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Court Denies Preliminary Injunction To Halt California’s New Statutory “ABC Test” As To Gig Economy Companies And Drivers

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On February 10, 2020, United States District Judge Dolly M. Gee denied a motion for a preliminary injunction to enjoin California from enforcing Assembly Bill 5 (AB 5) against Postmates Inc. and Uber Technologies, Inc. Judge Gee concluded: “Plaintiffs have not shown serious questions going to the merits — the critical factor in determining whether to issue a preliminary injunction — and, though company plaintiffs have shown some measure of likelihood of irreparable harm, the balance of equities and the public interest weigh in favor of permitting the state to enforce this legislation.”

Background

Effective January 1, 2020, AB 5 requires the application of the “ABC test” to determine if most workers in California are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission wage orders. (Read our prior post HERE.) Under the ABC test, a worker will be an employee and not an independent contractor unless these three conditions are satisfied:

  1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
  2. The worker performs work that is outside the usual course of the hiring entity’s business; and
  3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Notably, the statute exempts a number of occupations from the ABC test, such as certain licensed insurance agents and brokers, certain licensed physicians or veterinarians, and certain licensed private investigators.

Motion for Preliminary Injunction

On January 8, 2020, Postmates and Uber, along with two individuals who drive on those platforms (collectively referred to as “Plaintiffs”), filed a Motion requesting the Court to enjoin California from enforcing the new ABC test against Postmates and Uber.

In particular, Plaintiffs argued that AB 5: (i) treated gig economy companies different from other groups in violation of the Constitution’s Equal Protection Clause; (ii) deprived the two individuals of their substantive due process rights to pursue their chosen professions; and (ii) impaired the contracts between the individuals and Postmates and Uber.

The Court’s Ruling

On February 10, Judge Gee denied the Motion and rejected these arguments. Judge Gee acknowledged there was evidence that AB 5 targeted gig economy companies, but she held that “such targeting, even if it rises to the level of animus toward gig economy companies, does not establish an Equal Protection violation where the statue addresses legitimate concerns of deleterious misclassification of workers in many industries, not just the gig economy.”

In particular, she found that the “State’s asserted interest in protecting exploited workers to address the erosion of the middle class and income inequality…could provide a rational basis[] for any ostensible targeting of gig economy employers and workers.” Judge Gee also found rational explanations for AB 5’s exemptions because those work relationships “require business organization, skill, self-direction, self-pricing, shorter or less frequent work terms, a distinct location, a specific type of work, and other hallmarks of independent status.” Judge Gee therefore declined to find that AB 5 targeted gig economy companies in violation of the Equal Protection Clause.

The individual drivers’ arguments that AB 5 deprives gig economy workers of the right to pursue their chosen occupation also did not persuade Judge Gee. She reasoned that “[e]ven if Individual Plaintiffs’ employment status would change under AB 5, they potentially could still pursue their line of work, provided that their employers compensate them properly and allow them to have flexible work schedules.”

Finally, Judge Gee further determined that enforcement of AB 5 does not unconstitutionally impair the contracts between platform companies and drivers in violation of the Contract Clause because the parties should have known that the terms setting forth a driver’s contractor status in the contracts did not determine employment classification, even under the former Borello standard. She also held that, even if there was substantial impairment of contracts, AB 5 satisfies the public purpose test in a Contract Clause challenge because “AB 5 is an exercise of the State’s police power to protect workers aimed at remedying what it perceives to be a broad economic and social problem.”

What’s Next?

The Plaintiffs’ lawsuit challenging the constitutionality of AB 5 is still in progress, notwithstanding the denial of the motion for a preliminary injunction.

In addition, certain platform companies have launched a ballot initiative called the Protect App-Based Drivers and Services Act, which is aimed to appear on the November 2020 state ballot. Under the proposed Act, app-based drivers would be considered independent contractors, but be entitled to certain benefits (including minimum wage and a form of healthcare benefits) if certain conditions are met. For instance, the hiring entity must permit the worker to select their own dates, times, and hours of work; allow the worker to reject a request for an assignment at any time they wanted; let workers perform services for any other company including direct competitors; and cannot restrict the worker from performing any other kind of work.

