Uber Takes Another Lick’n, Will They Keep on Tick’n?

As if the driver shortage isn’t bad enough for surface transportation businesses, Uber and Lyft stocks tumbled yesterday on the heels of a statement from Biden’s Labor Secretary Marty Walsh. Now spread over all the front news pages, Walsh told Reutter’s that Gig Workers should be classified as employees.

This labor classification fight has been long and contentious but it’s been held to the state levels until now. If the pro labor Biden Administration decides that the balance of wealth is unfair – and it won’t take much to figure that out given the extraordinary salaries at the top of Uber and Lyft as compared to the meager sums dolled out to the drivers, a federal reclassification could be eminent.

For the first time in their 12-year lifespan, Uber and Lyft’s business models are being scrutinized by the Federal Government and if it’s determined that their driver base must be classified as employees, Uber stands to incur about $500 million (Lyft $200 million) or an extra 30 percent more in overhead per year.

Welcome to our world. While the Taxi industry has a longstanding exemption carve out, we in the luxury segment do not. Uber and Lyft entered the transportation market in 2010 and by 2013 had taken away more than 50 percent of our business travel market share all because of three things. Better technology and deliverability, for sure, but those were problems we could catch up on and solve. No, the biggie was price. They not only undersold our services they trained the business traveler to distrust us because they undercut us by so much. That had a profound impact on our client relationships and was the beginning of the erosion of our bread and butter – airport runs.

We may be seeing a change in the wind. In California, Uber and Lyft spent $200 million on ads to convince the public that voting YES on Prop 22 was a good thing when it wasn’t. Their testimonial ads focused on the driver pool that is indeed part time, such as students, making it seem that all the drivers were FOR the independent contractor model. The truth is the career drivers (those that are full time) are the ones that want the stability of being employees. Because of Prop 22 which collided with the Pandemic shut down, this demographic of driver is abandoning the transportation industry which has totally destabilized Uber and Lyft. The driver shortage is very serious problem. However, it affords us a good lesson - Take care of your people or someone else will.

Now that the Federal Government is getting involve with this labor issue, this is no longer just a state issue but a national hot button topic. It’s going to get very interesting to be sure and perhaps give the GCLA a new argument for the state of California.

Urgent Message Regarding Federal Loans and Grants - Time Sensitive

Dear Colleagues,

Today, I am going to keep this message short and to the point since time is of the essence. This week is your only window of opportunity to apply for the new PPP2 program. The applications are processed on a first-come, first served basis and when the money is gone, it’s gone.
In the spirit of time, I’ve researched the best tutorials for you to watch and came up with the one below that will take you through the entire application for sole proprietors, independent contractors and partnerships. Review this as soon as possible and get going on the application if you haven’t already:

https://www.youtube.com/watch?v=MRNKKSpPDaw

Also, hidden way down on the SBA website regarding the EIDL, there is a $10,000 grant program (free money). Some caveats to receiving this money apply so watch this video to find out if you are eligible. The amount of money in this grant program is $40 million and will pay out mid-February which is double that of the grant program from last June so don’t shirk this off! This link is extremely helpful to know exactly what’s entailed so watch:

https://www.youtube.com/watch?v=4xbjas5xwUI

For Greater California Livery Association members only – our office hours are 9am - 5pm, PST. My team and I have actually applied for relief on behalf of the GCLA and know the ins and outs too. If you need personal assistance, you should call our offices immediately or email us at www.sara@gcla.org and set up an appointment for one of us to help you. Our office number is (213) 349-0190.

If you are not a GCLA member, you need to join now. Our annual dues are $75 – that is $6.25 per month, or the cost of a Starbucks coffee and donut! The benefits to belonging to the GCLA extend out to offerings like this, a personal help desk, and go far deeper. Just go to our website and see what’s cook’n. www.gcla.org

We encourage members from all states and all countries to become members to connect with us. The state of California represents the 6th largest economy in the world with over than 165 Billionaires and more than 1 million Millionaires. The state is the Mecca of tech and entertainment. It also attracts more than 300 million visitors a year who vacation here. This is where the major networking opportunities abound. Come one, come all – you are welcomed here. We are enjoying an explosion of growth in our community and we’re only in month ONE of the New Year.

