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Instacart may have misclassified workers under gig law, judge says

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Instacart may be forced to reclassify its California shoppers as employees.


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When California’s AB 5 gig worker bill went into effect in January, the state expected a wave of lawsuits to enforce the law. The first of such cases has just worked its way through a San Diego court. On Monday, Superior Court Judge Timothy Taylor ruled that the grocery delivery company Instacart has likely misclassified the majority of its California shoppers as independent contractors.

The ruling comes in the form of an injunction against Instacart, which means the company must halt its service in San Diego until it classifies its workers correctly under the law. However, the judge also temporarily stayed the enforcement of the injunction, so the ruling won’t go into effect immediately and it can be appealed. This news was earlier reported by NBC.

“We disagree with the judge’s decision to grant a preliminary injunction against Instacart in San Diego,” an Instacart spokeswoman said. “We will be taking steps to keep that stay in place during the appeals process so that Instacart’s service will not be disrupted in San Diego.”

Most workers for gig economy companies, like Instacart, Uber, Lyft, Postmates and DoorDash, are classified as independent contractors. While that classification can mean increased flexibility for workers, it can also mean they’re shouldering many of the costs of their employers. For example, workers pay for their own car, phone, gas and vehicle maintenance. They also don’t get basic benefits, such as minimum wage guarantees, overtime pay and health insurance.

AB 5 changes all of that. Under the new law, companies using independent contractors in California will be put to a three-part “ABC” test to determine whether they must reclassify their workers. If they don’t pass that test, they’ll have to turn their workers into employees. Washington, Oregon, New York and New Jersey are also considering legislation similar to AB 5.

The San Diego lawsuit against Instacart was brought by City Attorney Mara W. Elliot in September. In Taylor’s ruling Monday, he wrote that the city “makes a very plausible showing of improper classification under the ABC test.”

“While change is hard,” Taylor wrote, “[Instacart] cannot legitimately claim surprise or that it has not had time to adjust its business model.”

Union leaders, gig worker activists and state lawmakers who supported AB 5 are applauding the court’s decision.

“For years, gig companies like Instacart have banked on the exploitation of workers who live beneath the poverty line, wondering where their next meal will come from or how they will pay their rent next month,” said Amber Baur, executive director of the United Food and Commercial Workers Western States Council union. “We’re proud to have the court rule in favor of these hard-working employees.”

Along with fighting AB 5 in the court, Instacart has joined other gig companies in sponsoring a ballot initiative to bring the issue to voters in November. Uber, Lyft and food delivery company DoorDash have each chipped in $30 million to support the initiative, known as the “Protect App-Based Drivers and Services Act.” Instacart and Postmates have each added $10 million, bringing the total raised to $110 million. 

To get on the November ballot, the proposal needs to collect more than 623,000 signatures. 

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How are gig workers affected by the coronavirus?

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The economic consequences of COVID-19 are far-reaching as all companies take precautions with budget cuts and layoffs. One group that has been vastly affected by the coronavirus outbreak is gig workers, a growing global community of workers who are self-employed. Most gig workers are contractors, which means that they do not have access to employee rights such as paid leave, a right that proves essential in a pandemic.

AppJobs surveyed gig workers from 58 countries in March to analyze the shifts in demand within different job categories and to see how they are dealing with the crisis financially. Over 50% of gig workers that were questioned claimed that they lost their source of income in February and March. Only 30% of gig workers claimed that they have enough savings to live on. 

