Published on May 3, 2024

On September 12, 2019, California legislators passed a law that sought to improve the lives of gig workers by changing the status of gig workers from independent contractors to direct employees. 

As such, the law requires companies to pay eligible workers a minimum-wage and provide them with various benefits, including overtime pay, that are not applicable to independent contractors. 

Such improvements were further backed by unemployment insurance and worker’s compensation funds that provided employees with needed relief if anything went wrong. 

Previously, independent contractors who believe they have been wronged would have had to fight for themselves without any support. As employees, they can join with other gig workers to form a union.

This legislation has brought forth improvements for all types of workers misclassified as independent contractors including nail salon technicians, janitors, construction workers, and others alike. The California law followed the footsteps of a similar law in New York City that established a minimum-wage for ride-share drivers.

Seeing a threat to their employment model, companies impacted by these policies quickly sought ways to circumvent these new laws. Uber, one of the main targets of California’s legislation, quickly stated that the law’s provisions would not apply to their drivers. On the other hand, Lyft began restricting the amount of drivers on New York City streets in an attempt to skirt the city’s new minimum-wage law. Lyft believed that they would lose a lot of money paying minimum-wages to drivers without passengers. 

Despite these responses from companies that rely on gig workers, traditional businesses, especially construction companies, have supported these efforts by highlighting how these laws will level the business playing field. After all, these laws require companies to pay their gig workers more, eliminating any competitive edge they gained by keeping labor costs low. 

These improvements would be set back with the start of the COVID-19 pandemic in March 2020. At that time, companies such as Lyft saw significant declines in their employee numbers as workers stayed home to avoid infection. African Americans, unfortunately, faced the brunt of these shutdowns and were disproportionately impacted by these rising unemployment rates. In fact, the unemployment rate for African Americans skyrocketed to 18.9%, higher than the 14.1% seen during the Great Recession in 2008. 

As drivers returned to work, they continued to struggle due to the lack of customers at this time. The situation for gig workers was further exacerbated by the pandemic as workers found themselves with elevated risks of exposure to COVID-19. Gig workers expressed these concerns during a March 28, 2020 strike against Instacart. While workers mainly asked for better job security and pay, they also promised to reject all orders until the company provided workers, especially those with preexisting medical conditions, with hazard pay, paid sick leave, and personal protective equipment. The strike was successful in providing workers with pay raises and getting Instacart to stop pocketing tips.

Fortunately, beginning in 2021, gig workers would begin to see their situation improve. Upon arrival in the White House, the Biden administration helped address some of these issues by passing legislation that would provide $1.9 trillion in relief funds. This money helped raise wages for workers. African Americans would greatly benefit from this law as they saw the highest increase in wages; although, this increase is diminished when considering how severely underpaid they are. 

More recently in 2023, New York City regulators helped Uber drivers obtain pay raises after the Taxi and Limousine Commission mandated gig companies to boost wages to counteract the rising cost of living in the city.

Unfortunately, not all seems well for gig workers as California voters passed Proposition 22 during the 2020 general election. This ballot measure mandates that ride-share drivers in the state are classified as independent contractors rather than employees. Despite a lawsuit, an appeals court upheld the measure’s status as state law. 

These developments are troubling when you consider that the number of gig workers has grown exponentially as traditional workers have flocked to the gig economy during the COVID-19 pandemic. This increase remains steady and doesn’t appear to be slowing. 

by Aaron Lee