[Chicago City Council] Legislative Brief - O2023-0001748 – The Chicago Rideshare Living Wage and Safety Ordinance

Context

The Chicago Rideshare Living Wage Ordinance seeks to address ongoing issues for rideshare drivers that impact their safety, employment stability, and rate of pay.  A growing body of research shows that drivers are subject to unsafe conditions, are unfairly deactivated from the app without any due process often based on complaints stemming from racial bias, and are seeing more of their wages going to the corporations that run the apps due to non-transparent algorithms that determine pay. 

Since the “Upfront Fare”  algorithms to determine pay were implemented, the portion of payment for rides that rideshare companies take has increased to 40% while the pay to drivers has decreased.  Currently drivers are earning under the minimum wage in Chicago. It is estimated that if the ordinance were enacted, rideshare drivers would collectively earn an additional $470-$631 million per year–money that would come into Chicago’s economy instead of leaving the city in profits for rideshare companies.

Major provisions of the ordinance

Addressing Unfair Deactivations: Drivers have experienced being deactivated from the apps after one bad review by a rider with no due process to verify if the complaint is true. The ordinance: 

• Creates new policies that require ride share companies to investigate claims by riders before deactivating drivers and in the case of zero tolerance cases (allegations that they were under the influence of drugs or alcohol) allow for an appeal process 

• Requires rideshare companies to take into account a drivers disability in reviewing a zero tolerance complaint to determine if a misperception of the disability led to the complaint

• Puts in place procedures to discourage false complaints

• Requires access to records on deactivation cases including aggregated demographic data

Safety: Research has shown that most rideshare drivers in Chicago do not feel safe while driving and have experienced some type of violence while driving.  The ordinance:

• Creates an assault against public chauffeur offense defined as threats to a rideshare driver and creates penalties 

• Requires a passenger verification system to verify identities of riders and supplies passenger information if the driver is a victim of a crime

• Allows drivers to cancel rides for cause without penalty

Increased Pay: Currently pay for drivers per ride is determined by an algorithm with very little transparency into how it is calculated and drivers currently earn under the minimum wage in Chicago.  The ordinance:

• Establishes a formula for calculating drivers’ pay that uses a minimum per mile and per minute amount and then divides by a utilization rate which takes into account time that the driver is working, but doesn’t have a passenger in the car

• Establishes a $7 minimum trip payment

• Requires detailed trip data within 24 hours to be sent to drivers after each trip and weekly reporting

• Updates customer receipts so they can see driver pay and what the rideshare company takes

• Requires a study on the number of drivers and how it impacts congestion and pay which will lead to recommendations for improvements to the system

Enforcement: Current regulations do not allow drivers to sue for enforcement of the regulations or to collect damages.  The ordinance:

• Allows drivers to sue the rideshare companies if the ordinance isn’t followed

• Allows for damages for underpayment of wages

• Prohibits retaliation for exercising rights under the ordinance

Legislative Analysis Overview

The ordinance addresses serious concerns that lead to rideshare drivers earning insufficient pay to live on or losing their job with no notice or due process despite the fact that 39% of Chicago drivers rely on the work as their primary employment.  

A similar pay structure proposed has already been implemented in New York City and has led to living wages for workers. Washington State has implemented a statewide per minute and per mile minimum pay standard, which includes rates for drivers within the city of Seattle that are higher than the rates proposed in this ordinance for Chicago.  One concern that has come up in New York City after a similar pay formula was implemented is that rideshare companies started locking out drivers from the apps in an attempt to avoid paying people more when a lot of drivers are on the road. Since that time, New York City has addressed this issue through implementing rules that have stopped this practice. The proposed Chicago ordinance includes provisions that do not allow lockouts from rideshare companies.

The provisions to avoid deactivation after one complaint and to increase safety are common sense and will lead to more job stability and safer work conditions for drivers. 

Support for the ordinance is recommended.

To read the full briefing, click here.