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.
As Jon reported last night, an individual arbitrator has issued an award finding a California Uber driver to be an independent contractor rather than an employee. The award is wrongly decided. I won’t engage in a complete analysis here, but, to find employee status, the arbitrator relies primarily on four California cases, three of which involved FedEx drivers. The arbitrator concludes that the facts of the Uber case resemble previous cases in which workers were found to be independent contractors. She holds:
Uber drivers are not supervised; supply the cars they drive; do not wear Uber uniforms or signage; can drive simultaneously for any competitor, including Lyft, Uber’s biggest competitor; are paid for each ride and have the unfettered option to work as little or as much as they want and whenever they want in the geographical location assigned to their platform.
But to find independent contractor status on this basis, the arbitrator has to ignore some other highly relevant cases, including a 2006 California decision involving drivers who worked for a courier company, JKH Enterprises, Inc. v. Dep’t of Industrial Relations. In JKH, the court found that the drivers were employees despite the following:
[T]he drivers are free to decline to perform a particular delivery when contacted by the dispatcher, even if the driver has indicated his or her availability for the day . . . . All drivers  use their own vehicles . . . They pay for their own gas, car service and maintenance, and insurance . . . . The drivers’ cars do not bear any JKH marking or logo. And the drivers themselves do not wear uniforms or badges that evidence their affiliation or relationship with JKH. Some of the drivers perform delivery services for other companies as well . . . . The drivers receive no particular training. . . . All drivers set their own schedules and choose their own driving routes. Their work is not supervised. Indeed, JKH only has a vague idea of where its working drivers are during the business day. . . . The drivers take time off when they want to and they are not required to ask for permission in order to do so.
So, this particular Uber arbitration award is wrongly decided. Of much broader importance, however, the award brings home something critical about progressive federalism: namely, progressive states need to clarify that gig workers, like Uber drivers, are employees within the meaning of state employment law. Continue reading
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.
As we approach January 20th, labor advocates and other progressives are placing their hopes in a handful of states and cities. The hope, as part of a “progressive federalism,” is that these states and cities will have the capacity to chart a course distinctly different from the one being pursued by the federal government.
Among these promising localities is New York, where both the state legislature and the the City Council and Mayor are already at work on a number of innovative and promising bills. But Josh Eidelson at Bloomberg Businessweek and Cole Stangler at The Village Voice report on a bill under development in New York that should be a concern to progressives and to labor. This bill, being pushed by Handy and by Tech NYC (“a newly formed statewide tech-industry trade association that includes Uber”), would allow companies to categorize their workers as independent contractors if those companies contribute to a “portable benefits” fund. Although we haven’t been able to track down the official legislative language yet, news reporting on the bill suggests that it will function as follows: Gig-economy firms that wish to take advantage of the new law would contribute 2.5% “of the fee for each job performed by the gig economy worker” to a portable benefits fund. Workers would then be permitted to use the monies in their account to purchase a health or retirement plan, or perhaps other benefits. In exchange, all those who work for participating firms would be classified as independent contractors under state law as long as they are permitted to choose their schedules and work for other companies.
Put somewhat bluntly, the proposed bill would allow gig firms to buy their way out of New York employment law for a fee equal to 2.5% of each job performed by their workers. Continue reading