Uber, Lyft, And The Gig Economy — Do Employees Matter?
All new technology brings changes to society. Gutenberg started it with his printing press, which undermined the power of the church by making Bibles accessible to everyone. The steam engine, radio, television, and the smartphone all led to radical changes in society. The automobile and the airplane set us free. Technology constantly redefines the relationship between people and work.
Employees have one thing in common — they like to get paid. Employers have one thing in common — they want to pay their employees as little as possible. The conflicts between them have lead to riots. Many have died in pursuit of the idea that work requires a measure of dignity as well as a paycheck.*
The so-called gig economy was made possible by the smartphone. Suddenly, anyone with a phone could connect with other people with phones to form digital relationships. Soon, people with a tuxedo hanging in the closet could rent it out to people who needed one. People with a spare bedroom could rent it for a night. And somebody with a car could link up with people who needed a ride.
The first company to turn ride hailing into a viable business was Uber, which offered drivers the ability to make a few bucks driving other people around. It was touted as something you could do part time to earn a little extra money instead of sitting home playing solitaire on your computer. Thousands and thousands of people jumped at the opportunity. Next to follow was Lyft, a company that got major financial support from General Motors.
But a funny thing happened on the way to the gig economy revolution. The people doing the actual driving found the were spending their entire day behind the wheel and making far less money than they thought they would. A study by the UCLA Labor Center in 2018 found two out of three drivers depend on providing rides as their main source of income. Half said it was their only job and three in five reported they drive more than five days a week. The drivers began clamoring for gas money and money to maintain their cars. Then they wanted things regular employees take for granted — health insurance, paid vacations, retirement programs, and worker’s compensation coverage.
The companies wanted to shift as many of the normal financial burdens that come with operating a business as possible onto the shoulders of the drivers as possible. They fought back, claiming they were little more than facilitators and thee drivers were independent contractors who operated their own businesses.
California is often at the leading edge of change in America. It’s where Caesar Chavez first organized the migrant farm workers who picked America’s crops into a militant force for economic justice. In 2019, the California legislature passed AB5, a law that classified the drivers as employees. The new law became effective January 1 of this year but Uber and Lyft paid no attention to it, continuing to run their businesses as they always had. Uber has already been threatened with a more than $600 million fine by the state of New Jersey for failure to withhold state taxes from the pay of its drivers.
AB5 grew out of a 2018 decision by the California Supreme Court that set up a three part test for whether a worker was an employee or an independent contractor. Called the ABC test, it has now been adopted by the US Department of Labor and 30 other states. It says a person is deemed to be an independent contractor if they have control over how the work is done, they are doing work that’s not in the usual course of the hiring entity’s business, and they are running the same type of business on their own.
Recently, California Attorney General Xavier Becerra sued Uber and Lyft for noncompliance with AB5. On August 10, Superior Court judge Ethan Schulman granted the state’s petition for an injunction. According to Engadget, that ruling enraged the companies, which threatened to simply cease doing business in California rather than comply. They claim they have been blindsided by the decision and cannot possibly do what the court and the state is asking them to do in the time allotted. The judge has since granted a short stay of his decision to give them more time to abide by the law.
“Uber and Lyft had two freaking years to change their business practices, but they’re acting like they’re so shocked,” Tia Koonse, legal and policy research manager for the UCLA Labor Center, tells Engadget. “Uber and Lyft can’t possibly pass [the ABC] test,” Koonse says. Most drivers would not operate a cab service independently on their own, largely because doing so would be illegal in most jurisdictions. And while drivers may have control over their schedules, they don’t decide which riders to pick up. “[The companies], through their algorithms, pressure drivers into taking rides without discrimination. So, arguably, the drivers aren’t in control over how they do their business.”
Koonse insists the drivers are absolutely doing work that is in “the usual course of business” for the companies. “Lyft and Uber don’t provide any other service! All they provide is this taxi company type service. Uber has gone so far as to suggest it really isn’t a transportation provider at all and that drivers aren’t the core to its business. Instead, it claims it is a “technology platform for several different types of digital marketplaces.”
“Be that as it may, the only thing they’re providing technology-wise is a ride with a person who has a car,” Koonse replies. “Transportation is definitely their business.” Even if Uber does offer other services like food delivery, drivers are still a key part of its workforce; it’s just that instead of transporting people, they’re transporting food, she argues.
Proposition 22
Instead of complying with the law as it is, the companies are pumping $100 million into a political charade known as Proposition 22, which will carve out an exception the California Supreme Court ruling and AB5 and permanently classify drivers as independent contractors by making that provision part of the state constitution. If any of you see a parallel between this subterfuge and the campaign by utility companies in Florida to amend that state’s constitution to make private ownership of rooftop solar systems illegal, you’re not wrong. Corporations will stop at nothing to preserve their income stream even if it means trampling on individual freedoms. Uber and Lyft could make that $100 million available to their drivers but choose not to, which tells you all you need to know about their ethics and moral code.
“The companies have had years and multiple invitations to obey the law and grant workers the employee status and benefits they are legally owed,” Edan Alva, a driver and organizer with Gig Workers Rising, tells Engadget. “In spite of multiple court rulings and a deadly pandemic, multimillionaire CEOs at Uber and Lyft are choosing to continue to break the law. Eliminating thousands of drivers’ income during a pandemic to avoid following labor law is cruel.”
Tia Koonse has the final word on this controversy. “If their business model is entirely contingent upon not paying minimum wage, overtime, providing required meal and rest breaks, reimbursements for expenses, [is] predicated on wage theft and they can’t turn a profit by treating their staff as employees, then that’s their problem,” she says. “It’s on them to figure it out.”
This is just the latest chapter in an ongoing struggle for workers’ rights with corporations who see work not as a collaborative enterprise but rather a system that allows ownership to extort as much effort as possible for the least amount of money. It’s the impetus that caused the textile industry to flee New England in the 50s, then sent corporations in search of cheaper options in Mexico before turning their attention to first China then India, Sri Lanka, Bangladesh, and Vietnam. For more on this topic, please read Naomi Klein’s seminal book No Logo. This is merely the latest chapter in an unending struggle to define the nature of work in the United States and abroad.
* Next time you are in Woonsocket, RI, visit the Museum Of Work And Culture for an immersive, interactive introduction into the never ending struggle between labor and management.
Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.
Latest CleanTechnica.TV Video
CleanTechnica uses affiliate links. See our policy here.
