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Uber’s framing of gig economy regulation in terms of personal freedom

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A bid by Uber and other leading gig economy providers to put a temporary stop to California’s efforts to place restrictions on who can be classified as a contractor has been rejected, leaving firms seeking workarounds.

US District Judge Dolly Gee in Los Angeles rejected a request – filed by Uber and Postmates – for a preliminary injunction to exempt firms from Assembly Bill 5 (AB5). The companies argue that the requirements of the bill to reclassify drivers as employees would add up to 40% to their operating costs, a rise that they complain is unfair and unconstitutional.

Judge Gee isn’t sold on that argument. While acknowledging that there would be a negative impact on gig economy firms, there is a wider societal interest in securing a living wage and regulating employment terms and conditions. In her 24 page decision, the judge does not rule on the merits of the wider case, so the lawsuit can proceed, but the temporary relief has been rejected.

Workarounds

Uber, Lyft and DoorDash have pooled $90 million for a political initiative to overturn AB5 at the next state election in November. But that’s a way off and the restrictions the bill imposes have been in place since 1 January, leaving gig economy firms seeking ways to get around the legislation.

For example, Uber has started testing a new feature on its app across a number of California cities which allows drivers to determine and set their own payment rates. This will then allow Uber to make a case that because drivers are essentially setting their own wages, they are clearly independent freelance contractors.

It’s not quite that simple though. In practice, Uber will set a base fare to ensure it gets its money. What has changed is that drivers can then increase that fare in 10% increments with a maximum charge of 5x the base fare. The best fare is then matched to riders. So while Uber says this will “enhance drivers control” over their income, essentially drivers will be bidding against one another.

In further efforts to demonstrate driver independence,  Uber will also provide them with more trip information up front, including travel time, distance, destination and estimated fare, and allow drivers to reject ride requests without penalty.

CEO Dara Khosrowshahi admits it’s a work-in-progress and there’s no certainty that the changes, which are being trialed in handful of airport cities, will work or what the impact will be on Uber’s business longer term:

It’s too soon to tell at this point. The drivers are reacting quite well to the increase in information that they are receiving. On average the service levels as it relates to riders has gone a little worse as far as a predictability of getting a ride. That’s something that we’re working through pretty carefully. Prices in California are up more than, let’s say the rest of the country as a result of the combination of these factors. So some of these changes are resulting in higher prices to the end customer, but it’s very early and there’s a lot of work to do going forward.

CFO Nelson Chai is quick to emphasize the ‘early days’ message, but adds: 

Driver feedback has been positive in terms of the information, the empowerment that I think our driver partners feel. I think that [in terms of] the service itself, prices have increased more than they have nationally. So I think from a rider standpoint, the service on balance has gotten more expensive. But it’s very, very early.

And I would comment, too, that AB5 in general for a number of contractors has created a huge amount of uncertainty. We rolled out these changes to be very clear about our position as a platform and to make sure that our drivers have the freedom to choose when and if they want to work. We’re going to be working through. We want this to be a win-win for our drivers and for the riders on our platform. And we’re going to be iterating to get there. Short term, it’s been, I’d say, net negative for riders, and it’s possibly a net positive for drivers. Hopefully, we can get to a win-win situation.

Whether other gig economy firms take similar preventative measures remains to be seen. Uber rival Lyft is keeping its powder dry for the time being, with co-founder and President John Zimmer saying that the firm is watching what happens at its competitor:

We obviously look at the impacts and are always evaluating but we have no additional product features to report at this time. We’re confident in our position in the market and how the marketplace is performing overall for drivers and riders we feel good about.

What Lyft has committed to is an investment of approximately $75 million year-over-year to fund and support “key 2020 policy initiatives across the United States including the important work we are doing in California to help protect app-based drivers and services” and “help protect the flexibility that our drivers value today”.

London calling

Of course California is not the only pain point for Uber when it comes to regulation. The ban on the company operating in London imposed last year by Transport for London (TFL) is another battle to be fought. Khosrowshahi is clear here:

In London, as far as regulatory goes, we’re going to have our day in court. We respectfully disagree with TFL’s conclusions. I’ll remind you that two years ago, in court, we won the right to operate in London. And I think that our safety levels, our service levels are across the board, significantly, significantly improved versus where they were two years ago. The team is very focused on executing on safety around the world. The London team especially is focused on it. So we expect that our day in court will be positive, but we know that we’ve got to make the case. In the meantime, we operate in London as we have, as always, and where we continue to optimize our business and it’s like any other day in London as far as our operations go.