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Gig Economy Helps India’s Women Workers Gain Financial Independence

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women in uber swiggy and heydeedee(Left to right) Hey Deedee’s Nasima Shaikh, Swiggy’s Priyanka Thorat and Uber’s Harpreet Kaur have found newer opportunites in the gig economy
Image: Aditi Tailang

For nine years 34-year-old Seetha Laxmi, a single mother of two, had a routine: Head to Mumbai’s Borivali railway station during peak commuting hours, jostle her way into packed trains carrying a big basket full of imitation jewellery—earrings, anklets, bracelets—and try and sell it, making about ₹300 a day.

After her husband abandoned her, Laxmi had turned to hawking on trains to make ends meet. She started her day early, worked for three to four hours before taking a break to return home and check on her children—then a year-and-a-half and four—and then went back to selling her wares on the Matunga-Borivali route.

Last year in January, she heard of Hey Deedee, India’s first all-women last-mile delivery service for ecommerce, retail and other businesses. Fed up of avoiding the police and switching compartments to win over that elusive buyer, Laxmi decided to grab the opportunity at Hey Deedee.

She had always wanted to learn to drive and this was an ideal platform to do that as well as earn a living. “When I was a train hawker, nobody knew me. But once I joined Hey Deedee, I got my own identity. That feels good,” says Laxmi, a resident of Sion.

“A lot of things changed in my life after joining here as a delivery associate. I learnt many new things. I even picked up some English and try to use it in my day-to-day life,” adds Laxmi, who starts her day at 5 am, completes her household chores, gets her son (the other lives in a hostel) ready for school before heading to work. “I earn about ₹18,000 a month. I’m now saving after a long time as I plan to buy a two-wheeler. At times I also support my parents financially,” she says.

Founded by Revathi Roy in 2016, Hey Deedee operates in 15 cities, including Mumbai, Pune, Bengaluru and Nagpur, with clients such as Nature’s Basket, Amazon and Flipkart, among others. Women who join the platform undergo a 45-day training programme where they are taught to drive a car and a two-wheeler. They are also instructed on how to get a licence and trained in self-defence. Once on the road after the formal training, they deliver 30-50 parcels a day. Hey Deedee employs over 1,000 women in 15 cities.

Nasima Shaikh, 30, a housewife, is another woman who was economically empowered after she joined Hey Deedee. “My husband is an auto driver and I decided to start working too to ensure my three children get a better education,” says Shaikh adding that since she learnt to drive and became a delivery associate, she has become more confident of herself.

“A woman or man is empowered only when they are in a position to earn their own money and spend. Unless this happens, our society cannot progress,” says Roy, who was on Forbes India’s W-Power list in 2017. 

For the longest time, people in blue-collar jobs remained faceless and nameless, with few options to pursue their aspirations. However, an emerging gig economy and the increasing participation of women in it provide a glimmer of hope.

According to the Employment Outlook Report by recruitment platform TeamLease, the gig economy is expected to generate more jobs in the future. It projects that the gig economy will have half of the urban workforce by 2025 and 80 percent by 2030. In 2019 alone, women gig workers accounted for about 68,000 jobs in India. Priyanka Thorat was one of them.

The 24-year-old has become a celebrity of sorts, acceding to selfie requests when she delivers food to customers. In 2018, online food ordering and delivery platform Swiggy signed up five delivery women, including Thorat, for the first time. Initially, she found reading maps and locating restaurants difficult. But now navigation has become a breeze after she learnt how to read maps with assistance from the company. “People appreciate me. I’m treated with double respect which I never got when I used to work as a domestic help,” says Thorat, whose parents passed away after she entered her teens. Since then, the resident of Worli’s BDD chawl in Mumbai has been single-handedly taking care of her three siblings.

Swiggy provides certain options for its women delivery executives. “They are free to log in at any hour and we encourage them to end their shift before 6 pm. There is also a policy where they operate in areas that are identified as safe zones. Also, as a precautionary measure, they are all provided with a pepper spray during their onboarding process,” says a Swiggy spokesperson.

