UC Berkeley Study: Gig Worker Earnings in Massachusetts with Ballot Proposal

Gig Economy Workers in Massachusetts: A Ballot Proposition and Potential Wage Concerns

A group of ride-hailing and delivery firms, including Uber, Lyft, and DoorDash, has recently submitted a ballot initiative in Massachusetts. This proposition seeks to maintain the classification of their workers as independent contractors, rather than classifying them as employees.

Potential Impact on Driver Earnings

Should this measure reach the November 2022 ballot and be approved, a study conducted by the University of California-Berkeley suggests drivers could potentially earn as little as $4.82 per hour. This figure is based on a typical 15-hour workweek, significantly below the state’s minimum wage.

Researchers Ken Jacobs and Michael Reich identified several potential loopholes within the proposed legislation. They estimate that a driver working a 40-hour week with a health stipend could earn only $6.74 per hour.

Response from the Coalition

The MA Coalition for Independent Work, the organization backing the initiative, has disputed the UC Berkeley findings. They assert that the research presents “false and misleading information” and does not align with the positive outcomes observed with Proposition 22 in California.

Proposition 22 as a Model and Legal Challenges

The Massachusetts initiative draws inspiration from California’s Proposition 22, which was passed in November 2020. However, a California superior court judge deemed Prop 22 unconstitutional in August, a ruling that is expected to be appealed.

The Core of the Debate: “Engaged Time”

The central point of contention, mirroring the debate surrounding Prop 22, revolves around the definition of “engaged time.” This refers to the period when drivers are actively working on a gig, such as during a delivery or while transporting passengers.

The proposed initiative would guarantee drivers an earnings floor of 120% of the Massachusetts minimum wage – approximately $18 per hour in 2023 – but only during actively “engaged” time. This calculation is a key concern for drivers who have recently protested against perceived inadequate pay.

Time Spent Waiting and Cruising

Jacobs and Reich emphasize that a significant portion of drivers’ time is spent driving without a passenger or delivery. This includes returning from drop-offs and searching for new fares, often in congested areas.

Uber’s internal data indicates that “engaged time” constitutes only about 67% of a driver’s total working hours. The remaining 33% – spent waiting for passengers or returning from trips – would not be compensated under the proposed initiative.

The researchers draw a parallel to traditional employment, arguing that failing to compensate for this waiting time would be akin to a fast-food restaurant only paying cashiers when actively serving customers.

Company Perspective on Unpaid Time

Uber maintains that drivers should not be compensated for time spent with the app activated while rejecting dispatches, completing work for other platforms, or running personal errands.

Mileage Reimbursement and Additional Benefits

The ballot question also proposes a minimum reimbursement of $0.26 per mile to help drivers cover vehicle maintenance and fuel costs.

However, Jacobs and Reich point out that this amount is $0.30 less than the IRS reimbursement rate and, crucially, only applies to miles driven while “active.” This means drivers would not be reimbursed for vehicle costs incurred while waiting for fares.

Based on Uber’s data, the researchers estimate that 6.6 miles driven per hour would not be eligible for reimbursement under the proposal.

Proposed Benefits and Eligibility

The coalition’s proposal includes additional benefits such as paid sick leave, paid family and medical leave, occupational accident insurance, and healthcare stipends for drivers working at least 15 hours per week.

To qualify for the healthcare stipend, some companies may require drivers to provide proof of existing health insurance coverage. While many drivers average 15 hours per week, the researchers note that due to the significant amount of unengaged time, a driver would actually need to work 22 hours to meet the eligibility requirements.

This could exclude a large portion of drivers who work fewer hours or do not already have health insurance.

Payroll Tax Implications

As independent contractors, drivers are responsible for paying both the employer and employee portions of payroll taxes, potentially amounting to up to 11.8% of their total income. The current proposal does not offer any offset for this additional cost.

Driver Perspectives and Broader Legal Trends

Luis Ramos, a Lyft driver from Worcester, expressed skepticism about the study’s findings, stating that he earns well above minimum wage and values the flexibility of the work. He believes the ballot question aims to protect these benefits.

The debate extends beyond Massachusetts and California. In March, Uber lost a legal battle in the United Kingdom and was required to reclassify its drivers as employees. Similarly, Dutch courts recently ruled that Uber drivers are employees, not freelancers.