Health Care Benefits In Gig Companies’ Ballot Proposal Wouldn’t Apply To Most Of Their Drivers

Oct 30, 2019

The California ballot measure filed this week by gig companies such as Uber and Doordash promises new health care subsidies for app-based drivers in exchange for keeping their workers classified as independent contractors.

But based on the campaign’s own comments at its news conference, very few of their drivers would ever receive those subsidies.

The initiative responds to the 2018 state Supreme Court’s “Dynamex” ruling and a law signed last month that appear to force the gig companies to treat their workers as employees and not independent contractors. After failing to win an exemption for their companies in the Legislature this year, the gig companies vowed to take the question to voters.

Uber, Lyft and Doordash pledged $90 million toward an initiative, which backers submitted to the California Attorney General’s office Tuesday in the first formal step toward qualifying for the November 2020 ballot.

The ballot proposal calls for app-based rideshare and delivery companies to provide subsidies based on the prices in the state’s Affordable Care Act health benefit exchange, Covered California.

There would be two different subsidy levels: Drivers who work at least 15 hours a week would receive 50 percent of the average monthly Bronze plan premium, and those who work at least 25 hours a week would get 100 percent.

The campaign says the 15- and 25-hour thresholds are more generous than the federal requirement that employers only need to offer health benefits to employees who work at least 30 hours.

But according to the campaign’s own statistics, the vast majority of the gig companies’ drivers wouldn’t be eligible to receive any health subsidies at all.

“We’ve seen statistics that more than 80 percent of the rideshare drivers are working less than 20 hours per week,” spokesman Brandon Castillo said during Tuesday's news conference, flanked by drivers in support of the measure. “More than 90 percent of delivery drivers are working less than 10 hours a week.”

If those stats hold and the initiative passes, that means fewer than 20 percent of rideshare drivers will receive the full health care subsidy, and even fewer will get any subsidy at all. Meanwhile, fewer than 10 percent of delivery drivers will receive any subsidy whatsoever.

So, why might the gig companies decide to offer health care benefits to so few of their drivers?

The campaign argues “the vast, vast majority” are working to earn supplemental income.

“This is not an employment model,” Castillo said at Tuesday’s news conference when asked why the ballot measure doesn’t include social security. “We’re trying to pair independent contractor status and the flexibility that’s inherent with it with what we believe — and the drivers behind us believe — is a fair package of economics.”

In addition, the campaign says, drivers can maximize their benefits by working at least 15 hours a week for multiple companies. 

“If the amount collected exceeds their health plan premiums, they keep the extra cash for themselves,” spokeswoman Kathy Fairbanks emailed on Wednesday.

The limited subsidy offer could also be a bargaining tactic.

Besides the health care subsidy, the initiative includes a mileage reimbursement and a “minimum earnings guarantee” set at 120 percent of California’s minimum wage.

But it does not include the right to unionize, which the campaign says should be addressed in the Legislature. It also doesn’t include other benefits afforded to employees under state and federal law such as paid sick leave and social security.

The gig companies have repeatedly said — and Castillo reiterated on Tuesday — that they'd prefer a compromise with labor unions.

A closer look at the health care benefits promised in their initiative suggests another area in which they could be leaving wiggle room for negotiations.

Copyright 2019 Capital Public Radio

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