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

Rideshare drivers wave flags as they line up their cars during a protest outside of Uber headquarters on August 27, 2019 in San Francisco, California. Dozens of Uber and Lyft drivers staged a protest outside of Uber headquarters in support of California assembly bill 5 and to organize a union for rideshare drivers.

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Rideshare drivers wave flags as they line up their cars during a protest outside of Uber headquarters on August 27, 2019 in San Francisco, California. Dozens of Uber and Lyft drivers staged a protest outside of Uber headquarters in support of California assembly bill 5 and to organize a union for rideshare drivers.
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Justin Sullivan/Getty Images

  • 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. Studies show this to be only about 60% of drivers’ time.
  • Assembly Bill 5 as it’s currently drafted could mean some drivers qualify to be employees, not contractors, based on a three-part test.
  • If they’re considered employees, Uber and Lyft drivers would be be entitled to provide certain protections like overtime and collective bargaining rights from the companies that are not currently offered.
  • 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.

On average, Uber and Lyft drivers spend 63% of their miles driven with passengers in the car, one 2018 study found.

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On average, Uber and Lyft drivers spend 63% of their miles driven with passengers in the car, one 2018 study found.
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Schaller Consulting

However, that number applies to a very specific portion of time, and would only apply while a driver has a passenger in their car or is in route to pick someone up. That’s only about 63% of the time, research by a former New York City transportation official Bruce Schaller found in 2018.

The Independent Drivers Guild, which represents Uber and Lyft drivers in New York, said there are other parts of Uber’s proposal that are misleading as well.

“The devil is in the details when it comes to calculating pay and expenses and the real take home pay being offered here is much, much lower than $21 per hour. California drivers are right to view this pay rate offer with heavy skepticism,” a representative for the group said.

New York City, the United States’ largest and most important ride-hailing market, tried to address the “while on a trip” 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 urged drivers and riders to sign a petition through push notifications in California this week.

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Lyft urged drivers and riders to sign a petition through push notifications in California this week.
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Lyft

“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.”

This post has been updated to more accurately reflect the time drivers spend without fare-paying passengers, based on the Schaller study.

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