Founded in 2014, Swiggy has more than 1,550 women delivery partners across 22 cities, including Mumbai, Pune, Bengaluru, Nagpur, Hyderabad, Chennai, Kochi and Kolkata.

Apart from becoming financially independent, women in the gig economy will also steer the country’s economic growth. The McKinsey Global Institute said India’s GDP could rise by $0.7 trillion if the workforce participation rate of women increases by 10 percentage points by 2025.

However, it’s easier said than done. Women in the country still battle stereotypes. Access to education and employment is a privilege for many. And convincing in-laws to allow them to work after marriage remains a major hurdle. Startups like Curryful are working to break such barriers by enabling housewives to make money by preparing meals from the comfort of their homes. Founded in 2018 by Ben Mathew, Rakesh Sasidharan and Roshni Joseph, it is a home-food marketplace that delivers homemade meals to customers. All the meals are freshly prepared and delivered in 40 minutes. “Our idea was born out of strategy as well as from our personal obsession to change the economic participation of women in society. Through research, and through opportunities we saw in our past roles, we arrived at the Curryful business model where we wanted to build a shared-economy and mobile-internet-based food service powered by women entrepreneurs,” says Sasidharan.

curryful chefAnuja Shah is able to make ₹6,000 a month by being a home chef on Curryful
Image: Mexy Xavier

Anuja Shah, 40, a chef at Curryful, had to discontinue her job as a lecturer at SNDT Women’s University  in Mumbai due to domestic responsibilities. She was always passionate about cooking and Curryful gave her the opportunity to exercise her culinary skills. Women like her have turned their homes into cloud kitchens and their food is in demand among the millennial workforce.

Curryful has its home chefs listed on Zomato and Swiggy. “My specialty is Gujarati dishes. I keep experimenting and adding new dishes to my menu once Curryful approves them. The price ranges from ₹80-120 per dish and I manage to cater to 10-12 orders per day. I’m only preparing lunch as of now… if I start doing dinner, my income will be higher,” says Shah, who earns ₹6,000 a month. “My family is extremely supportive. In fact, there are times when my husband helps me with the packing of the food.” 

Operating out of South Mumbai, Curryful has over 50 chefs and plans to expand to 25 cities and partner with 250,000 women entrepreneurs over the next three years.

According to BetterPlace, a platform for blue-collar workers, the gig economy accounts for more than 1.4 million jobs in India. Most of these include drivers, delivery associates, beauticians, maintenance workers and so on. However, TeamLease points out that there’s an 8-10 percent salary difference between male and female delivery executives; women are paid less for the same jobs.

Pravin Agarwala, co-founder and CEO of BetterPlace, disagrees. “I don’t think so. It’s completely driven by demand and performance. On the contrary, the supply is less and hence they [women] can ask for more [money],” he says. Roy of Hey Deedee concurs. “There is no pay disparity. In fact women are more diligent compared to men. They don’t waste their time after work… their focus is on going back home to their kids. Although the attrition rate is high, we are doing our best to retain employees by offering good incentives and insurance.”

It will soon be a common sight to see a woman behind the wheel while booking a cab as online ride-sharing companies have also started onboarding more women. Harpreet Kaur, 45, for instance, is a registered driver on Uber. “I joined Uber India four years ago. Since the age of 13, I was passionate about driving cars… my father was a driver and I was inspired by him. I learnt driving at a young age. But I cannot tolerate Mumbai’s traffic and so, I prefer doing night duty when the roads are empty and I can do more trips,” says Kaur, who quit studies after class 10 and now earns more than ₹60,000 a month.

swiggy partner and dance teacherSwiggy delivery partner Laxmi Prajapati is also able to continue teaching and learning dance
Image: Aditi Tailang

“A lot of people said this job is not meant for girls, it’s not safe. I listen to everyone, but do what I feel is right. I’m doing something I’m passionate about and where I have the freedom to work whenever I want. There is no boss breathing down my neck and no pressure. When your family members are supportive, things become easy. Everyone in my family has been supportive as a result of which I feel powerful,” says Kaur, who lives in Chembur in Mumbai. She is the sole breadwinner of the family currently as her husband lost his job. She bought a new SUV recently on a monthly installment basis and mostly does airport pickups at night. “Customers are happy when they see a female driver. During night time, women are relieved to find a woman driver,” says Kaur.

