Food delivery and ride-sharing giants, or so-called "gig-economy" companies, have joined hands and are pouring in millions of dollars to beat back challenges to their business models, more specifically treating their all important drivers as independent contractors as opposed to full-time employees.
Simply put: they are willing to pay top dollars to lobbyists and third parties so they don't have to cover workers’ compensation and health insurance for their drivers, meal and rest breaks, overtime pay and all related vehicle expenses.
The latest effort by companies including Uber (UBER), Lyft (LYFT), DoorDash (DASH) is called Washington Coalition for Independent Work formed to stop the reclassification of their drivers as employees and maintain status quo as independent contractors in Washington state, as reported by Washington Observer and GeekWire.
In Washington, independent contractors are considered to be self-employed and therefore companies that employ independent contractors owe no employment taxes to the state, according to GeekWire.
The fund has received $2 million in cash from Lyft while both DoorDash and Uber have made in kind contributions in the form of "staff time" worth $39,990.20 and $13,305.56 respectively, according to WCIW's contributions page.
"The committee is committed to preserving all options for achieving policies that protect driver independence and flexibility while advancing driver benefits," Mark Funk, spokesperson for the WCIW told GeekWire.
"Research has consistently shown that drivers overwhelmingly say they want to maintain their independence while having access to key benefits and protections,” Funk added in the GeekWire report.
The gig economy’s battle with independent workers have been unfolding in California, Massachusetts, Seattle and Illinois.
In November 2020, the passage of California's Prop. 22, which classifies app-based drivers as independent contractors instead of employees in the state, benefitted companies like Uber and Lyft.
Uber which will host its investor day on Thursday has seen its revenue from food delivery rise 97% to $2.23 billion in the third quarter of 2021.
"Our base Uber Eats restaurant delivery business was actually profitable in Q3, and we reinvested that profitability into our New Verticals, which will continue," said Uber's Chief Financial Officer Nelson Chai in the third quarter earnings call transcript.
Lyft, meanwhile, has seen its revenue rise 73% to $864.4 million in the quarter ended Sept. 30.
Seattle, on the other hand, proposed rules for ride-hailing and taxi drivers to unionize in 2016 but was reportedly blocked by court. Eventually, the city council in August, 2020 announced a new and higher minimum wage for these drivers.
Seattle mandated that drivers working for Lyft and Uber be paid at least 56 cents per minute, plus compensation for reasonable expenses, and drivers are paid for all of their time, including the time spent circling and waiting for a ride.
Separately, wages of delivery people have risen too.
The real wage winners from the pandemic were local messengers and delivery people, whose average weekly wage more than doubled to $1,437 from $680 during the second quarter of 2021 compared to the same quarter in 2019, according to a Dec. 22 study by Washington-based think tank Pew Research Center.
