Colorado Gig Drivers Are Ditching Uber and Lyft to Form a New Rideshare App

Now, rather than being driven up a wall, gig workers are taking control of their careers and futures by forming a driver’s cooperative: a new rideshare app owned and operated by the Mile High motorists themselves.

“Drivers are desperate right now,” says Minsun Ji, the executive director of the Rocky Mountain Employee Ownership Center, which is helping the drivers create the co-op. “Commission used be up to 65 percent. Right now, it is as low as 25 percent. Workers are really fed up with the way that Uber and Lyft are treating them.”

In 2022, drivers formed Colorado Independent Drivers United, a union for rideshare, delivery, pedicab, taxi, and limousine drivers — asking that rideshare companies take to no more than 25 percent of the profits from each ride or delivery; share more information about jobs with drivers before they take them; and stop deactivating drivers without giving them an explanation as to why they were deactivated.

Ji was a professor at the University of Colorado studying how to protect workers, and particularly gig workers, before joining RMEOC to help create the driver’s co-op. She’s well aware of the issues that caused drivers to unionize and hopes that a co-op can help, too. The move would ultimately allow workers to make decisions about management, pay and transparency themselves.

“A driver’s co-op is the most innovative solution that we have right now,” Ji says.

RMEOC, headquartered in Denver, has existed since 2012 with the goal of converting companies to employee-owned models to improve economic vitality. In April 2022, it launched a program aimed at incubating new employee-owned businesses. The driver’s co-op will be the very first one.

The overall goal will be to help start the rideshare company by assisting the drivers in generating capital, educating them about how to run an employee-owned business, and advocating for legal changes to help the company thrive. If the driver’s co-op reaches its membership goal of having at least 2,000 drivers when it launches, it will be the largest worker cooperative in Colorado, Ji says.

In employee-owned worker’s cooperatives, the workers typically form a board of directors — made up of employees who are voted on by the staffers. From there, the board can hire others to run the company who are experts in finance, management, or other specific skills that they may not have themselves.

Employee-owned companies provide many advantages, Ji says.

“It’s a better, democratic place for people to be at,” she points out. “They can actually have better pay plus a better working environment. It is a kind of a win-win situation for both employers and employees.”

To join the driver’s co-op, drivers will pay a $100 buy-in and complete an orientation to be sure they understand how the company works and the responsibilities of partial ownership. Unlike Uber and Lyft, the amount of profit the co-op takes in from each ride will be set at an 80 to 20 ratio, with the driver themself taking 80 percent and the other 20 percent going to the co-op to hire staff and pay operating costs.

Ji says the system will improve opportunities for people who may not have as many options for work, such as people from other countries. In the Denver metro, 75 percent of Uber drivers are immigrants.

“A lot of Americans will have choices,” Ji says. “Maybe it doesn’t work and you could just give up and move on to something else but, a lot of workers, they’re stuck with Uber…and they have no other way out of it.”

Denver will be the second city to launch such a model, with a driver’s co-op launching in New York City in 2021.

In New York, the co-op started with pre-planned trips only by contracting with the MTA’s Access-a-Ride program to help drive people to nonemergency medical appointments. Now it’s adding on-demand rideshare for anyone — at any time.

Overall, the New York co-op has delivered $5 million to its drivers since kicking off in 2021, Ji says. It raised about $1.7 million before launching.

Denver, on the other hand, is a smaller city and the technology is already in development, so costs should be lower. Locals have already raised over $250,000 for the year, with some investors committing larger amounts over a three-year term. The Colorado Health Foundation has been the largest donor, with contributions also coming from Rose Community Foundation and the Denver Foundation.

Raising capital isn’t all the co-op wants to accomplish before it launches: It’s also hoping to change state law that requires a $111,250 annual application fee for transportation network companies to receive a state permit to operate.

“That is too much burden for us,” Ji says.

Recently, the driver’s co-op has worked with Senators Faith Winter and Robert Rodriguez to introduce SB 187, Public Utilities Commission Administrative Fee Setting Transportation Services. Among other actions, the bill gives the Colorado Public Utilities Commission — which regulates rideshare companies — the authority to set fees governing transportation services in the state. That power currently sits with the legislature.

Should the bill pass, the driver’s co-op hopes the PUC will make its fee lower than the fee that Uber and Lyft have to pay. The bill will be heard in the Senate Transportation and Energy Committee on March 27.

At a March 19 organizing meeting, drivers said they planned to testify in support of the bill because they believe the state should be supporting drivers in their quest for fairness. Rodriguez is also sponsoring a bill supported by the drivers union that would increase transparency in gig work that is currently in the hands of the Senate Appropriations Committee.

Though Ji describes the passage of the fee-changing bill as critical for the co-op, it is continuing to work toward its launch while waiting on the legislation. The company’s app is currently in beta testing for drivers to sign up, as the company hasn’t been permitted for use by the public yet.

“The app can support workers to sign up as a potential member so that we can do a background check so that when we get permissions we can actually start operating,” Ji says. Over seventy drivers have signed up so far.

Ji is working to expand the model to other cities after Denver, too, such as Atlanta, Las Vegas, and San Francisco. If it catches on, she hopes the program will ultimately represent a significant source of competition for Uber and Lyft. For now, she’s just hoping that Denverites embrace it.

“Our drivers can be part of making history,” she says. “It’s really exciting.”