As uncertainty continues, gig workers can only hope that the situation will improve – and fast. Nikki, a gig worker from Philadelphia who had to stop driving with Uber and Lyft said that she lost over 95% of her income in a matter of days. Nikki had to give up driving because she didn’t want to put her daughter who has asthma under risk if she was to catch the virus. Nikki is not alone, gig workers that participated in AppJobs’ survey said that they are forced to make a decision between losing their source of income and risking infecting themselves and their families with the virus. Many gig workers cannot find new jobs to replace their gig jobs, so their only option is to continue working. The current state of the job market is of no help: as more industries shut down and people are being let go, gig workers are having difficulty finding alternative ways of making money. According to AppJobs Institute, due to self-isolation, the demand shifted to the delivery and online jobs

The situation might still get worse for gig workers like Nikki. The majority of gig workers face more financial uncertainty in the months to come, especially as quarantine measures tighten around the world. With fewer people that want to take rides and no pets to sit, no one knows what the near future withholds for gig workers across all industries. The survey results show that most gig workers are or had been employed in the restaurant, tourism, cleaning, customer service, rideshare and transportation industries, which are among the most negatively affected. The survey results also show that the majority of gig workers are far from satisfied with the support they have received from their companies so far. 

Gig workers are self-employed, which makes them an exposed group who very seldom have the right to support from the government or a company. We at AppJobs are working hard to help our members find new gig jobs, and new ways into the labor market, says the CEO of AppJobs, Alok Alström.  

75% of the gig workers AppJobs surveyed claim that the gig companies they work for have been of no help in this time of crisis. Gig workers need more help now than ever. They feel unprotected, vulnerable and overlooked. Many companies bulk-send hygiene tips to workers on their apps and recommend DIY measures to self-isolate while working, but this is not the support gig workers are looking for. Gig workers expect support from both gig companies and the government. They want financial help, paid sick days, insurance, tax reduction and stimulus checks so that they don’t have to expose themselves to the virus because they cannot afford to stop working. Gig workers like Nikki don’t want to have to choose between their jobs or their families’ health, and they shouldn’t have to.

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‘Gig economy’ workers fall on hard times in Singapore and Australia

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SINGAPORE — Nicholas Yeo did not expect such a rocky start to his first year as a full-time freelance photographer. The 26-year-old graduate of Singapore’s Nanyang Technological University counted it a blessing that his passion for taking pictures was also his livelihood.

Now he doesn’t feel so lucky. As the new coronavirus swept the globe, he saw more and more work dry up as events were canceled or postponed for health and safety reasons.

In all, Yeo said he has had six projects killed off, costing him the equivalent of around $4,200. “I can hemorrhage for another three months before I call it quits,” he told the Nikkei Asian Review, adding, “I know people up the chain who’ve been though worse.”

Yeo is among scores of workers in the “gig economy,” particularly in the creative industries, who have seen their incomes pared during the pandemic. These workers, who take up freelance jobs in lieu of permanent company positions, are some of the most exposed people in the labor force as economies go into hibernation.

“These workers are often the first ones to be cut during a downturn, and are viewed as more discretionary spending by many companies,” Carlos Castelan, managing director of the Navio Group business consultancy, told the Nikkei Asian Review.

At the same time, most have no safety net to fall back on.

“Unprotected workers, including self-employed, casual and gig workers, are the most critical groups as they do not have access to paid or sick leave mechanisms, and are less protected by conventional social protection mechanisms,” said Patuan Samosir, senior director at the International Trade Union Confederation – Asia Pacific.

With restrictions and lockdowns disrupting business activity across the region, participants in what had been a burgeoning gig economy are tallying up the costs, turning to each other for moral support, and looking to their governments for assistance.


A food delivery cyclist in Sydney: Despite expectations for a surge in online food orders, most gig workers are in a precarious economic position.

  © Getty Images

“I Lost My Gig,” a movement among freelancers that began in Australia and spread to Singapore, has set up an online forum for gig workers to record lost income due to the coronavirus. The combined losses reported by members from the two countries as of early April topped $215 million.

“There’s no opportunity for me to get any other work,” Rebecca Charles, a bartender, posted on the website. She said she has lost more than $1,200.

“Keep your heads high, my friends. We feel your pain. We are all in this together,” posted Mario Garza, a photographer who had work in Australia. He logged over $1,400 in lost income.

