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Lyft built a brand on being the nice gig work app clad in pink. Its drivers paint a different picture.

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SAN FRANCISCO — Ray Givaudan has driven for Lyft, Uber and even briefly Instacart to supplement his retirement over the last few years.

At first, the 55-year-old was loyal to Lyft. But then Uber introduced a long pickup fee to pay more if he goes out of his way to pick up a passenger. In addition, he could see what a customer paid for a trip, helping him understand whether he was getting a fair share. Instacart provided more opportunities for work during the pandemic.

“The first couple of years with Lyft, you seemed to be a decent company and transparent,” the Roanoke-based driver recently wrote in a letter to Lyft co-founders Logan Green and John Zimmer. “The last couple of years, not so much.” He cited the disappearance of surge-priced pay, lagging driver rewards, and the removal of helpful features such as a live phone help line for drivers.

Lyft has spent years trying to win over drivers and passengers with fun branding, an emphasis on social justice and charitable causes, and in-app tipping. The perks gave it a reputational edge in a marketplace where rival Uber was criticized for its treatment of drivers and corporate scandals, and where food and grocery delivery was a budding and uncertain sector of the gig economy, often with lower pay.

But the pandemic and related labor shortage have dramatically shifted that landscape over the last couple years. At Lyft, which remained focused on ridesharing, ridership was down by as much as 75% last year.

Drivers aren’t bound to one company, and can easily switch between apps. In the interim, many drivers chose to work for rival food delivery services, which experienced a boom in deliveries and offered additional transparency into earnings, along with such advantages as negating the risk of interacting with passengers. Companies such as DoorDash and Shipt added driver incentives, such as cash bonuses last winter in an effort to meet surging demand.

And while Uber experienced similar ridership declines to Lyft at the height of the pandemic, it doubled down with its Eats food delivery business.

Now demand for rides is returning, fueling a driver shortage. And as other companies have offered steadier work and more transparency, some drivers say they are frustrated with Lyft.

Lyft has fallen behind the gig work market in several areas, more than a half-dozen drivers, analysts and researchers say. Lyft’s take-home pay also tends to be lower than that of its biggest rival, Uber, owing to a combination of stiff competition and algorithms less sensitive to surges in demand.

“I think Lyft is floundering,” Givaudan said.

Lyft spokeswoman Julie Wood said the company places a priority on the driver experience. She said quoted wait times for riders on Lyft were lower than on Uber in 24 of the 30 largest markets over a recent period, according to company data points and visualizations that were shared with the Washington Post. That meant there was little indication drivers were choosing Uber over Lyft. And drivers in some cities were earning more than $35 an hour, well beyond what they would typically collect, the company said recently.

But the lack of transparency can lead some drivers to feel they’re not receiving a fair share. One driver shared screenshots with the Post showing that a passenger paid more than $43 for a trip from Northwest Washington to Reagan National Airport, but he took home just more than $16. The driver, a music instructor who spoke on the condition of anonymity because he did not want his students to know he was driving for Lyft, had to ask the passenger to see how much the person paid for the ride.

Wood said many of the features mentioned in this article are available on the Lyft app, either through pilot programs or unlockable driver rewards. Lyft has a long pickup bonus in six markets, for example. And drivers can earn the ability to see passenger destinations through their driver rewards, she said. Lyft is also experimenting with upfront pay in two markets, allowing drivers to see the earnings and trip details on the screen before accepting a ride.

Uber spokesman Matthew Wing acknowledged that the company has had to make improvements in the face of outside pressure and calls for change.

“Being the market leader comes with more scrutiny, as it should,” Wing said.

Instacart spokeswoman Natalia Montalvo said the firm met a March 2020 goal to add 300,000 shoppers, and there are stable numbers of shoppers across North America.

DoorDash declined to comment. Amazon and Shipt did not immediately return requests for comment. (Amazon founder Jeff Bezos owns the Washington Post.)

Drivers say they’ve watched a shift at Lyft from its beginnings, when it was the first ridesharing app to implement a default tipping feature and has allowed customers to tip since its debut nearly a decade ago. Lyft also was first to let drivers pocket their earnings right away through a feature called “Express Pay,” with instant deposits for a transfer fee, it said.

In California, estimated to be the largest U.S. market for gig work with more than one million workers, a 2019 law that mandated companies treat gig workers as employees helped drive some changes in driver treatment. Some companies — particularly Uber — added a number of perks for drivers, including more control over fares and transparency into earnings even before a driver took on a ride. The initiatives tried to prove drivers were independent.

Lyft didn’t adopt new features, as it pursued a different legal strategy. Analysts said that company likely benefited from the fact that Uber drivers were turning down trips, and the changes Uber made to its app were costly from a research, development and operational standpoint.