Underpinning such talk – at home and abroad –  is a fundamental thesis that the platform-enabled disruption caused by firms like Uber is unstoppable and a resulting inference that regulators better be on the right side of history here as society will demand it.  Khosrowshahi pitches it thus:

The most important factor that I point to is that we’re moving from a society that was dependent on transportation based on owned assets to a society that is going to depend on transportation-as-a-service based on shared assets. So there’s a very, very consistent tailwind that we have in the US and across the world and that tailwind is going to serve us well and continues to serve as well going forward.

I think people are changing the way that they live, that they’re changing certainly the way that they get around, and especially the younger generation is not a generation that associates car ownership with freedom. They associate non-car ownership with freedom using our services.

My take

In other words, this is a battle for freedom with Uber casting itself in the role of People’s Champion against Big Government meddling.

That’s an expedient framing in a US election year. It’s clearly in Uber’s interests to pitch a party line that it’s down to the regulators that fares have increased for customers. If that message can be amplified enough in the run-up to November’s ballots and people vote with their wallets, then perhaps AB5 can be sunk.

There’s certainly some merit in the argument made by critics that AB5 is badly-drafted piece of legislation with unintended consequences. While attention has focused on the impact on the likes of Uber and Lyft, there is, for example, a cap on freelance journalists producing more than 35 written content submissions per year.

That’s resulted in San Diego Assemblywoman Lorena Gonzalez, who was the primary drafter of the current legislation, having to promise exemptions for certain business categories in the form of a new piece of legislation, AB1850:

Based on dozens of meetings with freelance journalists & photographers, we have submitted language to legislative counsel that we hope to have available next week to put into AB1850 which will cut out the 35 submission cap & instead more clearly define freelancer journalism.

And there will be more announcements of changes to come in the next few weeks, she adds.

But such an admission of the need to rewrite legislation that’s only a few weeks old will only add weight to the arguments put forward by hostile gig economy firms that this is bad law. For her part, Gonzalez obviously rejects such criticism, insisting that these are just tweaks:

I do believe in AB5 and will fight any attempts to repeal it. I will fight Uber’s attempt to exempt themselves through initiative.

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Insurance platform Collective Benefits raises £3.3M to give gig economy workers a safety net – TechCrunch

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The famous phrase “software eats the world” was originally coined to describe how technology gradually replaces the old industrial norms of production. But few realized that when Uber started to “eat” the taxi industry it would also be among the first harbingers of a new wave of what it meant to be “employed.” As similar gig economy platforms start to eat the old relationship between employer and employee — where some semblance of duty of care had developed — the gig platforms have yet to develop much caring for the gig worker. And as these platforms gain power, do they really want this to look like the re-emergence of serfdom? Gig work is coming to an industry near you, whether we like it or not.

Ideally, we need a new model that can deal with income minimums, benefits, insurance, pensions, etc., which responds to the dynamic way the world of work is evolving.

Collective Benefits is a startup aimed at tackling this growing “protection gap” created by the gig economy where so-called “self-employed” workers must often go without basic benefits such as family leave and sick pay, not to mention mental health support and critical injury pay.

The startup has today announced the closing of £3.3 million seed round led by U.K.-based Stride.VC, alongside existing investors Delin Ventures, Insurtech Gateway and several angels from executives at Uber, Deliveroo and Urban.

Collective Benefits has set out to build a tech platform that gives gig workers access to a full range of affordable, portable protections and benefits which they can carry around with them between the platforms they work on.

So instead of your benefits being tied to one employer, as is the current case, they can apply to any gig economy “employer” someone works for.

It’s also working with a number of on-demand service platforms who are giving their workforces access to these benefits. The startup will use the funding to further its growth and offering for gig platforms. A consumer service aimed at freelancers will follow later this year.

Anthony Beilin, CEO and co-founder of Collective Benefits, said in a statement: “There are six million self-employed workers in the UK, which includes both higher-paid freelancers and gig economy platform workers. Yet, neither group typically has a safety net — no holiday pay, no family leave, no mental health support, not even paid sick days. We are building Collective Benefits so that the gig economy workers are covered by the same protections typically reserved for full-time employees.”

