Ali Damabi is a single dad of two teenage girls living in San Jose. He drives for Uber 10 hours a day, five days a week and makes roughly $120 a day, but it’s not enough, he says.
“I don’t have a choice… there are no jobs,” Damabi says. Often he comes up short for his rent and other expenses at the end of the month.
Damabi’s story is common among Bay Area rideshare drivers, who say Proposition 22—a voter initiative sponsored by Lyft, Uber, DoorDash and other gig work startups—in November did not make things better, despite promises of change.
Now the legislation is having ripple effects across California as the companies behind the law eye other states and countries for similar measures and investors see its potential to grow to other industries.
Prop. 22 was born in response to AB 5, a bill authored by California Assemblywoman Lorena Gonzalez (D-San Diego) that says workers must be classified as employees if their work falls within a company’s usual course of business.
The legislation cut at the heart of the business models that had catapulted Uber and Lyft from scrappy Silicon Valley startups to household names worth billions of dollars. Both firms have floated self-driving cars as their future, but for now minimally-paid contractors remain the drivers of their business—literally and figuratively.
But Rufus Jeffris, senior vice president of communications at regional economic think-tank Bay Area Council, says rideshare companies had little choice but to craft an initiative to negate the effects of AB 5, which was opposed by people in many industries.
“It was a direct shot at California’s innovation economy,” Jeffris says. “It was clearly directed at companies that have worked to try and provide platforms for independent contractors to make a living and to run their own businesses.”
AB 5 was broad, affecting workers in just about every industry, including art, media and logistics—anyone paid on the basis of each completed job, and not considered an official employee. Prop. 22, however, focused on rideshare drivers.
“[AB 5] cast this blanket net over a wide range of independent contractors and didn’t respect and didn’t recognize that many of them have different motivations, different needs, different reasons for operating as independent contractors,” Jeffris says.
The companies behind Prop. 22 put out a wide-ranging and aggressive campaign, together contributing more than $200 million—the most expensive in California’s history. Consumers were sent messages on the apps urging them to vote yes on Prop. 22. Drivers were told to vote for the initiative and polls show roughly 70 percent were in favor of Prop. 22.
Damabi himself voted yes.
“I vote because Uber said everything is going to be okay,” he said. “But nothing changed.”
The initiative promised 1.2 times the state’s minimum wage, and health insurance to workers who drive at least 15 hours a week.
But the proposition’s fine print showed that these benefits are divvied out based on the amount of time that drivers are “engaged,” or actively picking up or dropping off passengers and making deliveries.
That means workers like Damabi, who works 10 hours a day, or 50 hours a week, may only have half that time counted toward qualifying for those benefits.
Ken Jacobs, UC Berkeley Labor Center chair, says confusion is by design. “Many of them thought they were voting to increase gig workers’ pay,” he says. “The $200 million allowed the companies to confuse the issue.”
Damabi says his pay diminished during the coronavirus pandemic, partly because of the reduction in the number of rides and passengers. Uber also takes a 30 percent slice of every fare, he says.
“I have to pay child support, … car payments, insurance, rent,” he explains. “I’m really scared for the future.”
Gig Workers Rising, a California rideshare advocacy group that spent months organizing against Prop. 22 says the lack of employee status harmed drivers during the deadly coronavirus surge this winter.
“In the midst of a devastating pandemic, (the companies’) majority Black, brown and immigrant workers had to choose between working and risking their lives or being unable to afford rent,” the group said in a statement. “Workers are denied quality PPE, sanitation equipment and payment for the additional labor they take on to make sure that they, their families and customers are safe.”
Damabi echoes those concerns. “We don’t have any vacation, we don’t have any health insurance, 401k, nothing,” he says.
Meanwhile, driver jobs at other companies have disappeared following Prop. 22’s passage. At Kroger’s and Albertson’s grocery stores in Southern California, management laid off delivery drivers and outsourced deliveries to DoorDash and other gig companies.
“We are seeing some of the fallout that was anticipated,” Jacobs says. “We are seeing the companies trying to push this same model in other states.”
After Prop. 22’s passage, Uber CEO Dara Khosrowshahi said success in California offered a roadmap for enacting similar legislation elsewhere. Uber and Lyft executives this week were reportedly studying enacting a similar model in Europe.
California Assemblyman Ash Kalra (D-San Jose), who vocally opposed Prop. 22, says Uber and Lyft’s wealth allowed them to carve out special rules for their companies. He’s troubled by the proposition’s stipulation that an amendment to the rules can come only from a seven-eighths vote from the legislature.
“Basically, what they’re saying is we don’t want to be regulated, we don’t want any government oversight,” Kalra says. “They’ve made California one of their colonies… they can extract resources from us without having to follow the same rules as other responsible businesses.”
But not everyone is disappointed by Prop. 22’s passage.
Shawn Carolan, a partner at early Uber investor Menlo Ventures, penned an opinion piece in The Information arguing the initiative benefits both workers and startups.
“We are now telling people they can have flexible jobs without sacrificing benefits,” Carolan wrote, referencing the minimum wage and health insurance promises. “At a time when some of us have lost jobs and need short-term employment… the appeal of a flexible job with the security provided by benefits is easy to understand.”
Carolan says Prop. 22 opens the door to new business models.
“The existence of flexible work arrangements in fields like nursing, executive assistance, tutoring, programming, restaurant work and design suggests that a Prop. 22-inspired approach could make sense there as well,” he wrote in the article.
Despite his disappointment with how little changed with Prop. 22 passed, Damabi said if he had a chance to vote for it again, he would.
“Thank God we’ve got Uber for the drivers and can still pay rent, insurance, car payments,” he says. But he still feels he’d be better off as an employee.
“A lot of drivers aren’t happy,” Damabi says. “For now, it’s so hard for us.”