Consumers Will Pay Increased Fees To Offset California Gig Worker Benefits

Gig workers for Uber and others in California will start getting benefits, but consumers will pay the price in additional fees, the Financial Times (FT) reported Monday (Dec. 14).

Proposition 22, upheld by California voters, said Uber and others in the gig economy could keep classifying their workers as independent contractors, but benefits like healthcare and accident insurance would have to be provided.

To cover the cost of the new benefits, Uber said that starting Monday, it would hit rideshare consumers with a maximum of $1.50 per ride and up to $2 on meal deliveries, FT reported.

DoorDash, Lyft and Instacart also said they would increase service fees to offset benefits, but the amount of the surcharge was not announced, according to FT. In the campaigns for Proposition 22, the rideshare and delivery companies did not mention plans for a direct levy, nor was it part of the ballot verbiage or campaign literature.

“Neither riders nor drivers should be shouldering the costs of these meager benefits on behalf of billion-dollar corporations,” Shona Clarkson, an organizer with Gig Workers Rising, told FT. “In reality, the benefits promised by Prop 22 offer workers no real protections in the midst of this deadly pandemic.”

The plan also guarantees gig workers minimum earnings of 120 percent of the minimum wage, which amounts to $15.60 per hour next year, FT reported.

Analysts have forecasted that a similar measure implemented across the country could cost Uber somewhere in the range annually of $400 million, according to FT.

In other news, on its first day of trading, DoorDash shares saw an intraday price of $182, up from the initial public offering of $102. This was above a range that had been reported to be between $90 and $95 and put DoorDash’s value at about twice the level of Uber on a price to sales basis.