Uber, Lyft, DoorDash, and other app-based ride-hail and delivery companies will have to reimburse gig workers in California for unpaid vehicle expenses between 2022 and 2023. This requirement stems from a provision in Proposition 22, the controversial law that classifies gig workers as independent contractors, offering limited protections and benefits. While the law guarantees a minimum earnings guarantee for engaged time, gig workers are not entitled to a guaranteed minimum wage for the time spent between rides.
Under Proposition 22, drivers meeting the minimum earnings requirement are eligible for a reimbursement for vehicle expenses. Starting in 2021, drivers began receiving $0.30 per mile driven while actively engaged, with the rate supposed to be adjusted annually to keep up with inflation. However, the app-based companies failed to implement the rate adjustment, resulting in drivers being underpaid.
It was recently discovered that none of the app-based companies, including Uber, DoorDash, Lyft, and Grubhub, adjusted their driver reimbursement fees as they were awaiting the publication of adjusted rates by the California treasurer’s office, as mandated by Proposition 22. Frustrated drivers raised the issue, prompting the treasurer’s office to publish the adjusted rate in May 2023. Uber and DoorDash have since started sending backpay to drivers, while Lyft and Grubhub have committed to retroactively paying drivers.
The delay in providing adjusted vehicle reimbursement rates raises questions about transparency and accountability. The treasury’s long delay, lasting up to 18 months, was attributed to the uncertain status of Proposition 22 after being ruled unconstitutional in August 2021 and then overturned in March 2022.
While not all drivers will be eligible for backpay, as many exceed the minimum rate, those who primarily drive for food delivery platforms like Uber Eats and DoorDash are more likely to rely on tips and should expect to receive payments.
The app-based companies have yet to disclose the exact amount of money they will be paying out to drivers, but it is estimated to reach millions collectively. Additionally, gig workers have expressed concerns about the lack of transparency regarding the calculation of backpay amounts, emphasizing the need for clear and detailed breakdowns.
The incident highlights ongoing challenges faced by gig workers, including a lack of transparency, low wages, and limited benefits. It also raises broader questions about the gig economy and the need for stronger regulations to protect the rights and fair treatment of workers in this sector.