California gig workers get millions for unpaid vehicle expenses

Between 2022 and 2023, Uber, Lyft, DoorDash, and other app-based ride-hail and delivery companies must reimburse California gig workers millions of dollars for unpaid vehicle expenses.

Proposition 22, the controversial law that classifies gig workers as independent contractors and offers them limited protections and benefits, mandates the back payments. Gig workers get a minimum earnings guarantee, not a minimum wage, for the time they spend “engaged” in a gig, not between rides.

Prop 22 requires vehicle expense reimbursement for low-income drivers. Prop 22 in California gave drivers $0.30 per mile driven while “actively engaged” in 2021. The law also requires rate increases to match inflation. Thus, 2022’s 6.8% inflation increase should have raised those payments to $0.32 per mile, and 2023’s $0.02 increase to $0.34 per mile.

Drivers log thousands of miles annually, so two cents can add up. Industry reports estimate 1.3 million California gig drivers.

(Gig workers’ vehicle mileage deduction rate is half that of business owners and employees, which is $0.655 per mile in 2023, in line with Prop 22’s meager benefits.)

The Los Angeles Times reported that Pablo Gomez, a full-time Uber driver since 2019, noticed that his payments never went above $0.30. We now know that no app-based companies increased driver payments.

Uber, DoorDash, Lyft, and Grubhub told they waited for the California treasurer’s office to publish adjusted rates before adjusting driver reimbursement fees. Prop 22 requires the treasury to calculate and publish the adjusted rate annually, which it failed to do.

After studying Prop 22, Gomez contacted the state treasurer’s office on April 13 but was rejected. He then tweeted at California treasurer Fiona Ma, asking why the rate hadn’t changed. Gig worker and Rideshare Guy senior contributor Sergio Avedian promoted the tweet. The rate adjustment was published on May 10, Ma replied. Uber and DoorDash paid drivers immediately to avoid a class-action lawsuit.

Avedian threatened to sue if the companies did not retroactively pay. He told that he was the lead plaintiff and had the law firm ready.

Lyft has started backpay. Grubhub will retroactively pay drivers, and Instacart didn’t respond.

The state treasury did not respond in time to explain why adjusted vehicle reimbursement rates took 18 months for 2022. Avedian said the treasury was waiting because of Prop 22. A California appeals court overturned the ballot measure’s August 2021 unconstitutionality in March. Industry experts say the treasury should have treated Prop 22 as law, even though the lower court ruled it unconstitutional.

I asked app-based companies if they had requested an updated rate from the department in the past year and a half. Uber said it reached out once in January 2022, and DoorDash said it had repeatedly requested updated mileage rates “dating back to January 2022.” Lyft also requested information from the treasury, but did not say when or how often. I also asked the companies if they had informed gig workers of the treasury’s delay to assure them of payment. None had.

As expected. Even as they find new and innovative ways to get workers to work for low wages, app-based gig companies have yet to achieve true profitability. Algorithmic wage discrimination, tip hiding, and tip stealing. An Uber spokesperson told me that “it’s up to the treasurer’s office to mandate that rate.”

It’s not “better to ask for forgiveness than permission,” but it’s similar. Better to hope no one notices than pay workers properly.

Not all drivers get backpay. Many ride-hail drivers exceed the minimum rate, so they don’t get vehicle reimbursement fees. However, Uber Eats, DoorDash, and other food delivery drivers rely more on tips, so they should see payments in their accounts.

Avedian, a part-time driver, received $85 from Uber. DoorDash gave his part-time wife over $200.

What about full-time drivers?

“Full-time DoorDash, Uber Eats, GrubHub drivers drive 5,000 miles a month. “No doubt,” he said. “They’ll owe several hundred million. It’ll be expensive.”

Some back-of-the-envelope math suggests that companies could pay millions to drivers.

Amazon Flex, Shipt, and Spark also hire gig workers.

No transparency
Avedian has screenshotted his, his wife’s, and his podcast listeners’ backpay reimbursements. He hates the companies’ lack of transparency in calculating these amounts. No company gives drivers mileage breakdowns.

Only Uber specifies that the payment is from California Prop 22 benefits. DoorDash drivers get random payments.

“Everybody’s getting money, and these drivers are like, ‘Oh, I got $400. I got 800 bucks, but they don’t know what it’s for.”

Avedian tracks his net earnings, miles driven, trips, and Prop 22 adjustments in a spreadsheet. Uber underpaid him by $3, according to his calculations.

Avedian called this gig economy nickel-and-diming. Three million people equals three million dollars. I’m not complaining about money, but why not be transparent?

Colorado’s gig worker transparency bill was vetoed in May.

“Millions of people are driving for these companies, and they’re getting ripped off because of a lack of transparency,” said Avedian. “You must have something to hide, otherwise you wouldn’t fear transparency.”