Rideshare ballot showdown poses ‘unusual’ question
Tufts analysis breaks down complex employment fight
MASSACHUSETTS HAS A long history of putting complicated policy questions that lawmakers have been unable to resolve to a direct vote in statewide elections. This fall looks like it will be no exception, as the marquee ballot question that voters may face involves how state employment law should treat drivers for “gig” economy platforms like Uber, Lyft, and DoorDash.
As a new analysis from the Center for State Policy Analysis at Tufts University makes clear, there’s nothing simple about the question that seems destined to appear on the November ballot unless a legislative resolution of the issue is reached in the coming weeks.
The ballot question is being pushed by the big rideshare companies, who want to codify the status of drivers as independent contractors, not employees. The confusion starts with what the Tufts analysis calls the “unusual” fact that the question lacks a standard “keep the status quo” option for voters, as seen with most ballot questions.
While a “yes” vote being pushed by the big driving platform companies would set up a new structure that treats drivers as contractors, while providing a limited suite of benefits, a “no” vote doesn’t lock in their status as standard employees. Instead, it would merely allow an ongoing lawsuit to play out, in which Attorney General Maura Healey is suing Uber and Lyft, arguing their drivers must be treated as employees under current state law.
The analysis says rideshare drivers occupy a hard-to-define gray area somewhere between truly independent contractors and full-fledged employees. They are free to work as many or as few hours as they want, and can even turn down individual jobs while driving. They also are free to work for firms that are in direct competition with each other, something many of them do. At the same time, unlike true independent contractors, they cannot develop a client base of their own, independent of the app service. And they have no freedom to negotiate prices for their services, a hallmark of compensation in the world of independent contractors.
“The result has been a kind of third-way limbo, where gig drivers get the flexibility to set their own schedules but miss out on both the entrepreneurial potential of real independent contractors and the robust protections afforded to employees,” says the analysis.
The report doesn’t land firmly on the hotly debated issue of what rideshare drivers earn, pointing to studies showing drivers still earning more than $20 per hour after accounting for expenses, while saying other studies have suggested some drivers in Massachusetts net less than $5 per hour. The report says tips can boost earnings, and it allows that some drivers may underreport their earnings.
The ballot question, which is being backed by Uber and Lyft, which are expected to spend heavily on the campaign, would provide some benefits to rideshare drivers while cementing their status as independent contractors. Those benefits include a guaranteed minimum wage of $18 per hour. As the CSPA report points out, that certainly differs from the current pay structure, which has no guaranteed minimum, but it only applies when they’re actually driving a customer, not in between jobs, and it doesn’t account for things like employer-paid payroll taxes that they’ll be responsible for.
Drivers would earn sick time, and get 26 cents reimbursement per mile driven – though this is less than half the IRS approved rate of 58.5 cents per mile, and, like the minimum wage rate, only applies for miles driven with customers aboard. Drivers would get partial stipends to help buy health insurance, but only if they average 15 hours or more work per week for a particular company. That threshold, the report says, could prove tricky for drivers, many of whom split their work week among many gig companies. A driver could, the report points out, average 14 hours a week for Uber, 14 hours for Lyft, and 12 for DoorDash. He or she would not be eligible for any help buying health coverage, despite working 40 hours a week for driving platforms.The analysis says passage of the measure could lead some traditional employers to add gig drivers to their business model. Meanwhile, it characterizes a “no” vote as essentially a “bet on the attorney general’s lawsuit.” A victory by the AG, says the report, would boost the compensation package of drivers, while increasing costs to consumers and leading to some contraction of the sector.
Whatever the outcome, the analysis says, determining the status of rideshare drivers won’t settle questions about how to treat those who work in the broader gig economy. “So what’s needed is a model of rules and protections built with the gig economy in mind. And that’s not really what’s on the ballot,” it says.