Other groups are stepping up as well. Singapore Unbound, which represents writers, created a relief fund to help members who are in dire straits as a result of canceled book events, plays and movie productions. The fund started out with $2,000 and offers grants of $200, using resources originally intended for writing fellowships.

“Singapore Unbound has decided to postpone this year’s writing fellowships to Southeast Asia, and to commit the funds instead to aid Singaporean writers badly affected by the shutdowns,” the group said on its website.

Labor statistics from Singapore showed that in 2018, close to one-tenth of all working residents in the city-state were self-employed. In Australia, a study of the gig economy by the state government of Victoria concluded that about one-twelfth of all employment in the country is gig work.

Not all gig workers are equal, however, and those who offer online services may fare better than freelancers with incomes tied to events, said Maria Figueroa, director of labor and policy research at Cornell University’s School of Industrial and Labor Relations.

“There’s likely to be a surge in demand for food delivery workers, too, as people are not patronizing restaurants as much,” Figueroa told the Nikkei Asian Review.

But Walter Theseira, an associate professor of economics at Singapore University of Social Sciences, believes even independent workers on food-delivery and ride-hailing platforms like Grab and Gojek are vulnerable.

“A lot of the platforms are able to sustain the wages that they do now because they’re sustained by cheap financing,” he said. “There is some concern about whether that financing is going to dry up.”


A nearly empty Siloso beach on the island of Sentosa, off Singapore, on April 4: As the economic goes into hibernation, self-employed workers stand to receive about $700 a month from the government for nine months.

  © Getty Images

While some companies may eliminate freelance jobs to cut costs, Emily Weisgrau, president of business consultancy Weiswood Strategies, warned this may be a double-edged sword, with those companies unable to lure back temporary workers when the situation returns to normal.

“Now is actually the time for businesses to retain freelancers, who can keep work moving without the additional financial burdens like health insurance and retirement benefits that employees expect,” Weisgrau said.

Governments across the region have rushed to deliver billions of dollars in aid to tide workers over during the coronavirus slowdown.

In Australia, the state of Victoria earmarked more than $300 million for displaced workers. In Singapore, self-employed workers stand to receive about $700 a month from the government for nine months.

Lower-to-middle-income residents in the city-state who face job or income losses can also apply to a temporary relief fund for help with living expenses. Those approved receive a one-time cash payment of about $350.

Freelancers like Yeo are hoping for an end to the pandemic and a return to normalcy. “Commercial gigs have been good, until the virus happened,” he said.

For now, he has applied for government assistance. “Never in my life would I have imagined I would want to queue to meet social services to beg for a handout,” Yeo said.

Additional reporting by Peter Guest.



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Why Keith Weed invested in ‘gig CX’ platform Limitless | Digital

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There’s no need to retrace the full story of Uber’s legal disputes with its drivers – they continue to be covered in many other publications – but suffice to say the gig economy has not always lived up to what it once promised: to liberate workers from the confines of conventional employment and allow them to deal directly with consumers on terms that suited them. And at a time in which almost everyone’s work is feeling insecure, the precarious nature of that kind of life perhaps looks less appealing than ever.

So why has Keith Weed (pictured, top) – the former Unilever marketing supremo now living the portfolio life as a WPP board director, charity non-exec and angel investor – decided to back Limitless, a company aiming to bring the gig economy to customer experience in major companies?

His arguments, though already well-grounded, have been given a surprising boost by one of the indirect consequences of the coronavirus pandemic: the surge in online shopping. Speaking to Campaign on a call with Roger Beadle, co-founder and chief executive of Limitless, Weed said: “The biggest impact this is going to have is [it will lead consumers] to expect brands to have a bigger ecommerce platform.”

The crucial behaviour change caused by the lockdown was to prompt huge numbers of people to try online shopping for the first time, Weed said: “We’ve basically probably got the next 15 years of people [set to come] online [to] have come online in the last 15 days.” In other words, the size of the consumer base has, almost overnight, reached a level observers wouldn’t have expected for another 15 years.