The company provides a benefits platform for both gig economy platforms and self-employed freelancers (such as sick pay, family leave, and mental health support), but the platform is also designed to boost loyalty to the gig platforms amongst the workers, as well as reduce churn and talent acquisition costs.

Fred Destin, partner at Stride.VC, said: “We’re seeing services platforms gain unstoppable momentum in every segment of our lives, from rides to food delivery to freelancing. We need a new playbook. Collective Benefits addresses one of the core challenges in this brave new world of work, using technology to design and deliver a new type of safety net to all the participants in this fast-growing part of our economy.”

Robert Lumley, Director and Co-founder of Insurtech Gateway, said: “The insurance industry faces a massive challenge in keeping up with the extraordinary growth in self-employment. Collective Benefits has created entirely new insurance products for the self-employed not addressed by traditional insurers and accessible through a flexible tech platform that allows them to get the cover they need.”

The fact this startup has appeared just goes to show the market failure today due to the on-rush of new technology sprinting ahead of regulation. Some 96% of UK self-employed have no income protection, while 93% of UK self-employed have no health or critical illness coverage. PWC estimates that self-employed will account for 20% of labour force by 2025.

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How the industry is meeting the needs of the gig economy – COVER

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Montreal gig workers have to hustle, despite lack of labour protections

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A few years ago, Shanti Gonzales started waking up in the morning with no voice.

At the time, she was working a gig where she would sing to rooms of rambunctious children at libraries and schools, and it took a toll.

No amount of honey and tea and lozenges helped. She often would wind up hoarse by the end of her shift, meaning she had to stop working — at that job, and at her other gigs.

“I didn’t have anything to lean back on. I didn’t have paid time off. I didn’t have health insurance, I didn’t have any benefits. I didn’t even have someone to cover for me,” she said.

“Without these protections, you feel trapped.”

Like many her age, Gonzales, 24, is working in what’s called the gig economy. Though the term may bring to mind jobs that involve some kind of online platform (such as Fiverr or Foodora), it also includes those who work independent contracts for short, fixed periods of time.

The rise of the gig economy has led to a problem: workers who are juggling several different contracts don’t always have the protections, such as a human resources department, or a union, that salaried workers do.

Gonzales graduated from McGill with a BA in English three years ago, and since then, she’s never had a full-time job. She has worked as a musician, nanny, arts educator, administrator, copywriter and playwright.

In some of those jobs, she has faced discrimination based on her gender, her race, and her age, she said. But she never had many avenues of recourse.

A ‘rolling back’ of labour protections?

According to John Paul Ferguson, a professor at the Desautels Faculty of Management at McGill University, the gig economy has less to do with the type of work people are doing and more to do with the relationship between the employer and the employee.

Along with his colleague Matthew Corritore, Ferguson is surveying gig economy workers in Montreal to better understand their realities.

Ferguson says while there are some good things about the gig economy — like how online platforms can make it easier for people to contract for work — he has concerns about the effect of the gig economy on workers’ rights.

In the past, policies were put in place restricting casual labour because of concerns about exploitation, underpayment and unfairness, he said.

“The worry that those of us who have studied employment for many years have is: how much of this is just a rolling back of some of these protections that we put on our employees in the past?”

The province’s major labour laws do not apply to people who are self-employed. However, Catherine Poulin, a spokesperson for Quebec’s Ministry of Labour, said some self-employed workers in the gig economy may actually have an employer-employee relationship with their employer, and therefore are protected.

Gonzales, for example, is considered an employee at some jobs, but considered self-employed at others.

Those who face discrimination are also entitled to the protections under the Charter of Human Rights and Freedoms, and can file a complaint with the Quebec Human Rights commission, Poulin said in a statement.

Relying on a community

Gonzales says one of the most important aspects of the gig economy is knowing which gigs are good and which are not.

She relies on a community of people who meet up in person or chat over the phone to give each other advice about jobs and employers to avoid.

This tight-knit web of people also share opportunities with each other and recommend each other for jobs that may come up.

Gonzales said being a part of the gig economy can be isolating and leave people vulnerable because they don’t have co-workers.

“I think that’s why these little micro communities form. It’s the people: we’re ‘in it’ for each other. We’re in it to make sure that we can achieve each others’ goals, together. The community aspect is the thing I am fiercely protective of and fiercely invested in.”

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