“Through various initiatives and programmes, we aim to onboard more women and gender-diverse partners by devising a value proposition that offers earnings, safety and a support experience to them. We would like to continue onboarding more women driver partners so that they can make a mark in the industry of mobility and earn a sustainable livelihood,” says an Uber India spokesperson. He, however, refused to divulge the number of women the company has employed.  

It’s not just all work and no play. Companies also give women a chance to pursue their hobbies on the side. Recently Swiggy started a campaign called ‘Swiggy Starhunt’ in which the company encouraged its delivery partners to showcase their talent on video-sharing app TikTok.

Laxmi Prajapati, 36, a Mumbai-based delivery partner with Swiggy since the past year, was enthused when she learnt about this. A dance instructor in the morning and delivery executive by afternoon, she never misses an opportunity to make a TikTok video while she is waiting at a restaurant for an order. “I love to dance… all my stress goes away. With Swiggy I’m able to pursue my passion. I teach dance in the morning and learn in the evening. There are no restrictions with Swiggy… there are days when I get orders for choreographing a wedding sangeet. I don’t have to worry about losing my job… I just go offline for the day and take up sangeet orders,” says Prajapati, who got married at 16 and has three children (a daughter and two sons). “I’m able to earn money and pursue my passion because of my family’s support. My 17-year-old daughter helps me with household work and my youngest son, who is in class 3, is also quite self-reliant. I feel blessed. I never imagined I’d get so much recognition and respect. At times when I deliver orders, people say things like, ‘We’re glad you delivered this, more power to you’,” says Prajapati, a resident of Malad. “In the future, I want to ensure my children get the best education and all the facilities that I did not get in my life. We live in a small house now and I want to buy a bigger one. Recently I bought a two-wheeler on EMI and put my children in a better school. Everything will be alright soon.”

(This story appears in the 13 March, 2020 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)

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Growth of the gig economy | New Straits Times

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IN October last year, Prime Minister Tun Dr Mahathir Mohamad said the gig economy had been identified as a new source of economic growth and would be made part of the 12th Malaysia Plan.

The word “gig” used to be associated with musicians or performing artistes hired to play for specific events or short-term engagements. But this buzzword has trickled its way to almost any kind of employment, particularly on an ad hoc or temporary basis.

It concerns mainly freelancers, project-based workers, independent contractors as well as part-time hires. They are all part of a growing trend called the gig economy.

According to financial planning lecturer Associate Professor Dr Mohamad Fazli Sabri, people have been doing “gigs” for decades.

Mohamad Fazli, who is Universiti Putra Malaysia’s Faculty of Human Ecology deputy dean (Graduate Studies and Industry and Community Network) said: “Working part-time and freelancing have been around for ages. These jobs are becoming more pronounced due to the rise of digital platforms such as smartphones and the Internet.

“Technological advancements have paved the way for those who are interested in offering services through websites or mobile apps,” he said, adding that it is more popular among young people.

“There has been much debate on what comprises a gig economy and how it is different from freelancing. To put it simply, both terms are synonymous. It can also be referred to as a sharing or collaborative economy.

“While we are familiar with food delivery services, professionals are now starting to offer services like legal consultation, journalism and copywriting, among others, under what classifies as gig economy.”

Mohamad Fazli said the gig economy has benefited consumers as they are provided with an array of options and services to choose from.

Freelancing allows individuals to work for companies anywhere in the world and not limit their talent to geographical boundaries. PIC FROM https://www.freepik.com/free-photos-vectors/man

For large organisations, it increases flexibility and efficiency while lowering the cost of doing business.

“Gig workers enjoy flexibility, lucrative pay and the freedom to choose the type of work. No wonder people are turning away from desk jobs to be a part of the gig economy,” he said.