“That’s the reason you’re seeing all these problems in online grocery,” Weed said, adding that two of the giants of ecommerce, Amazon and eBay, were also experiencing problems due to overwhelming demand.

That, in turn, leads to a far greater demand for online customer service – which is where Limitless comes in. The company offers freelance customer service workers, dubbed “experts”, who work on a gig basis, meaning clients can bring them on for exactly the amount of work they need doing, helping them deal with sudden peaks in demand.

“Post-this [pandemic], the amount of online shopping will go down, but the amount of people who have now had an online experience will never go back,” Weed said. “So there will be a step change in the amount of ecommerce used – brands are going to have to think about how they engage with that.”

Beadle founded Limitless with Megan Neale in 2016, after a 25-year career in the contact centre industry, including founding and selling a successful company. Blue-chip clients of Limitless have included Microsoft and Unilever, where Weed first became involved as a customer.

One of Beadle’s deep regrets about the call-centre business was its low rates of pay. “The reason we founded the company [Limitless] is we were ashamed our industry pays people the minimum wage the world over,” he said. “It’s virtually impossible to break that economic model in the world of call centres, so we wanted to find a model that could strip a lot of the wasted cost away and pay people more.”

As a result, it pledges that its experts earn an amount equivalent to considerably above the living wage (the UK real living wage is currently £9.30 an hour or £10.75 in London). Beadle and Weed both set Limitless apart from the likes of Uber by stressing that it is not meant to provide full-time work to any of its experts – and that the work can be done during gaps in the day, such as while a parent is waiting to pick up their kids.

The idea is that the experts are worth paying more than call-centre employees, because unlike full-timers, they are chosen for their use and knowledge of the brand in question. Brands are able to invite their own customers (or even employees) to become experts – something that Beadle calls the “special sauce” of the operation, or perhaps one sauce of several.

“It’s not just a free for all,” Beadle said. “The very people that are helping you have native knowledge, use of the brands and the products, and are fans and advocates. You get a much richer, empathetic level of service.” The experts are provided with training and resources to support their existing knowledge.

There’s also another factor Beadle credited with ensuring high standards, and it’s a classic hit of the gig economy: a marketplace dynamic. “You’re only on the platform if you have a great rating and are helping consumers,” he said. With luck, the fact that both the brand and the consumer need to be happy with the expert’s work will protect this system from being manipulated.

There’s an obvious overlap between Limitless’ experts and the style of influencers offered by another company Weed has invested in, Tribe. It’s an interesting direction for a man who, while at Unilever, took a stand against bad practices in the influencer industry. “One thing I’ve learned is that authenticity is everything” when it comes to influencers, he said.

“The [influencers] that are less interesting are the big names that have clearly been bought to talk about brands,” Weed explained. “Consumers are very forgiving around stars in ads talking about brands – the difference [with influencers] is that people are looking for something more personal and real.” People were “genuinely interested in other people’s opinions”, he said, but “after that, what’s important” when it comes to influencers is: “Are these people real users of the products and are they really knowledgeable?”

On the broader impact on brands of the coronavirus crisis, Weed said: “I believe and hope we’ll see more brands thinking about society, and the roles of serving society, than we had before. Already, a lot of brands have had to rethink what sort of brand they are in a moment of crisis. Post-this, most brands will say we’ve got to think about a multi-stakeholder approach, how we influence the environment and society, and not just think about our P&L.”

And what role is Limitless trying to play in society? “We’re trying to think about how work is done in the future,” Weed said, echoing wording used by Beadle. “The exercise the world is going through right now in working remotely will change the way people think about how they work. We need to think through new models around how people are going to work to ensure brands don’t find themselves becoming irrelevant and left behind.”

The argument that great change is coming to the way we work is unanswerable. Whether or not Beadle and Weed have the right answers, they seem to be asking the right questions.

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