In wake of Prop. 22, Albertsons is converting its home delivery to gig work

Michael Hiltzik

Los Angeles Times

Those who warned that California’s anti-labor Proposition 22 would hasten the destruction of good jobs and the rise of gig work have a new data point to cite, courtesy of the Albertsons grocery empire.

As of the end of February, hundreds of home delivery drivers for Vons, Pavilions, Safeway and other stores owned by the Boise, Idaho, chain will no longer be employed by Albertsons.

Their work will be outsourced to the gig delivery company DoorDash, which has made a nationwide deal to take over the service.

Albertsons says the transition is national in scope and has nothing to do with California’s Proposition 22.

But make no mistake. Proposition 22, which passed in November with a $206-million war chest from ride-hailing and delivery companies, made this change almost inevitable in California.

With contributions totaling $52.1 million, DoorDash was the second-largest backer of the Proposition 22 campaign, just behind Uber, which put up $59.2 million.

Proposition 22 makes it virtually impossible for regulators to scrutinize wages and hours and other working conditions at the gig companies. Without a change in federal law, their workers will be barred from organizing a union. They’re not entitled to unemployment insurance or workers compensation.

“This is what we predicted would happen with Proposition 22,” says Steve Smith, spokesman for the California Labor Federation. “We could see it coming 100 miles away.”

Proposition 22 was designed to exempt the ride-hailing and delivery companies from the state’s far-reaching labor law, AB5, which made it harder for them to designate their workers as independent contractors rather than employees, who are entitled to significant workplace benefits.

“This is why we did AB5 and what we warned people about with Prop 22,” says Assemblywoman Lorena Gonzalez (D-San Diego), who sponsored the labor law. “Left to having no rules, corporations whose only concern is their bottom line will replace good middle-class jobs with independent contractors who don’t have benefits like a minimum wage and healthcare that we expect.”

The affected workers make deliveries from local stores to residential customers for a nominal fee, using company-owned refrigerated trucks about the dimensions of a small delivery van. They were informed during December that their jobs would be eliminated as of Feb. 27.

Albertsons says in an emailed statement that it “made the strategic decision to discontinue using our own home delivery fleet across a variety of market areas and states” in early December. It says its aim was to “compete in the growing home delivery market more effectively” by transitioning to “third-party logistics providers who specialize in that service.”

A couple of curious things about that.

Albertsons says that “since the COVID-19 outbreak, our eCommerce business has risen to new heights and has become more strategically important to Albertsons Companies. Our goal is to truly make eCommerce a competitive advantage.”

If that’s truly the case, why would the company give up control of its relationship with its delivery customers to a third party, rather than keeping this “strategically important” service in its own hands?

Delivery customers are likely to be among the best customers, spending the most money and translating their appreciation for Vons and Pavilions service into more patronage.

Instead, Albertsons will cede control of this service to an outside vendor. DoorDash, not Albertsons, will enjoy the cherished relationship with Albertsons customers. Customers will be able to place their orders through DoorDash’s app — they’ll no longer have to order through Albertsons’ website (though they can if they wish).

DoorDash, moreover, isn’t all that experienced in the sort of deliveries it’s assuming for Albertsons. The company says it started working with Albertsons in 2018 and now serves 230 of its supermarkets (out of 2,200 company stores nationwide).

According to the registration statement for its Dec. 9 initial public offering of stock, DoorDash has specialized in delivering restaurant meals, though its ambitions are to grow beyond the segment.

Grocery deliveries may well be different from restaurant orders — they’ll be larger on average, with more perishables. DoorDash drivers use their own cars, but Albertsons drivers use company vehicles, because food preservation standards are different. (DoorDash spokesman Taylor Bennett says the company won’t be acquiring the Albertsons fleet.)

The likeliest explanation is that Albertsons is looking to cut costs. And what better way to do that than by transferring a whole category of worker, along with their right to benefits such as health coverage and retirement, to an outside company.

In Los Angeles County, where about 60 drivers are employed at selected Vons and Pavilions stores — typically serving upscale neighborhoods — their pay ranges from $15 to $20.50 an hour, depending on their longevity with the company, according to Local 770 of the United Food and Commercial Workers.

The local had been trying to unionize those workers, but that effort has ceased, now that the jobs are being eliminated.

In Northern California, drivers for Albertsons-owned Safeway, the dominant supermarket in the region, are members of UFCW Local 5. The roughly 250 drivers had reached a contract agreement in November that is being voted on now, with ballots scheduled to be counted on Friday. The union leadership expects ratification, union official Jim Araby told me.

The proposed contract allows Safeway to outsource deliveries to DoorDash under very narrow conditions, Araby says. Deliveries must be offered to employees first; customers can opt to use DoorDash, but the delivery fee is $9.95, compared to $3.95 for an employee service. Araby says he expects Safeway to fight hard to loosen the restrictions on DoorDash usage in future negotiations.

The contract would give the workers healthcare coverage paid mostly by the company, as well as a 401k with a company match, vacations and sick leave. The wage range is $17-$22.50 an hour.

The unionized drivers aren’t subject to the outsourcing. But that leaves as many as 600 at risk in Southern and Central California, Araby estimates.

Albertsons says it expects to offer other jobs within the company to the affected workers, and severance to those who leave.

Albertsons drivers plainly have had a better deal than DoorDash “dashers,” as the company terms its front-line workers. DoorDash says its drivers earn an average of more than $22 per hour “while on a delivery,” but that covers only time spent after a driver agrees to accept an order. Waiting time isn’t included. And the figure doesn’t include drivers’ expenses, such as fuel, maintenance and insurance.

Put it together, and we’re witnessing the continued deterioration of work in America. California tried to stem the decline with AB5, the law that forbade companies such as Uber and DoorDash to designate the workers essential to their business model as “independent contractors” with almost no benefits or workplace rights.

The companies, fattened with billions of dollars in venture investors’ cash, fought back with Proposition 22. Given their success at persuading California voters that stiffing these workers was a good thing, you can expect similar efforts in states coast-to-coast. Albertsons drivers are cannon fodder in this battle, but many, many more will face the same fate.

This story originally appeared in Los Angeles Times.


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