Some gig workers are more entitled to equality than others. That’s one takeaway from a ruling last month by the British Supreme Court, which found that contract Uber drivers must be classified as workers eligible for minimum pay and benefits.
That’s not the case for Uber drivers in the United States, especially after the passage of a California ballot initiative, known as Prop 22. Voters agreed with the company that its drivers must remain classified as contractors and are not entitled to the full protections that other workers enjoy. The ballot proposal was written by a group of gig companies to exempt themselves from state law that classified their workers as employees.
At the heart of Uber’s rise is the stance that, as a trade-off for flexible schedules, its legion of drivers cannot be granted the benefit of a guaranteed minimum wage, full employer-provided health care, expenses, paid leave or an unemployment lifeline. Under pressure, Uber has advocated instead a system that keeps them as contractors with a modicum of benefits.
When Uber faced threats to its business model in court and from state governments, it argued that it is actually just a digital matchmaker and not in the transportation business. So its drivers have remained contractors rather than become employees.
Those arguments were as well received as cold tea and soggy biscuits in Britain, after the Supreme Court there ruled unanimously last month that the drivers who brought the cases are unequivocally not contractors. Uber drivers, therefore, must be classified as “workers” — a middle ground classification in Britain between “employee” and contractor — and be granted a wage floor and certain benefits, such as holiday pay and access to a pension plan.
There is no direct equivalent to Britain’s “worker” classification in the United States, and employers in Britain are spared direct funding of employee medical benefits thanks to the National Health Service. But Uber’s switch marks a significant test. If Uber can sustain its business while granting drivers improved guaranteed benefits and a financial safety net, then surely that model can be replicated elsewhere. Spain, for instance, passed legislation this month that would require food delivery app companies to treat their drivers as employees.
Uber said it would now grant more than 70,000 of its British drivers worker status. Dara Khosrowshahi, Uber’s chief executive, said the ride-hailing company had “decided to turn the page” on worker benefits. How nice for drivers overseas.
Maintaining workers’ classification as contractors is advantageous to gig economy companies, which would otherwise face higher labor costs and operate even deeper in the red. Companies like Uber, Lyft and Instacart have bent over backward to preserve their business models, arguing that granting laborers the dignity of predictable wages and benefits would threaten the flexibility of the work.
But the British court found that Uber asserts profound control over its drivers, which includes setting fares, dictating which routes drivers should take and punishing them for low ride-acceptance and high cancellation rates. Punishment includes blocking access to the app without recourse.
“You don’t have to choose between employee rights and a flexible work schedule,” said William Gould, a Stanford University law professor and former chairman of the National Labor Relations Board. “What happened in the U.K. is an opportunity to address this at the federal level.”
Following the passage of Prop 22 in California, lawmakers in at least a handful of states from Utah to Massachusetts are mulling new regulatory frameworks for gig workers that could lead to a patchwork of rules and worker rights that will be difficult to disentangle without federal legislation. Uber wants laws similar to Prop 22 in Canada and across Europe, and it has been lobbying multiple statehouses and labor unions for look-alike legislation.
Already, the impact of Prop 22 is being felt. The law provides minimal health benefits to a subset of workers and wage guarantees only for the times when they are fetching or driving passengers or food. The grocer Albertsons said it was replacing hundreds of employed delivery workers with less-expensive DoorDash drivers.
When the pandemic settled in, many drivers realized they had no safety net, as rides slowed to a trickle and they were made to appeal to the federal or state government for unemployment benefits, funds that gig companies don’t pay into. (By one estimate, Uber and Lyft saved more than $400 million in California alone over a five-year period by eschewing the payments.)
Uber wants Prop 22’s wage structure to apply in Britain, too, meaning drivers wouldn’t be paid for time when they are waiting for a ride. That appears to run afoul of the British court, however, which ruled that wait times should be included.
“Expanding benefits for all gig workers while protecting their flexibility would look different in different places,” said an Uber spokeswoman. “It’s not for Uber to define what is right for everywhere.”
Gig workers may have an ally in President Biden, who has indicated he is sympathetic to the laborers. Along with Vice President Kamala Harris, he urged Californians to reject Prop 22. Transportation Secretary Pete Buttigieg attended a wage rallyoutside Uber headquarters as a presidential candidate in 2019, and, as Boston’s mayor, Biden’s labor secretary nominee, Marty Walsh, bemoaned his lack of regulatory authority over Uber and Lyft.
Gig companies have drawn billions in venture capital funding to help underwrite a system that is a race to the bottom for labor protections. But it doesn’t have to be that way. While millions of Americans worked from home amid shelter-in-place orders, drivers proved themselves essential by delivering prepared meals, groceries and other goods.
They deserve the opportunity to make financial headway.