Our motto is real: We are in this to win this and so we shall!

Sara Eastwood-Richardson
Executive Director, GCLA

PPP – Part 2: Applications Should Be Filled Out NOW!

Just in case the crazy news cycle has distracted you from getting new information about another round of funding (PPP 2) which was approved December 27th I am highlighting the details for you. Applications opened this week and small businesses ONLY may apply so that, this time around, money goes to those who need it the most, first. Remember, this is a LOAN that must be paid back. This is not free money. Read the loan terms so you are clear on this point.

The Skinny on Transportation Insurance in Today’s COVID Climate

Everyone in this industry took most of their vehicles out of service last spring. Those that did so, received a discounted insurance rate. As counties throughout California and beyond are opening, we are seeing signs of life – albeit mostly retail work – return. It’s probable that many of you are considering taking a vehicle or two out of mothballs. When you do so, I regret to inform you that your premiums will be much higher than they were before they were shuttered. It is simple math and nothing nefarious on the part of the insurance companies. One vehicle is more expensive to insure than, say three or four or ten or fifty. Whatever your old plan was is no longer so you must start anew with literally a new program.

Insurance companies are finding other industries to underwrite while transportation across all channels is in a lull. That means there is less competition. As an example, Northland Insurance is no longer writing in California effective this month. Philadelphia, Lancer and limited to select companies National Interstate are still underwriting in our state. That’s only three companies (or at least that is all I could find and I made a lot of calls). There is a reason there are so few – reward vs. risk and the transportation revenues just don’t bear out for insurers at this time. The good news is that the companies who are in the market have been very fair to us during these times while they have suffered heavily on the commercial side. I believe they will continue to nurture us back to health and will work with each of you on an individual basis – relationship plays a huge role in all outcomes so let civility reign.

What can the GCLA do about this you ask? Just what I am doing now. We can inform our members of the realities of what it costs to fire back up. We can give you advice on what to do, help you to consider all options like pooling fleets, and more. This is one reason we feel it’s time to get a Town Hall meeting on Zoom initiated for you. Selim Aslam, GCLA board of director and CEO of MIB Worldwide Chauffeur Services has offered to moderate for us. Watch for a date to our first Town Hall as we sort out the details. Also, email me a must-have topic and I’ll do my best to accommodate you.

There is something else you need to be aware of regarding insurance. Risk management is now front and center in every conversation I have with travel management companies. Corporations are scared to death to have their employees travel on business or even return to their offices because they fear liability issues relating to Covid-19. As an employer, you too must face the new reality that your frontline has to be protected. You do not want any illness on your watch – regardless of passenger or driver.

This is the absolute reason the GCLA endorsed SafeCleanRide. This is a 3rd party TRAINING program that requires participants to be TESTED on hygiene and sanitation safety. Those that pass the test receive a certificate of completion. This is a standardized program that helps mitigate risks and this MATTERS to the risk management team at insurance companies – and it will help protect you as an employer. Covid has opened a pandora’s box to a world on hyper alert of germs. Operators who are taking a passive stance on this, who think they have covered their basis because they have created company protocols need to think again. Training and testing conducted independently takes this matter to a more secure level. It will help to mitigate risks involved with contagions and public and employee health matters and may help, God forbid, if you should ever have to legally defend yourself. Go to www.GCLA.org and get certified.

Stay strong!
—Sara Eastwood Richardson

Unpacking Prop. 22

Unpacking Prop 22

The Uber, Lyft and Instacart $180 million ad campaign launched this month. You’d have to be living under a rock somewhere in the California wilderness to have missed their ads. So compelling was their advertising “story” that many of our GCLA members became disheartened and figured the fight was over. The GCLA had just set up a GoFundMe account to raise money to contribute to the Coalition we joined when pushback from operators ramped up. Transportation owners got spooked about spending good money on bad, and worse, retaliation if Prop 22 should pass. All of a sudden, we felt people starting to pivot on something we’ve worked on for 6 years.

