Lyft launched a new Super PAC to prevent Illinois gig workers from getting employee benefits

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The country’s two largest transportation network companies – Lyft and Uber – and other “gig” driving and delivery businesses are likely going to try and change Illinois law to create a new classification of workers. On top of making transportation in cities worse in many respects, the companies are trying to limit worker benefits and employment protections. 

The two companies, along with other delivery app companies, recently won a referendum in California to, once again, change how state law classifies their workers. Proposition 22 will undo parts of state law, which had already changed this year to ensure ride hail and delivery drivers are “employees” and eligible for  benefits. 

Lyft has started organizing in Illinois, promoting alleged benefits of independent work driving and delivering over working for “someone else.” In one video ad posted on Twitter, someone who says her name is Crystal says she lost her job, took up driving for a ride-hail company, and then realized she didn’t want to work for anyone else and started a business. The TNCs are taking their position to other states soon, too. 

Still from the Twitter ad.
Still from the Twitter ad.

Across the country, TNCs and other gig companies classify the people who work for them as independent contractors (sometimes referred to as or W9 or 1099 workers, named after the tax forms related to their work), depriving them of several rights (like unemployment insurance and sick leave), and other benefits and employment protections. 

Employees – managers and app creators – on the other hand, receive paid time off, pay for sick leave, health insurance, and other forms of compensation. 

Independent contracting is a model for companies to pay for work that’s outside of their normal course of business. From a legal standpoint it means that workers are supposed to be able to decide when and how to do the job they were contracted to do, and set their own fees. People who drive for TNCs cannot set fees or change other policies that affect how they work. 

It’s hard to argue that ride-hail drivers are freelancers, when the only thing they get to control is whether or not they want to work on any given day. Pricing, not knowing where their next passenger is headed, and other rules are all set by the TNC company, not the driver. The same goes for people delivering for the myriad food apps like Grubhub and Postmates, as well as Instacart for groceries.

A California Supreme Court decision ruled against the plaintiff, Dynamex, a delivery company that Streetsblog Chicago editor John Greenfield used to bike for, and set precedent that all workers are presumed to be employees unless their engagement meets each of the criteria on the ABC test:

  1. “The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  2. “The person performs work that is outside the usual course of the hiring entity’s business.
  3. “The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

California state law AB5 codified the ruling and went into effect on January 1, but in last week’s election, California voters approved Proposition 22. Propositions are binding referenda, placed on all California voters’ ballots after petitions attain a minimum number of signatures; Illinois does not have propositions. Prop 22 modifies California law and reverts drivers and deliverers back to independent contractors, adding some stipulated benefits. It also requires a 7/8ths vote to reverse it.

Gig companies, specifically those with drivers, wanted to exempt themselves from AB5, and head off any future class action lawsuit filed by gig workers who say they’re required to work like employees but aren’t getting the associated benefits. Moving from employee to “independent contractor+” means many California workers are going to lose a lot of benefits and protections (this chart summarizes the differences between the situation AB5 established and the new terms under Prop 22).

Prop 22 does add a requirement for minimum pay for time worked, a vehicle maintenance subsidy, and a healthcare subsidy. The new law doesn’t require workers to get paid for time waiting for the next fare, although doing so may incentivize the companies to find ways to reduce that time, which would reduce “deadheading” (driving around with no passengers or cargo), congestion and emissions.

Lyft’s and Uber’s compliance with AB5 was stayed after they sued the state of California. The benefits stipulated in Prop 22 are not as good as those for someone classified as an employee. One study said those “promises in the proposition were worth the equivalent of only $5.64 per hour” (University of Berkeley Labor Center).

Note that Prop 22 specifically refers to drivers and delivery workers and doesn’t change how other app-based workers are classified, like dog walkers, babysitters, furniture assemblers, people who pick up and charge e-scooters at home, and house cleaners. 

There was a fight. The TNCs and other companies spent about $200 million campaigning for “Yes on 22”, while a reported $15 million supported the “No on 22” campaign. Californians cast 15.5 million votes on Prop 22, and “yes, classify them as independent contractors” won by 58 to 42 margin. 

The “Yes” campaign was also buttressed by the companies modifying their apps to repeatedly show messages to drivers and companies’ customers lobbying them to vote yes. 

The fight for rights and benefits of people who get work via apps will likely come to Illinois. A new Super PAC called “Illinoisans for Independent Work” was filed in Illinois on June 22, 2020, by Politicom Law, a law firm based in Sausalito, California. Lyft is the sole donor to the PAC, and has given $1.2 million as of June 30, 2020. The political action committee has reported cash holdings of $534,463 (as of September 30, 2020).

On Twitter I’ve seen three ads from the PAC. Two of them feature gig workers (or actors) generically saying they love being their own boss, and that they never want to work for someone else again. The PAC’s website currently consists solely of stock photos and links to the group’s social media accounts.

I am not aware of any proposed bills in Illinois, either like California’s AB5 to classify many app-based independent contractors as employees, or to preempt such a law. However, Illinois representative Will Guzzardi (39th District) told me “I’m working with a big coalition on language, and we’re hoping to introduce something” to classify app-based workers as employees “next year.”

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November 13, 2020 at 03:23PM

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