On the day of a nationwide ride-share drivers strike demanding higher pay and better working conditions, Rep. Deb Haaland (D-N.M.) announced plans to introduce a bill putting Uber, Lyft and other ride-share companies on the hook for their drivers’ payroll taxes.
Currently, Uber and Lyft treat their drivers as independent contractors, forcing the workers to pay 15.3% payroll taxes for Social Security and Medicare all on their own. (Traditional company employees split the cost with their employers.)
Haaland’s bill would shift the burden for paying the payroll tax entirely onto the companies that employ the drivers.
“This is about fairness. Uber and other billion-dollar, multinational corporations are not paying their fair share,” Haaland, a vice chair on the Majority Leader Task Force on Poverty and Opportunity, said in a statement. “Instead, they are passing the buck to their workers, increasing financial insecurity for folks who are working hard to put food on the table and keep a roof over their heads.”
“The gig is up,” she added.
The legislation, which is backed by Social Security Works, Credo Action and the Alliance for Retired Americans, is designed to encourage ride-share companies to treat drivers as ordinary employees with full protections and benefits. Doing so would save the companies money on payroll tax contributions.
If the ride-share companies chose to continue to classify drivers as independent contractors and pay out the full portion of drivers’ payroll taxes, they would still be under no obligation to guarantee hourly pay above minimum wage.
“This will strengthen Social Security, protect workers’ retirement and disability protections, while providing a strong deterrent against misclassifying workers,” Haaland said.
The bill would likely improve the finances of Social Security and the part of Medicare funded through payroll taxes. Some experts believe that because many ride-share drivers are able to declare a net loss on their taxes, billions of dollars in ride-share revenue end up escaping payroll taxation.
The ride-share drivers strike on Wednesday reflects growing frustration among drivers that they bear much of the risk involved in making the companies money without sharing in the corporations’ considerable value.
The strike is timed to precede Uber’s initial public offering, or first stock sale, later this week. The company is expected to issue stock worth as much as $91 billion.
In advance of the IPO, Uber offered $300 million in one-time bonuses to over 1.1 million veteran drivers.
There is conflicting research about just how much ride-share drivers earn from their work. A Stanford University study released in March found that Uber drivers earned $21 an hour on average.
But other research that seeks to account for the taxes, vehicle-related expenses and financial risk borne by drivers has produced lower estimates. A February study conducted by the Massachusetts Institute of Technology found that 74% of drivers earn less than minimum wage in their state and 30% of drivers actually lose money on the job.
This article has been updated with more detail on what Haaland believes the bill would do.