If you re-read my letter to you from last week, I said we had to see this through; we are in this to win this. I want to thank the brave hearts that listened to me and sent money our way so we could continue to fight. We are on the right side of this argument because our business model will never pass the smell test to employ IOs the way the TNCs have been able to do. If anyone thinks they can remake their businesses if Prop 22 passes, you are in for a rude awakening. Uber and their counterparts are suggesting a hybrid version of the labor law and asking the voters in California to bless it. But those voters are now hearing our side of things and feeling queasy about saying YES to something that underserves the drivers they’ve come to care about – especially during a pandemic when so many people are in financial straight jackets. The sob story, followed by veiled threats to stop serving the residents of California created panic at first. But, as reality – and our messaging - is sinking in, people are turning on Uber, Lyft et al.

Yesterday, the LA Times endorsed a NO on Prop 22. The article is critical about the 3rd tier employee model the TNCs created. It boils down to paying 20% less than minimum wage and only half of the mileage standard of the IRS. They receive no sick or family leave. The newspaper sites a myriad of reasons that Prop 22 fails to be worthy of a YES, and we’ve included that story in this week’s e-news so I encourage you to review it. In the end, the voters will decide but as of this week it looks to be an uphill battle for Uber and friends. A new statewide poll conducted by UC Berkeley Institute of Governmental Studies poll shows “that 39% of the 5,900 likely voters surveyed from Sept. 9-15 would side with the companies and vote yes on Proposition 22, compared with 36% who said they would vote no and 25% still undecided. The poll's margin of error is plus or minus two points.”

As for our industry’s support, the ball is squarely on the 50-yard line with momentum swinging our way. You’re our team and now is NOT the time to walk off the field. We need everyone suited up and ready to play – that means whether it’s a $10 or $1,000 or anything in between, you must contribute to the win.

I believe in you and I think we’ve got this!

—Sara Eastwood-Richardson

Why You Should Vote "NO" on Prop. 22

Why Voting No on Prop 22 Is Better for Chauffeured Transportation

The short answer is that we all just want a more fair and equitable playing field. I am a business traveler. Until 2014 I routinely used livery services when traveling. Ten years ago, the price to go from LAX to my headquarters in Torrance (12 miles) was $250 – one way, including fees/gratuities. My company paid the bills as if that was the norm. Why? Because it was. We enjoyed a corporate account with a chauffeured service for years until one day, Uber knocked on our door with a “sweetheart deal” and just like that, our longstanding relationship with the limousine company ended. Fast forward to now, those rates of old seem surreal. Uber charges $50 for that same ride.

Ride Hail businesses crushed us with price because they circumvented our labor laws from the beginning. It was only a matter of time that they’d go public at which point their financials would be on full display (including the $46 million package for their CEO…hem hem). Cast their outrageous spending against the backdrop of a blue-collar driver, who truly clears about $5 an hour, and it really begins to smell like a sweatshop.

If Uber loses this argument because VOTE NO wins, we ALL get to reset the consumer’s expectation on pricing. In other words, we get a very much needed bounce. Uber has vowed to downsize their business model and focus on intercity transportation allowing us to expand our turf - or in some cases reclaim - the suburbs (there’s good money there).

If Uber wins with a VOTE YES they will get a special carve out that we may or may not be entitled to. You can bet that the GCLA is looking at this from both sides and we will be prepared to pivot.

Which is the better path for us in California? Winning the VOTE NO campaign offers more surety that we will be able to increase market share. Further, the demand will be greater than the supply and you know what that means to pricing, right? It goes up. That is better in the long run than if Uber wins. If the YES has it, chauffeured transportation will make the argument that we should get the same deal as Ride Hail businesses but it’s easy to imagine a lot of pushback from the state of California. There are other worries in a YES scenario. Our pricing will likely be pushed down while quality control and liability issues will rise.

The GCLA has worked long and hard to get AB 5 passed and made into law this year. We must see this through with all the muscle we have as an industry. This is our one shot and if we win, rest assured, you are gong to be the beneficiaries of a rebound of business the likes we have not seen.

Every vote counts; yours, your relatives, your friends, your customers. And, with time on our hands there’s no excuse for you to stay on the sidelines. Take action in your community with all you’ve got and use the GCLA VOTE NO slicks on all your emails and social media marketing.

We’re in It to Win It.

—Sara Eastwood-Richardson

A Second Stimulus Package - What's in it for You

Senate Comes Back Next Week:
What You Need to Know About the Bill That's on The Table

On September 8th, the Senate returns from recess and will take up the matter of finalizing another economic stimulus package.

