Backgrounder: Employment Status of Gig Workers in Brazil
In Brazil, the largest gig-economy company is the transportation app Uber, with more than 50,000 drivers in 100 cities. As in other countries, Uber workers raise labor issues, especially regarding their status as independent contractors.
According to Brazilian law, employment relationships have five characteristics: (1) subordination (the employee integrates the company organizational structure, subject to employer’s direction, with limited or no autonomy), (2) remuneration/compensation (the employee works for payment), (3) regularity (the employee must work in a regular basis), (4) “intuito personae”/personality (the employee must him or herself work and cannot be substituted by his own decision) and (5) natural person (the employee Is an individual and not a company or any other legal entity). Subordination is the key feature used to distinguish an employee from an independent contractor.
Currently, more than ten lawsuits are pending against Uber in Brazilian Labor Courts, all involving the same gravamen: drivers’ classification as employees.
In Minas Gerais State, there are four judicial rulings in such Uber cases.
In both, the workers have appealed, but Uber and the drivers reached a settlement before the Regional Labor Court (as the Court of Appeals in labor legal matters are called in Brazil) could review the cases.
- Holding: a judge ruled the driver to be an employee.
- Reasoning: (i) Uber controls workers through analyzing strictly their activities (for instance, a driver who refuses 6 rides is blocked for some hours), providing training on what to wear, how to drive and how to deal with customers, and evaluating customers’ ratings (with an average 4.4 rating the driver is dismissed, and with an average 4.4-4.7 rating, the worker is suspended for two days, and after the third suspension he is dismissed). The UK case (Aslam v. Uber) was mentioned to support this view.
However, Uber appealed and the Regional Labor Court reversed the judge’s ruling.
- Holding: The Court ruled the driver to be an independent contractor.
- Reasoning: Uber is an intermediation platform that merely links providers and customers, and the driver has freedom to decide when and how to work without the company’s interference.
In São Paulo State, there are two judicial rulings in Uber lawsuits.
- Holding: a judge found the driver to be an employee, and that Uber offers transportation service for their customers and is not a mere digital device that drivers use to find clients.
- Reasoning: Uber has control over workers, establishing ride’s prices and counting on the workforce registered in the platform to serve their customers.
- Holding: a judge ruled the worker to be an independent contractor.
- Reasoning: despite the fact that Uber requires some conditions to accept a worker as a driver, and establishes some working conditions, the relationship between Uber and its drivers is a spontaneous contractual relationship and the company does not control drivers’ activities.
In both, the parties have filled an appeal, and the Regional Labor Court has not reviewed the case yet.
In the Federal District, there is one judicial ruling in Uber case.
- Holding: a judge found the driver to be an independent contractor.
- Reasoning: the driver and Uber have a partnership, and both share the benefits of this type of relationship. Despite some company suggestions to the drivers on how to behave, there is no subordination.
The Superior Labor Court, responsible to standardize the judicial interpretation on labor law issues, and the Supreme Court have not ruled on any Uber lawsuits.
The controversy on Uber workers is not confined to individual litigation. Gig-economy companies are also under investigation by the Labor Prosecution Service (MPT) to verify if they are misclassifying workers as independent contractors and therefore collectively violating workers’ rights.
The Labor Prosecution Service is a body of public prosecutors. Specifically, MPT acts to enforce collective and individual workers rights, such as eradicating slavery and child labor, combating labor fraud, and promoting health and safety workplace regulations. In Brazil, Prosecutors are independent from the other three branches of government (Executive, Legislative, and Judiciary).
Prosecutors formed a working group in order to better understand how on-demand work via apps impact labor relations and how the Labor Prosecution Service could approach the topic. The main findings of the final report issued were: (i) for adequate enforcement of labor and employment law, the gig-economy should not be considered a separate sector of the economy; (ii) generally, digital platforms in the gig-economy perform as intermediator companies that connects service providers and requesters, in which the workers cannot select their clients and the customers are not able to choose their drivers, and therefore it is likely to identify an employment relationship between these companies and workers; (iii) analysis of subordination must take into account how technological changes are reshaping the organization of work and new patterns of labor control. In this sense, the role that algorithms and programming play in the gig-economy business model, and how they allow employers to manage workers activities, is particularly important.
These findings will support investigations conducted by prosecutors. If they find labor and employment law violations, they can: (i) reach a settlement with the company through a conduct agreement (similar to a consent decree in the US); or (ii) bring public civil actions or collective civil actions against the company (which have similarities to class actions in the US).