Still, some of Uber’s changes were short-lived. It uncoupled driver earnings from passenger fares earlier this year as it no longer needed to prove drivers were independent operators in a supply-and-demand-based marketplace, sparking outrage among some drivers.

That led to cases where passengers found themselves paying astronomical fares while drivers collected meager bonuses. Meanwhile, some riders trying to take a Lyft were shown reasonable prices, but there weren’t drivers to accept the fares.

Ridesharing apps are highly dependent on their matching algorithms to pair customers with nearby drivers for a reasonable fare, at a rate that ensures gig workers are willing to make the trip.

Lyft’s algorithm is less sensitive, analysts said, meaning prices don’t spike as easily and driver bonuses can be lower and less frequent. Wood pointed to the wait time data as evidence that there is an ample supply of drivers, however.

But the differing algorithms can lead to headaches. For example, when customers pouring from an event are all demanding rides at once, they might find the price of an Uber has spiked while Lyft is comparably cheaper. In that case, Uber’s algorithm has detected a surge in demand and raises the price accordingly so customers can secure a ride with the limited supply of drivers.

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Economy

More opportunities under 12th Malaysia Plan, gig economy to benefit

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KUALA LUMPUR: Malaysia, like many other countries, has not been spared from the effects of the COVID-19 pandemic. This is evidenced by the rising unemployment rate, which shot up to 4.5 per cent in 2020 from 3.3 per cent in 2019.

In its Graduates Statistics 2020 report, the Department of Statistics Malaysia also showed that the number of unemployed graduates jumped to 202,400 in 2020 against 165,200 in 2019.

Fortunately, the gig economy has emerged with a new opportunity, particularly for fresh graduates, to compete for jobs available not only locally but also through international platforms.

Under the recently unveiled 12th Malaysia Plan 2021-2025 (12MP), the government has assured that it will create an ecosystem that supports the development of the gig economy to encourage the people to take full advantage of this opportunity.

To improve the situation, Malaysia University of Science and Technology (MUST) professor Geoffrey Williams opined that several initiatives could be done in the 12MP, including to promote new forms of employment, new innovative companies, start-ups for graduates and a whole fresh new feel to employment post-COVID-19 crisis.

“This means liberalising markets; promoting entrepreneurs; freeing up opportunities; making life simpler for micro, small and medium enterprises; and promoting decent, well-paid jobs with good work-life balance and long-term flexibility and security in a whole new future of work,” he told Bernama when contacted recently.

Apart from that, he said, social pensions and social insurance with help from the government and companies should be added to safeguard the welfare of gig workers.

Asked what should the government focus on while creating the ecosystem as mentioned in the 12MP, Williams noted that it is important to not allow unemployment and underemployment to become the norm.

Taking Europe and the United States in the 1980s for example, he said unemployment had become a structural problem for decades.

“We must avoid this, as we can see it is not so much that graduates lack skills or a determination to work, it is more that there are too few good jobs in existing firms,” he said.

While the importance of the gig economy has been emphasised in the 12MP, one of the major concerns is that the gig economy in Malaysia is often linked to “lowly jobs” such as delivery riders and e-hailing drivers who constantly work in an environment with lack of proper welfare protection.

To prevent gig workers, especially fresh graduates, from falling into such a “low-value-added-job trap”, Williams is of the view that the government should provide a good, transparent and supportive environment with less interference.

He said laws should also be reviewed to ensure gig workers are protected and have rights, particularly to be paid and paid properly.

“Gig economy jobs can be viable, empowering and flexible income options, so the right legal framework and due process options must be there,” he said.

According to Williams, there could also be an ombudsman scheme to help make enforcement easier, even with online claims.

“We need to stop unscrupulous firms using gig-economy workers to avoid paying minimum wages and benefits, and we must also stop exclusive zero-hour contracts which act as a constraint on trade for gig economy workers.

“People should be free to work for multiple companies so they can get gigs from whoever has them available,” he said, adding that laws should also be made easier for gig workers to register as enterprises and create enforceable contracts, rather than just template agreements with mega-firms.

Encouraging high-value gig jobs

While acknowledging that gig economy jobs are often linked to low-skilled, low-income work such as delivery riders and e-hailing drivers, Williams said the people should not limit their ideas to these.

He said nowadays, freelance professionals often set up micro-enterprises using online platforms to provide services in areas such as graphic design and branding, digital marketing and e-commerce, freelance writing and content creation, virtual assistant and professional support, online training and coaching, as well as web development and coding.

“Even professionals like lawyers and accountants are offering services using online platforms now, and it is becoming quite respectable and well-paid,” he said.

To encourage high-value gig jobs in the country, the Malaysia Digital Economy Corporation (MDEC) piloted the eRezeki High Income Apprentice programme in 2016 to explore the opportunities in the digital freelancing segment.

The six-month pilot programme, which ended in December 2016, trained and mentored 658 participants who successfully generated a cumulative income of RM2.9 million.

