Uber, Flexibility and Employee Status

Published May 18th, 2018 -  - 05.18.187

Professor Estlund argues that if gig firms have to classify their workers as employees (as I believe the law now requires, and as the Dynamex decision makes more likely), those firms will respond by “exercising greater control over hours and scheduling, and that workers will therefore lose flexibility.” As I wrote in an earlier post, it is true that gig firms might respond in this way to a legal determination that their workers are employees. As I put it then:

Of course, Uber might choose to respond to a legal determination that its drivers are employees by imposing greater control over its workforce.  If, to speculate, Uber allows flexibility partly in order to avoid a finding of employee status, then – having lost that game – it might decide that it makes economic sense to increase control over who works when, and over how rides are provided.  But this is entirely speculative and would be contrary to everything Uber has said about its business model.

Professor Estlund contends that I’m wrong about the Uber business model because “Uber’s business model is based on treating drivers as independent contractors; if that fails, then so does what seems to be the main reason for leaving flexibility in the hands of drivers versus claiming it for the firm.” With respect, I disagree. The main reason for flexibility is that flexibility – in the hands of the drivers – is core to the success of the Uber business model. The Uber model depends on having a massive workforce that responds – on its own and in response to dynamic pricing – to the ever-shifting demands of passengers. The firm can’t claim this flexibility for itself. It doesn’t have that capacity, and, more to the point, its success is built around a technology that allows it to operate without needing this capacity. Put otherwise, a desire to treat drivers as independent contractors is not the sole, and probably not even the most important, reason for Uber to offer – indeed to ensure – that drivers have scheduling flexibility.

A related point, which Maddy raised with me: flexibility, aside from being integral to the Uber business model, is an essential part of Uber’s cultivated self-image. This is an image, moreover, that Uber deploys aggressively in its driver-recruitment efforts. One excellent example is this TV ad in which Uber portrays the benefits, for drivers, of moving seamlessly back and forth between “working” (that’s what you do for your other employer) and “earning” (that’s what you do with Uber) and “chilling.” Flexibility’s centrality to this projected image implies that Uber would be that much more hesitant to take charge of scheduling, even if the firm was deemed to be an employer.

Professor Estlund is undoubtedly right that employee status would come with costs to firms like Uber, including increased tort liability and overtime payments (unless the “taxicab” exemption for overtime applies to firms like Uber, which it might). But I do not think she’s right to conclude, on this basis, that “if gig workers become employees, they are likely to end up with about as much flexibility as current employees enjoy.” For one thing, in certain contexts including the gig economy itself, current employees do enjoy the flexibility to determine when they work. This is true for Instacart in-store shoppers who are classified as employees and yet set their own schedules. (The job posting on the Instacart website boasts about this feature of the job). This is also the implication of cases like DialAmerica Marketingwhich hold that scheduling flexibility and lack of supervision is consistent with historical practice for classes of workers appropriately classified as employees. Equally important is the point I’ve already tried to make: The Uber business model depends on drivers having flexibility when it comes to scheduling. That won’t change if the firm has to insure against tort liability or handle increased overtime payments.

One other note. Professor Estlund argues that “allowing employees complete control over their own hours might enable them to unilaterally put the platform on the hook for overtime.” I agree that employee status might have implications for overtime: essentially, if Uber has to comply with the law and pay overtime, they may decide to limit drivers to forty hours in a week. This is, in a sense, a restriction on workers’ “flexibility.” But, again, only if flexibility means working overtime at straight-time rates.

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