Once More Around The Roundabout With Ride-Hailing

It's time to make Uber, Lyft, and Doordash's workers employees, with all that's entailed

In Why Do British Uber Drivers Deserve Better Benefits?, The NY Times Editorial board has weighed in on the recent UK Supreme Court ruling that Uber drivers must be granted benefits that the company does not generally offer to US drivers:

[…] in Britain, […] 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.

I appreciate the snark.

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There is still a battle brewing in the UK over compensation for time spent waiting for a fare, which the App Drivers and Couriers Union brought up in a statement:

While we welcome Uber’s decision to finally commit to paying minimum wage, holiday pay and pensions we observe that they have arrived to the table with this offer a day late and a dollar short, literally. The Supreme Court ruled that drivers are to be recognized as workers with entitlements to the minimum wage and holiday pay to accrue on working time from log on to log off whereas Uber is committing only to these entitlements to accrue from time of trip acceptance to drop off. This means that Uber drivers will be still short-changed to the tune of 40-50%. Also, it is not acceptable for Uber to unilaterally decide the driver expense base in calculating minimum wage. This must be subject to collective agreement.

And of course, Uber has been compelled to take this action by the UK Supreme Court but is fighting a battle for Prop 22-style ruling in various US states, along the line of that ballot proposition in California, which overturned a state law requiring employee status for ride-hailing drivers

Uber has argued in California and in the UK that it’s hard to track the time that drivers spend waiting for a fare. Economists are split on whether the US should adopt ‘independent worker’ category similar to that of the UK. As reported by Axios:

In a 2015 paper for The Brookings Institution's Hamilton Project, former acting Secretary of Labor Seth D. Harris and economist Alan B. Krueger proposed that gig workers get their own employment category — a proposal that has since become an often-cited model.

  • Harris, a member of the Biden transition team, and Krueger said “independent workers” should get collective bargaining rights and have companies pay half of their Medicare and Social Security taxes.

  • However, they said workers should not be guaranteed a minimum wage and overtime pay, in part because of the challenges of tracking drivers' hours, especially while they wait for ride requests.

Ross Eisenbrey and Lawrence Mishel disagreed (in a paper published at the Economic Policy Institute) with the arguments made by Harris and Krueger and pointed out that Uber and others already track driver’s time and countered other supports for an ‘independent worker’ category:

We find:

  • The claim that the immeasurability of work hours for some digital app relationships requires a third employment status other than employee or independent contractor is empirically flawed. Uber is the leading case, and Uber can and does measure the time drivers have their apps on, to the minute. Uber has a guaranteed wage program that demonstrates that hours tracking and minimum-wage obligations can be administered effectively. Uber takes disciplinary action for having a low acceptance rate, so drivers must respond quickly to ride requests or face serious consequences. Therefore, drivers are free to choose when they turn on the app but are not free to ignore the app and do personal chores when it is turned on.

  • A driver can be an employee regardless of whether waiting time is compensable or charged to any particular employer; just because that problem seems complicated doesn’t mean we need a new category of worker. Moreover, there is an easy solution to the problem of allocating waiting time among one or more employers: the employer whose driver accepts the ride pays for the waiting time leading up to the ride.

  • We disagree with the proposal to deny minimum-wage and overtime protections to Uber drivers and see no need for a third employment status. Our conclusion that Uber exerts substantial controls over a driver’s time while the driver is on the app also has implications for whether Uber drivers should be considered employees. Rather than pursue a legislative fix along the lines offered by Harris and Krueger, a better approach is simply to establish that Uber and Lyft drivers and similar workers are employees with all attendant rights.

Meanwhile, the National Labor Relations Board under Trump agreed with Uber that its ride-hailing drivers were consultants. Joe Biden has started to make changes at the NLRB, firing the general counsel, Peter Robb, on the first day of his administration. His chief deputy, Alice Stock, assumed that role and was fired the next day.

President Biden has dubbed Peter Sung Ohr as the agency's acting general counsel, which provides a forty-day window to appoint a permanent head for the agency. Ohr, as deputy assistant general counsel in the division of Operations-Management, held that Northwestern University football players could unionize. There are signs that Ohr may turn his attention to ride-hailing companies, according to Robert Iafolla:

One target may be a 2019 advice memo opining that Uber drivers aren’t employees with labor rights under the NLRA, said Celine McNicholas, a former Obama-era NLRB official who works as labor counsel and director of government affairs at the left-leaning Economic Policy Institute.

But they should have such rights. President Biden has voiced support for aggressive agency action as a way to sidestep a battle in Congress. Again, Iafolla:

With a potentially divided Congress, it could be an uphill battle to pass any legislation on tech issues such as antitrust, privacy or Section 230, all of which have deep partisan fissures. So, if Republicans keep the Senate, "you're going to have a Biden administration looking to do as much as they can through agency actions" where Democrats can push regulations unilaterally, said Brian Chen, a staff attorney with the National Employment Law Project. That could make the already-powerful Department of Labor and National Labor Relations Board more important than ever.

I’m betting that this is the likely course of events, where President Biden’s NLRB will find that ride-hailing drivers (and many other gig economy workers, like food delivery workers) should be treated as employees, and gain access to the protections of the National Labor Relations Act and other regulations, like minimum wage (from the Fair Labor Standards Act).