Among the jobs and work performed by digital freelancers are programming, graphic design, data analytic, content writing, proofreading, translation, and transcription. These jobs are normally high-value in nature and therefore requires relevant qualifications.

The pilot project was later scaled up as the Global Online Workforce (GLOW) programme in 2018, with the aim to empower local talents, especially the unemployed and underemployed graduates, to become digital freelancers by leveraging their knowledge, skills, and abilities to secure and perform jobs from the global market.

This effort will be continued in the 12MP to train the local talents on how to become digital freelancers by providing relevant opportunities that could improve the capabilities and the quality of Malaysian digital freelancers in the global market.

Meanwhile, upskilling and reskilling training programmes will be made available to improve the career path of the gig workers in the location-based platforms. – Bernama



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Prop. 22 governing gig workers found unconstitutional, but in effect

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By Christopher B. Dolan and Matt Gramly

This week’s question comes from Josh D. from Marin County. With our current 24-hour news cycle, it’s hard to keep up with all the important issues in our daily lives. It seems like Proposition 22 was an initiative constantly discussed five years ago that went away. Did Proposition 22 ever take effect?

Dear Josh: Thanks for reaching out. Many people may have forgotten about Prop. 22. On Aug. 20, Alameda County Superior Court Judge Frank Roesch ruled Prop. 22 to be unconstitutional.

Recall that Prop. 22, a ballot initiative passed by California voters in 2019, permitted many gig economy companies such as Uber, Lyft and DoorDash to classify their drivers as independent contractors instead of employees. These companies and others poured over $200 million into the campaign to pass Prop. 22.

The benefit to the companies in classifying drivers as contractors rather than employees is that it allows them to evade almost every regulation in place governing how companies treat their employees, as well as most costs associated with having employees. These include health insurance benefits, minimum wage laws, safety regulations, workers compensation insurance, etc.

Relating specifically to drivers, the companies would be excused from paying employees mileage and reimbursing them for the cost of gasoline and vehicle maintenance. The cost savings to these companies would have been in the billions of dollars annually. The downside, of course, is that drivers would have to pay for their own health insurance coverage and would have almost none of the benefits that most full-time employees receive. The cost savings to the companies gets shifted to the drivers, as expenses to them.

Prop. 22 was far reaching and expansive in its language and in the sheer number of components it included. For instance, it also contained language that would prohibit drivers from forming a union. For that reason, as well, the judge wrote, Prop. 22 violated the constitutional requirement that ballot initiatives be limited to a single subject.

Relative to the point prohibiting unionization, Roesch wrote that it “appears to only protect the economic interests of the network companies in having a divided, un-unionized workforce, which is not a stated legal goal of the legislation.”

Roesch is saying that the drafters of Prop. 22 overreached both on process and in substance.

Prop. 22 was created as a ballot initiative by gig-worker companies as a direct response to Assembly Bill 5, a law passed by the California Legislature and signed by Gov. Gavin Newsom. AB 5 would have required these companies to classify drivers as employees, thus granting them benefits including minimum wage protections, workers compensation insurance, overtime pay, etc.

Much of the basis for Roesch’s ruling in finding Prop. 22 unconstitutional rests largely on the idea that in California, in accordance its Constitution, only the Legislature can, for example, regulate compensation for workers’ injuries. The goal cannot be accomplished through a ballot initiative process because the Constitution grants that right exclusively to the Legislature.

In essence, Roesch said that Prop. 22 took that power away from the Legislature, thereby violating the Constitution. In his ruling, Roesch also said California voters have the power to make such a change to the Constitution, but, “If the people wish to use their (ballot) initiative power to restrict or qualify a plenary and unlimited power granted to the Legislature, they must do so by (a ballot) initiative constitutional amendment, not by (a ballot) initiative statute.”

Voters would have to amend the Constitution first, amending it to permit, in effect, the passage of legislation through ballot initiatives. Neither the voters nor the Legislature have thus far amended the Constitution in such a manner. The state Legislature followed the Constitution in properly passing AB 5 through the legislative process as dictated by the Constitution. Prop. 22’s authors and backers did not, thereby violating the Constitution.

Ride-hail giant Uber has filed an appeal and requested a stay on Roesch’s ruling until the appeal is complete. While it pending, Roesch’s order does not yet take effect. For now, at least, these companies do not have to classify drivers as employees and can continue to use them as independent contractors, saving billions of dollars in costs, to the detriment of their drivers.

Christopher B. Dolan is the owner of Dolan Law Firm, PC. Matt Gramly is a senior litigation attorney in our San Francisco office. We serve clients throughout the Bay Area and California from offices in San Francisco, Oakland and Los Angeles. Email questions for future articles to: help@dolanlawfirm.com. Each situation is different, and this column does not constitute legal advice. We recommend that you consult with an experienced trial attorney to fully understand your rights.

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