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.
Major players in the gig economy have responded to President Donald Trump’s action to bar refugees and citizens of seven Muslim countries from entering the United States.
Most controversially, in the face of a 1-hour strike at New York’s John F. Kennedy International Airport yesterday by the union representing 19,000 New York taxi drivers in protest of Trump’s Muslim ban, Uber suspended surge pricing. In effect, Uber broke the strike despite their claim that it wasn’t their intent to do so. Both Buzzfeed and Slate report on a movement by consumers to cease using Uber and delete the application in response.
Uber also released a email sent to employees by CEO and co-founder Travis Kalanick, in which he stated Uber is “working out a process to identify…drivers [affected by Trump’s executive order] and compensate them pro bono during the next three months to help mitigate some of the financial stress and complications with supporting their families and putting food on the table.” Kalanick serves on President Trump’s business advisory group.
Uber’s chief rival Lyft, on the other hand, released a much stronger statement. Per Mashable, in an email to consumers entitled “Defending Our Values,” co-founders Logan Green and John Zimmer called Trump’s order “antithetical to both Lyft’s and the nation’s core values,” noting they stand firmly opposed to the action. Most notably, Green and Zimmer stated that Lyft is “donating $1,000,000 over the next four years to the ACLU to defend our constitution.”
Airbnb, for its part, “has offered free accommodation to people left stranded by President Donald Trump’s travel restrictions,” according to the BBC.
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 public agency in Switzerland charged with providing obligatory on-the-job accident insurance, Suva, has determined that an Uber driver in that country is an employee – meaning Uber will have to pay social security contributions on that driver’s behalf. Swiss broadcaster SRF reports that the agency found that the Uber driver’s case clearly had the characteristics of an employment relationship under Swiss law. Like in the United States, Uber’s “comprehensive control” over drivers was critical to the determination of employee status, since Uber drivers cannot set their own prices and face consequences for deviating from Uber rules and directives.
According to TechCrunch, Uber stressed that the decision pertains to an individual driver and that it plans to appeal, although the decision can serve as precedent and Switzerland’s Federal Council may create new rules for technology service providers.
The decision in Switzerland represents the third significant European challenge to Uber’s classification of drivers as independent contractors. In October, a British employment tribunal found that Uber drivers are not self-employed independent contractors, but rather Uber workers. And in November, the European Court of Justice heard arguments in a pending case asserting Uber should be classified as a transportation service subject to strict European labor laws.
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.