the things they like about their gigs, too.
We’ll keep watching as more developments in this saga erupt around the country and ensure you stay informed.
If you’re a California driver, we hope you’ve been tracking your mileage! You could stand to get quite a chunk of change if you have solid records. The best way to make sure you’re keeping track of every mile you drive for your gig is to get Gridwise! Simply sign in when you start your shift, and your miles will be logged seamlessly as you hold on to each precious bit of potential for making more and getting more out the miles you drive.
