The country’s second largest grocery store chain is eliminating its unionized delivery drivers in California just two months after passage of the Proposition 22 ballot question. Prop 22 allowed major companies to not classify thousands of independent gig workers as employees in exchange for minimum wage guarantees and other benefits.
The delivery outsourcing effort by Albertsons, which operates Vons, Pavilions and Safeway stores in California, is said to take effect by the end of February, and will turn over its in-house operation to DoorDash or other outside companies that specialize in that type of work.
Although it is not known how many of the company’s unionized drivers will be impacted, a spokesman for Albertsons said it was trying to find other opportunities within the company for any displaced drivers.
“Albertsons Companies made the strategic decision to discontinue using our own home delivery fleet of trucks in select locations, including Southern California, beginning February 27, 2021,” said spokesman Andrew Whelan. “We will transition that portion of our eCommerce operations to third-party logistics providers who specialize in that service.”
Rapid Response
The move by Albertsons is not the first response in the wake of Prop 22’s passage just two months ago in what was the most expensive referendum in the state’s history, with the likes of Uber, Lyft, Instacart and others spending over $200 million to support its passage. Last month, both Uber and DoorDash announced they were rolling out new fees to offset the cost of the concessionary wage and benefit programs the companies promised in lieu of adding hundreds of thousands of Golden State workers to their payrolls.
Uber said it will add surcharges of up to $1.50 for California riders and $2 for Golden State deliveries, although in some cities, these charges will at least initially be lower. DoorDash said it will also start adding fees, but didn’t specify how much they’d be.
Lyft and Instacart, which were also big backers of the $200 million “Protect App-Based Drivers and Services” coalition that fought for Prop 22, have yet to comment on their plans for adding fees.
While these latest changes are confined to California, the increasingly competitive and consumer-utilized food and grocery delivery service business is facing similar pricing and growth repercussions in other states, as well as pushback from the restaurant industry over rising fees.
In Seattle last week, Uber announced a 24 percent increase in fares to cover the city’s newly increased $16.69 minimum wage law that took effect Jan. 1 after being unanimously passed by the City Council in September.
At the time, Uber spokesperson Harry Hatfield said the company was aware “that any price increase is frustrating for customers” and that it was continuing to “look for new ways to reduce prices” while complying with local laws.
Fee Caps
At the same time, DoorDash and other food delivery services are facing a wave of state and local fee restrictions at the behest of restaurants that felt fees as high as 30 percent were exorbitant.
Delivery fee caps ranging from 15 to 18 percent are already in place in New York, New Jersey and Washington state, as well in major cities like Chicago and New York City.
While food and grocery delivery service has been a lifeline — and exploded in popularity — during the pandemic, the economic viability of these companies will be under pressure if rising costs and increased wage and benefit requirements can’t be offset.
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