Lyft announces additional fee for California riders to cover cost of Prop. 22 driver benefits

Starting Wednesday, Lyft will tack on an additional fee to all rides in California in order to cover the costs of new worker benefits required as a result of the passage of Proposition 22 in November.

Lyft is not the first ride-share company to announce such a fee. Uber rolled out a price hike in December, just days after Prop. 22 went into effect, also calling it necessary to pay for the protections required by the measure such as guaranteed earnings, health care subsidy and disability coverage.

At the time, Lyft said it didn’t have plans to accompany the Prop. 22 rollout with a fee to riders, but the company did not rule out the possibility that it would institute something similar at a later late depending on how the benefits impacted the company’s bottom line over the “next few quarters.”

As it turned out, it didn’t take that long for Lyft to decide it would follow Uber’s lead, and its riders will see a flat fee ranging from 30 cents to $1.50 per ride, depending on location.

By comparison, Uber riders in San Francisco can expect to see an additional 30 cents on rides and $2 on food deliveries.

The decision by both to slap a steeper price tag on riders across the state comes after a contentious, costly campaign in which app-based companies spent north of $200 million convincing riders they’d have to pay more to use the ride-hail and food delivery services if Prop. 22 didn’t pass.

Just weeks after 58 percent of voters statewide moved to approve the measure that exempted companies such as Uber, Lyft and DoorDash from Assembly Bill 5, a statewide labor law that requires them to classify workers as employees rather than independent contractors, they surprised those same voters with higher fees that had not been forecast in the widely distributed campaign materials.

Lyft doesn’t see the fees as an about-face, but as a necessary tool to make the new protections offered to drivers viable for the long-term.

“Prop. 22 promised to protect driver independence plus provide them historic new benefits. We are now making these benefits sustainable so that they can continue to best protect drivers now, and in the future,” a Lyft spokesperson said in an email. “And if the measure hadn’t passed, the service would have been drastically impacted for riders.”

Had Prop. 22 not been passed, gig companies would have been required to provide their contractors-turned-employees with more comprehensive labor protections required under state law, such as minimum wage, health care and unemployment insurance.

Ahead of the election, companies backing the measure sold voters on the idea that steep costs associated with these benefits would require them to cut jobs, reduce driver flexibility, decrease availability of service increase costs for passengers just to stay afloat.

Opponents to Prop. 22 have not gone quietly since the November election.

Gig Workers Rising, which helped to organize the opposition, described the decision by Lyft as another “classic corporate bait and switch.”

“It is shameless that these billion dollar corporations have spent millions to deny workers real benefits, and are now offsetting the costs of their nearly nonexistent benefits to riders,” it said in a statement. “These corporations cannot be trusted and we will continue to organize to win workers the dignified working conditions they are owed.”

Additionally, a group of drivers teamed with Service Employees International Union California State Council to file a lawsuit in California Supreme Court Tuesday. They allege Prop. 22 violates the state constitution and are calling for it to be struck down.

cgraf@sfexaminer.com

Carly Graf

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