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It’s been more than a decade since ride-hailing and delivery apps came onto the scene and gave rise to the gig economy. Uber led the way in 2009, relying on independent contractors to transport passengers using their own vehicles when it fit their schedules. Since then, Uber’s business model has spread far and wide, creating an army of app-based drivers working for a variety of companies.
But time has shown that driving for these apps isn't as great a gig as it seemed. As independent contractors, drivers who shuttle people around or deliver goods to your door are left out of labor laws that set pay standards. As a result, it’s common for app-based drivers to earn less than their state’s minimum wage.
Nerdy Tip
The federal minimum wage of $7.25 per hour hasn’t changed since 2009. But 30 states and Washington, D.C., have minimum wages set above that federal minimum. Read more about minimum wage.
In battles playing out in city halls and state legislatures across the country, lawmakers are attempting to change that reality with new rules that raise wages and extend common worker protections to some gig drivers. Here’s a look at what’s at stake.
Typically, an app-based driver is paid a base fee per trip, plus tips. How much they earn fluctuates, with each app’s algorithm adjusting base pay depending on customer demand and other factors.
Because app-based drivers are classified as independent...
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