A labor court judge in the state of Minas Gerais, Brazil has found that an Uber driver there is an employee of the company, taking the debate over the classification of drivers to another country. The Brazilian newspaper Zero Hora reports that the decision is the first in Brazil to recognize Uber as an employer of drivers. According to Reuters, the judge “ordered Uber to pay one driver around 30,000 reais ($10,000) in compensation for overtime, night shifts, holidays and expenses such as gasoline, water and candy for passengers.” Uber announced that it will appeal the decision. The ruling only applies to a single driver, but could open the door to more challenges.
Brazilian news portal G1 notes that the judge applied a multi-factor test for employment status under Brazilian law. Key factors included that a) users are assigned a driver by Uber, unable to select from options; b) Uber (not the passenger) pays drivers at the end of each week after withdrawing a percentage, thus going beyond simple mediation of passenger-driver business; c) transport is Uber’s primary business, as partially evidenced by its investment in automobiles vehicles; and d) Uber drivers are submissive to the company, forced to comply with strict rules in order to drive for the company.
Zero Hora also emphasized that the judge found that drivers were encouraged to drive regularly despite flexibility, and that Uber engaged in a hiring process by approving drivers.
Paul M. Secunda is Professor of Law and Director, Labor and Employment Law Program at Marquette Law School.
Although by no means a new question regarding retirement, the noteworthy growth of gig companies in the sharing economy has renewed concerns that even more American workers will lack access to employment-based retirement plans. Although some argue that the gig economy offers workers advantages including more independence and flexibility, company-sponsored retirement saving is not one of them. This is a dangerous state of affairs, as employment-based retirement plans make up a critical part of an individual’s strategy for retirement security.
Such retirement plans, like the nearly-ubiquitous 401(k) plans, provide a necessary bulwark against destitution in old age, especially given that Social Security provides only partial income replacement and few Americans have put away much in private savings. Yet, independent contractors, which is how most gig companies classify their workers, are approximately two-thirds less likely than standard employees to have access to an employer-provided retirement plan.
Much academic and judicial ink has already been spilt over whether Uber drivers and other members of the sharing economy are members of the so-called “contingent” workforce or “precariat” (part-time, leased, temporary, and per diem workers), not entitled to receive retirement benefits as part of their employment. Whether these employees are statutory employees is of utmost importance because it largely determines whether gig workers are covered by employment laws, as most such laws center on the employer-employment relationship.
What all these jobs have in common is that the work activity is happening outside of the traditional safety net of employment and are highly unstable. Whereas statutory employees are covered in the United States by numerous labor and employment law statues that provide security and protection in the workplace, workers in these alternative work arrangements are not. Once stable employment relationships have given way to relationships that are much more arms-length, regardless of whether it is a contractor situation, temporary employment, or a one-time encounter.
The Recorder reports that Uber has “successfully persuaded a private arbitrator that a California driver for the transportation company is an independent contractor, not an employee, in the first arbitration in the United States to test that issue.” While drivers continue to challenge Uber’s mandatory arbitration agreements in court, the arbitrator’s decision represents the outcome of the first of what could become many individual challenges by drivers asserting proper classification as employees, if arbitration agreements are enforced.
The New York Times surveys the current state of universal basic income programs, highlighting a Finnish pilot that aims to boost entrepreneurship and encourage work by reducing financial disincentives that accompany unemployment benefit programs.
With the holiday season increasing the volume of online shopping, the Los Angeles Times looks at the pressure delivery drivers at Amazon face to keep up with the added demand. Drivers have alleged a failure to pay minimum wage and overtime, and that the company has misclassified some as independent contractors despite exercising almost complete control over the drivers.
The Washington Post challenges interpretations of a recent report by the Economic Cycle Research Institute concluding that white workers had disproportionately failed to benefit from recent improvements in the broader economy. Tracy Jan of Wonkblog instead suggests that changes in the relative size of demographic groups and the age distributions within each may better explain the developments.
The Detroit Free Press reports that confidence among small business owners has been booming since Donald Trump’s election last month. As compared to before the election, 44% more of those surveyed believe that business conditions will be better in six months than worse.
Bloomberg reports that representatives of both Uber and Lyft have voiced support for President-elect Donald Trump’s choice of Elaine Chao for Secretary of Transportation:
“We have the utmost respect for Elaine Chao, an accomplished public servant and highly capable leader,” Adrian Durbin, a spokesman for Lyft, wrote in an e-mail. “We congratulate her on the nomination and look forward to working with her on an array of transportation issues.”
Niki Christoff, head of federal affairs for Uber, said in an e-mail that “Chao’s knowledge of transportation issues is extensive and we look forward to working closely with her.”
Uber adviser Bradley Tusk called Chao a friendly appointment for the technology industry. “In many ways, she may be the cabinet member with the most interesting and important tech policy issues out there,” he said, citing the department’s involvement in regulating autonomous vehicles to drones to the technology that decides how cars communicate with each other.
Chao, a former Secretary of Labor under President George W. Bush, has previously made statements praising the gig economy and its labor model, which is predicated on classifying workers as independent contractors and not employees. While the Secretary of Transportation does not apparently have a role with respect to worker classification, Chao represents a member of President-elect Trump’s Cabinet and former Secretary of Labor who will likely advocate on behalf of gig economy companies at the potential expense of gig economy workers.
Last month, the Equal Employment Opportunity Commission adopted a Strategic Enforcement Plan for 2017-2021 to “set forth its continued commitment to focus efforts on those activities likely to have strategic impact in advancing equal opportunity and freedom from discrimination in the workplace” – and indicated that the gig economy will be a priority for the agency going forward.
Notably, the EEOC recognized that employment discrimination ensuring from the rise of the gig economy is a major issue. Categorizing the gig economy as an “Emerging and Developing Issues priority,” the Plan states the EEOC will “address issues related to complex employment relationships and structures in the 21st century workplace, focusing specifically on temporary workers, staffing agencies, independent contractor relationships, and the on-demand economy.” The EEOC specifically stated that it will prioritize “clarifying the employment relationship and the application of workplace civil rights protections in light of the increasing complexity of employment relationships and structures, including temporary workers, staffing agencies, independent contractor relationships, and the on-demand economy.”
Professor Sachs and Professor Noah Zatz have both addressed how the gig economy can give rise to discrimination against workers on the basis of race, sex, religion or national origin, and recently an Uber driver filed a complaint with the EEOC alleging Uber ratings are racially discriminatory. While Title VII only applies to discrimination against employees, and not independent contractors, the EEOC’s demonstrated commitment to addressing the gig economy indicates it may become an ally of workers seeking rightful classification as employees.