BLOOMBERG LAW – It’s tough for Raul Rivera to take a day off as a driver for Uber Technologies Inc. and Lyft, Inc. and still make a living. After 10 to 12 hours on the road in New York City and New Jersey, he can draw about $200 to $300 per shift, but those margins are closing with soaring gas prices, on top of the other expenses drivers shoulder.
Along with rentals, toll fees, commissions pulled from the companies, and gas—about $4.35 a gallon in New York City as of Monday afternoon, or roughly $280 a week for Rivera—he said he saves only $600 by the end of the week. He recently had to stop working briefly after he couldn’t keep up with the $400 weekly payments on a car he was renting.
“I liked the idea of being flexible and being your own boss,” Rivera said of his decision to quit an office job six years ago and start driving for the rideshare giants as an independent contractor. “It doesn’t feel like that anymore. These companies squeeze the driver to get every cent. Now this surge in gas is really hurting people.”
Rivera and other drivers in New York City plan to caravan on Tuesday from Brooklyn to Uber’s headquarters in Manhattan to demand better pay and other benefits, including bolstering health and safety and transparency in driver deactivation. Surging gas prices are just the tip of the iceberg for app-based drivers, many of whom say in persistent litigation that they should be classified as employees, instead of independent contractors, as defined by the companies.
The protest organized by a coalition of worker advocacy groups mirrors other efforts around the country—including in California, Massachusetts, and Illinois—that have seen drivers push for more benefits.
Still, business expenses remain the most prominent economic harm that drivers are suffering, said Boston-based attorney Shannon Liss-Riordan, who has represented drivers in class actions alleging that gig companies misclassify drivers as contractors, rather than employees. She said those business expenses, including the cost of gas and owning the vehicle, represent the largest percentage of what’s being recovered in litigation settlements with the gig companies.
For years, litigation involving these companies has involved not just minimum wage and overtime issues, but mileage reimbursement and business expenses. This is key to the debate over whether gig drivers should be considered employees or contractors.
“The drivers have to absorb the cost of running the business. With gas prices spiking, it has made it even more pressing on the drivers, and what it means to bear the cost,” Liss-Riordan said. “If they were employees the company would have to pay this cost.”
‘Listen to Drivers’
The average price of a gallon of gas in New York has risen to $4.35 as of Monday, compared to $2.90 a year prior, according to AAA. Prices around the country are spiking from just under $4 to as much as $6 a gallon in California. Meanwhile, California Gov. Gavin Newsom (D) is proposing $400 in relief to every household with a registered vehicle as gas prices go up. The maximum benefit is $800 for two vehicles.
Lyft and Uber responded to rising gas prices by adding surcharges of between 45 cents to 55 cents a ride, and in some places they say pay has increased.
“Our platform only works if it works for drivers, so we’ll continue to monitor gas prices and listen to drivers over the coming weeks,“ said Uber spokeswoman Freddi Goldstein.
New York City also has unique rules for taxi and rideshare drivers, and the City Council passed minimum wage protections for the app-based workers, as well as other benefits.
Uber increased its pay rate for drivers 5.3% at the start of March, bringing the minimum wage up to $29.78 in New York City and helping with increasing fuel prices, Goldstein said, adding that the company also recently launched a new feature that helps drivers save up to 25 cents per gallon through cash back.
Lyft announced a fuel surcharge, but it doesn’t apply to drivers in New York City. They can take advantage, however, of a 4% to 5% cash back on gas through June 30. The company said that independent contractors can access myriad tax deductions each year, including costs associated with vehicle depreciation, lease payments, or cell phone plans.
Lyft also pointed to an internal analysis showing that as of early March, drivers nationally are spending on average 75 cents more on gas per hour than a year ago. The company said factoring in the increased fuel expenditure, drivers nationally are still earning more per hour on average than last year, and drivers aren’t leaving the platform.
Still, drivers say they’re having a hard time keeping up.
“The biggest issue is the rising gas prices to fuel the tank, and the income we’re getting is still the same,” said Naomi Ogutu, president of NYC Rideshare Club, a worker advocacy group, who also is a rideshare driver. “All the expenses are from the driver for the vehicle, insurance, the gas, and the maintenance.”
Volatility of Expenses
Giving rideshare drivers employee status gives them access to unemployment insurance coverage; paid family leave laws in California, New York, and a handful of other states; coverage under workers’ compensation laws; and some elemental rights under wage and race discrimination laws, said James Parrott, director of economic and fiscal policies at the New School Center for New York City Affairs.
“They’re not compensating them fairly, and gas prices are a good occasion to see that the business model doesn’t really take into account the volatility of expenses the drivers may occur,” Parrott said.
The NYC Tax and Limo Commission in the past has implemented surcharges to cover high gas prices and could consider doing it again now, he said.
“The core issue here for drivers is the companies have never adequately compensated drivers for their time and expenses,” Parrott said. And “it’s partly because the companies intentionally mislead drivers as to how to properly account for all their expenses and working time that people have taken on driving as their primary form of income generation.”