When done right, working on gigs come with the perks of independence, peace of mind and good pay.

Mohamad Fazli said that in the United States, gig workers are expected to make up around 40 per cent of its workforce by this year.

“In Malaysia, food delivery services are flourishing. To date, there are 13,000 Foodpanda and 10,000 Grab Food riders in the Klang Valley.

“There are people who undertake side jobs on top of full-time jobs to bolster their income or even to maximise productivity,” he said.

PROVIDING OPPORTUNITIES

Freelance-hiring specialist and gig economy platform Workana allows companies to engage talented and qualified freelancers for project-based job opportunities worldwide.

The Latin company, which started in 2012 in Buenos Aires, Argentina, recently set up its Southeast Asia headquarters in Kuala Lumpur.

According to Workana co-founder Tomas O’Farrell, over 100,000 freelancers signed up on the platform since April last year.

Workana co-founder, Tomas O’Farrell

“Most talents are Malaysians, with the rest coming from across the region. We now have an excellent pool of talents comprising graphic designers, coders, writers, social media experts and marketing experts. This platform is a way of connecting companies with the talented people they are looking for, and reducing much of the friction of hiring remotely.

“Companies are also posting more jobs on our platform. Workana has over 30,000 job postings each month coming from all over the world.

“Our growth here in Malaysia is amazing. What makes it interesting is that Malaysian freelancers are now able to work for companies anywhere in the world and not limit their talent to geographical boundaries,” said O’Farrell.

He added that the workforce has changed in the last decade with Gen X and Gen Y being technology-savvy individuals who prefer to work independently.

“Experienced and professional freelancers cherish their freedom to work at their own pace and commit to projects with less supervision.

“Many companies, especially startup businesses, are looking for top talent. Employing a freelancer is an option that works for growth and return of investment (ROI).

“For example, if a company only needs a person for a limited period to complete a project, hiring a freelancer makes perfect sense.”

Technological advancements has paved the way for those who are interested in offering services which are found on websites or mobile apps.

O’Farrell added that Workana provides opportunities for its freelancers to develop their skills by inviting them to conferences and think-tank sessions.

However, he said, professional skills enhancement needs to be done on an individual basis.

“Since developing a skill is a learning process and needs time and commitment, this means freelancers who are motivated will need to enrol for courses as they deem fit.

“For example, a freelance social media expert who is also proficient in Adobe Photoshop and can use social media tools effectively will be highly sought after on the platform.

“In the end, the gig economy becomes an altogether wider topic. Given the popularity of remote working, technology advancement (emails, live chats, video calls, collaboration software) and mushrooming co-working spaces, hiring freelancers is something which is destined to become a big part of the human resources industry.

“It is definitely here to stay,” O’Farrell concluded.

PITFALLS

While the unemployed, students and fresh graduates struggling to land a first job may find the gig economy platform advantageous, there are rising concerns about worker welfare and a deteriorating safety net.

Employment issues from the gig economy are mainly on having financial security like Social Security Organisation and Employees Provident Fund savings.

Mohamad Fazli said: “Many gig workers are from the younger generation. They may not be fully aware of the importance of having Employees Provident Fund (EPF) savings which provides retirement funds and benefits.

“They must be equipped with financial literacy or else they will be financially vulnerable.

“Besides EPF, full-time workers enjoy a certain amount of security in terms of consistent pay and health benefits.

“Those who are working gigs at the low-skill level have little room for career growth and development. There are no opportunities to climb up the ladder and secure promotions.

“Gig workers with higher education backgrounds must think of ways to move towards a professional level befitting their qualifications,’’ he added.

O’Farrell explained that freelancers face common challenges such as irregular workload and getting paid on time by different clients.

“To overcome this, we have a secure way of paying freelancers. We take advance payment from the companies and work as a mediator to ensure that payment is made to the freelancers once the jobs are completed.”



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Foodora Workers Just Won The Right to Unionize And It Might Disrupt the Gig Economy’s Business Model

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Management-side lawyers are warning it could ‘erode the foundational basis of the gig economy’

February 26, 2020