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Postmates — Like Uber And Lyft — Is Working With California Labor Groups To Keep Independent Contractors. Critics Aren’t Sold.

AP Photo/Charles Rex Arbogast

This Tuesday, Feb. 20, 2018, photo shows the Postmates app on an iPhone in Chicago.

AP Photo/Charles Rex Arbogast

In a remarkable shift from their historically contentious relationship with organized labor, gig companies are negotiating with unions to potentially extend benefits to their hundreds of thousands of California workers — as long as the companies can continue to classify them as contractors.

Postmates, an app-based food and grocery delivery platform, began meeting with labor groups more than a year ago, Vice President of Global Public Policy Vikrum Aiyer told CapRadio — the first time Postmates has spoken publicly about its intentions. Earlier this week, ride-hailing companies Uber and Lyft published an op-ed announcing a similar effort.

They’re all hoping to influence a pending bill at the state Capitol that would convert their workers to employees.

The legislation would codify a California Supreme Court ruling last year, known as the Dynamex decision, that made it harder for many companies — including Uber, Lyft and Postmates — to classify workers as independent contractors.

Proponents say the bill would guarantee essential benefits for workers, like health care coverage and unemployment insurance. Gig companies and business groups argue it would eliminate worker flexibility, which is critical to their business model. A study last year found more than 10% of Californians participate in the gig economy.

Aiyer says the talks between Postmates and labor groups have focused on three goals: establishing a standard base wage, contributing to a benefits fund and giving contractors more input on workplace conditions. According to Aiyer, the company is considering a proposal to create a new classification of worker — something between a traditional employee and an independent contractor.

“The goal…is to contemplate a new class of work,” he said. “One that is able to honor the flexibility and the short-term nature of people on our platform, but also one that also stacks” worker protections and benefits on top of earnings.

In an interview with CapRadio, Asm. Lorena Gonzalez (D-San Diego), who introduced Assembly Bill 5 to codify the Dynamex decision, signaled there may be a narrow possibility of reaching an agreement with gig companies. But so far, she says, their proposals fall short.

“I have yet to hear from these companies anything that would truly provide taxpayers protection from subsidizing these companies or workers’ empowerment on the job,” Gonzalez said, arguing that the state is currently forced to subsidize health care and other benefits that ought to be provided by employers.

For years, gig companies staved off efforts to unionize workers by lobbying city councils, state legislatures and federal regulators to classify workers as independent contractors instead of employees. Independent contractors do not have the same collective bargaining rights as employees.

But gig companies have suffered some notable defeats in recent years. In 2015, Seattle passed an ordinance allowing drivers for ride-hailing apps to unionize, despite strong opposition from Lyft and Uber. With California’s Dynamex decision last year, and Gonzalez’s bill passing the state Assembly last month, companies now appear to be searching more aggressively for a compromise.

Aiyer shared some insight into the potential deal points between Postmates and labor groups but said the negotiations remain fluid. The company’s proposed pay standard would set a minimum wage for workers on the platform — something guaranteed to employees under state law, but not independent contractors. Postmates would also pay into a proposed benefits funds, which would go toward things like health care coverage, accident insurance and long-term savings.

Defining “worker voice,” according to Aiyer, has been the most challenging aspect of the negotiations with labor groups. Aiyer says Postmates wants to give workers a platform to share input on workplace standards and how the company functions. But it’s unclear if that means full collective bargaining—a hallmark of unionization.

Steve Smith, spokesperson for the California Labor Federation, has not been directly involved in the negotiations. But he says achieving full employee status for these workers remains the goal of labor groups, and the two sides appear to be “very far apart” in their negotiations.

Gonzalez didn’t shut the door completely on an agreement with gig companies that would spare them from the requirements under her bill.

“I can imagine a world where we created a new standard [that] preserved their rights as an independent contractor, and all of that would be bargained for in an enforceable contract with a union,” she said.

But Gonzalez added that this new standard would require “a new state bureaucracy” and more concessions from gig companies. The benefits fund, for example, would have to approach 30 percent of a worker’s salary for her to be on board. She adds that bona fide collective bargaining would be key to any agreement with gig companies.

“Anything that’s not collective bargaining is collective begging,” she said.

Gonzalez says gig company lobbyists have discussed aspects of their proposals with her.

Aiyer says Postmates and labor would prioritize working with Gonzalez through her existing bill  if they reach an agreement. But he did not rule out the possibility of a separate piece of legislation carried by another lawmaker.

Aiyer declined to state which unions Postmates has been working with or when a deal may be reached.

Editor's note: We've updated the estimated number of gig-company workers in California who could be affected by these negotiations after receiving new information.

Scott Rodd

State Government Reporter

Scott Rodd previously covered government and legal affairs for the Sacramento Business Journal. Prior to the Business Journal, Scott worked as a freelance reporter in Los Angeles and Washington, D.C.  Read Full Bio 

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