California Uber and Lyft drivers can unionize under new law, but will that lead to better wages?

Some Richmond Uber and Lyft drivers are cautiously optimistic about a new California law granting them union rights, but many question if it will reverse their deteriorating earnings in an industry where the average driver makes less than minimum wage after accounting for vehicle expenses.

Assembly Bill 1340, signed by Gov. Gavin Newsom in October, allows app-based ride-hail drivers to form unions and collectively bargain with Uber and Lyft for the first time.  Assemblymembers Buffy Wicks, who represents West Contra Costa County, and Marc Berman, who represents San Francisco, sponsored the bill.

“It’s a good idea, and that’s what we need because we have nothing to lose,” Uber driver Nasr Ahmed said in support of the bill.

The legislation takes effect on Jan. 1, giving drivers like Ahmed, a Richmond resident who works 10 to 12 hours a day, hope for better conditions after years of declining pay.

“I was doing really good in the beginning,” Ahmed said. “We used to get bonuses. They used to take care of us. Now we almost work for free.”

The $25 per hour Ahmed averages after tips doesn’t sound too bad, but the figure drops dramatically after car-related expenses such as gas, EV charging, daily wear and insurance. A full-time driver since 2016, he epitomizes the financial strain and uncertainty faced by Richmond’s gig workers. He moved his wife and three children from Yemen to Richmond last year, spending his entire savings and $30,000 from a 2021 accident settlement. Now he struggles to make ends meet while working six to seven days per week.

Earning below minimum wage

Ahmed’s experience reflects broader trends highlighted in a 2024 study by the UC Berkeley Labor Center, which analyzed earnings data from 1,088 drivers across five major metropolitan areas, including the San Francisco Bay Area.

The study found that the median hourly employee-equivalent pay for California passenger drivers, which accounts for payroll taxes and mandated benefits that independent contractors must have, equaled $5.97 per hour without tips and $7.63 with tips. This falls far below California’s minimum wage, which ranged from $14 to $15 per hour in early 2022 when the data was collected, and is now at $16.50 an hour. 

The study also revealed that drivers spend roughly 30% of their working time waiting between rides, a period during which they do not receive compensation.

Hector Castellanos, who lives in Antioch and has driven full time for 10 years, works 70 to 72 hours per week and struggles to make ends meet. 

“I was fighting for this for a long time,” Castellanos said of the new law. “Working 12 hours, I make between $180 and $200 per day.” But that doesn’t count expenses, including $30 daily to charge his Tesla.

Glimmer of hope

Drivers say conditions worsened after Proposition 22 passed in November 2020. Funded by $200 million from gig companies, it promised 120% of minimum wage for “engaged time” plus health care benefits. But the health care stipend has proven largely inaccessible. Qualification requires 15 hours weekly of “engaged time” when passengers are in the vehicle, not total app time.

“Most drivers just use Medi-Cal because we can’t afford insurance,” Castellanos said.

“Some drivers have 96 hours online and only 20 or 25 active hours,” said Mohammad Alnagar, who has driven for Uber since 2017.

For those who do qualify, the stipend often doesn’t cover insurance costs.

Alnagar immigrated to the United States from Yemen in 2015 with his wife and two children, and currently lives in Richmond. After driving full time, he now works part time as both a driver and an electrician, having watched Uber driver earnings plummet. 

“Before they won Prop 22, they promised to increase the price,” Alnagar said. “But starting in November 2021, they started to decrease the rate. That’s why we need a union, to protect drivers and give them support.”

He provided a concrete example: In 2019, a ride from downtown San Francisco to the airport would earn him between $30 and $45. Now, he said, his take can be between $10 and $15.

An Uber spokesperson said the app provides drivers with information about the trip’s destination and the amount they’ll earn, giving drivers the choice to decide what is best for them. He did not elaborate on how declining rides can negatively impact the ride requests a driver receives.

Lyft did not respond to multiple requests for comment.

AB 1340 passed with the support of Uber and Lyft after lawmakers agreed to introduce Senate Bill 371, which lowered the underinsured motorist coverage requirement for the two companies from $1 million to $60,000 per person. Critics say the trade-off shifts financial risk from Uber and Lyft to injured parties.

Whether the new law will deliver meaningful improvements for drivers remains uncertain. For Ahmed, whose immediate concerns center on supporting his family, the promise of collective bargaining offers a glimmer of hope.

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