Steve Mnuchin and House Speaker Nancy Pelosi met by phone yesterday to try and find a compromise. President Trump is considering more executive orders to sidestep Congress if the bottle neck is not fixed.

This excerpt is from CNET. These are actions underway that are specifically important for you to understand:

1. The new eviction moratorium

What it is: On Sept. 1, the Trump administration under the CDC banner issued a nationwide order temporarily halting millions of US renters from being evicted, in hopes of reducing the spread of COVID-19. The order will cover all 43 million US residential renters so long as they meet certain requirements, and will last through Dec. 31, 2020.

How it could help you: To be eligible for the CDC's eviction moratorium, you must not expect to earn more than $99,000 this year (or $198,000 for joint filers). You're also eligible if you did not report income in 2019, or if you received a stimulus check earlier this year. You must also demonstrate that you've sought government assistance to pay rent, declare that you are unable to pay rent because of COVID-19 hardships, and affirm that you are likely to become homeless if you are evicted.

However, it's important to note that the order does not set aside any new federal funding for renters -- even if renters can't be evicted, they will eventually owe that rent, along with any late fees, penalties or interest. And in the meantime, landlords might struggle without that income from renters. Renters can also still be evicted for reasons other than not paying their rent.

2. A second stimulus payment to spur spending

What it is: A payment sent to qualifying individuals and families, based on annual income, age, number of dependents and other factors. The first stimulus payment authorized under the CARES Act has been sent to over 160 million Americans -- as a check, as a prepaid credit card or via direct deposit. But there have been problems, and after three months some are still waiting for their stimulus payment.

How it could help you: The payment isn't taxable and you can use it however you want -- to pay for food, housing, clothing and so on. The idea is that spending the checks will help the economy recover faster.

Why we think a second payment will pass: The CARES Act authorized payments of up to $1,200 per eligible adult and so does the $1 trillion HEALS Act. The House of Representatives' $3 trillion Heroes Act also called for $1,200 stimulus payments, but for more people. The White House supports another round of checks, which makes it likely that sending out payments will be part of the final bill.

3. Payroll Protection Program designed to help small businesses retain employees

What it is: Intended to help you retain your job, the Paycheck Protection Program provides forgivable loans to small businesses as an incentive to keep employees on the payroll.

How it could help you: The PPP is intended to encourage businesses to keep employing workers who would otherwise have lost their jobs during the pandemic.
Why we think it could get extended: The Republican proposal will target the hardest-hit small businesses, Sen. Susan Collins of Maine said during the rollout of the bill. That includes those with revenue losses of 50% or more over last year.

4. Employee retention tax credit could help companies cover worker pay

What it is: Under the program, an employer can receive refundable tax credits for wages paid to an employee during the pandemic. The employer can then use the credits to subtract from -- and even receive a refund for -- taxes they owe.

How it could help you: Again, it's not a direct payment to workers, but the program encourages businesses to keep workers on the payroll.

Why we think it could happen: The HEALS Act includes further tax relief for businesses that hire and rehire workers, and the Democratic-backed Heroes Act also builds on the tax credits that were part of the initial CARES Act. And there's additional bipartisan support besides.

5. What's happening with Trump's payroll tax cut?

What it is: The president has for months pushed the idea of including temporary payroll tax cuts in the next stimulus package. Another directive he signed earlier this month includes deferring certain taxes retroactively from Aug. 1, through December for people earning less than $100,000.

How it could help you: If you have a job, a payroll tax cut would let you keep more of your earnings from each paycheck for now. The plan would not help those who are unemployed and don't receive a paycheck. Workers and employers would still need to pay those taxes the following year.

Will it stick? Trump signed a memorandum Aug. 8 to enact the payroll tax cut, but it isn't clear if he has the legal right to do so. Typically, financial decisions like tax cuts are authorized by congressional vote, not a presidential order. We'll have to wait and see if legal action is brought against the order. Neither the proposed Heroes Act nor the Senate plan includes a payroll tax cut. US Industry trade groups say the tax cuts may be "unworkable."

Stay Safe,
Sara Eastwood-Richardson