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Gig workers are employees; start treating them as such, Opinion

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Wed, Jan 20, 2021 – 5:50 AM

ONE of America’s largest grocery chains, Albertsons, announced this month that it would replace many of its staff delivery drivers with independent contractors working for the delivery service DoorDash. Those contractors will not receive important labour protections that have been provided to the full-time employees they will be replacing.

For years, companies and legislators have debated whether so-called gig workers like those who drive cars for Uber or deliver groceries for DoorDash should be entitled to benefits like minimum wage and unemployment insurance. But in the wake of a California ballot proposition passed in November and a rule just released by the Trump administration, it appears that the erosion of labour protections is advancing aggressively.

When the gig economy sprang up during the Obama years, it seemed novel. Companies like Uber used software to offer assignments to people on call who set their own hours. One major caveat: as independent contractors, these workers wouldn’t get traditional wage protections, workers’ compensation, health insurance or unemployment benefits. But that didn’t stop the quick expansion of the gig economy.

In 2019, California legislators sought to improve life for gig-company workers, passing a law that required companies to treat app-deployed workers as employees. In response, the companies spent US$200 million promoting Proposition 22, a state ballot initiative that affirmed gig companies’ classification of their workers as contractors while enshrining limited protections.

This hybrid labour category came from an unexpected source. In 2015, Seth Harris and Alan Krueger, labour economists from the Obama administration, argued against giving gig workers employment status. Instead, they proposed a compromise: app-deployed workers could receive some rights, like tax withholding and a right to organise, but not others, such as a minimum wage and unemployment insurance.

But researchers like us who have documented the exploitive conditions of gig work worried that this approach would hurt a much larger group of service workers – just as the Albertsons decision will.

App workers need the same benefits afforded to traditional workers, including payment for time between assignments, unemployment benefits and the right to organise. The pandemic, which greatly worsened conditions for delivery workers and “shoppers” (the people assembling grocery orders), has exposed just how vital basic protections are for vulnerable workers.

In ongoing research with colleagues at Northeastern University, one of us, Dr Schor, analysed a delivery platform that converted its California workers to employees before the passage of the 2019 law. Both top and middle management said they felt positively about the switch, citing improved performances and increased productivity that partly offset the costs of employment protections.

GRUELLING REALITY

In ethnographic research on Uber and Lyft ride-hail drivers, Dr Dubal found that, contrary to the companies’ promises of freedom and flexibility, longtime drivers feel trapped in gruelling work schedules and controlled by their algorithmic bosses. Notably, these findings undermine Uber and Lyft’s arguments against employment status.

In a bad omen for workers outside California, Dara Khosrowshahi, the chief executive of Uber, has vowed to support efforts similar to Proposition 22 elsewhere. Lyft, a competitor, is behind political action committees that will support candidates who will protect its business model. Shawn Carolan, a venture capitalist whose firm has invested in Uber, has written that the Proposition 22 model should be extended to other industries, such as education, healthcare and computer programming – which would increase the number of Americans who toil without a safety net or predictable earnings.

In some sense, gig-economy companies have been moving in parallel with Washington. The Trump Labor Department this month released a rule, set to go into effect in March, that will make it easier for companies to designate their workers as independent contractors.

But the incoming Biden administration can undo the rule. And working with Congress, it can move to dignify app-deployed work by calling it what it is: employment.

The Biden administration can end the state-by-state, sector-by-sector battle over basic workers’ rights. It can clarify that exemptions from employment and labour laws violate the Fair Labour Standards Act, therefore invalidating Proposition 22.

Marty Walsh, Joe Biden’s nominee for labour secretary, can also move to revoke a Trump administration letter from 2019 that classifies gig workers as contractors. Perhaps most important, the Biden administration could work on winning passage of the Protecting the Right to Organise Act, which would untie the hands of workers who seek to organise their workplaces.

As inequality reaches record highs, the hybrid-worker category threatens the future of all service workers. With the building of progressive momentum to address racial and economic inequality, the Biden administration should expand protections for all workers, not allow them to erode for millions more. NYTIMES



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Gig economy musn’t push labor back into 19th century – Deutsche Welle

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Gig economy firms ordered to give 60,000 riders contracts in landmark Italian ruling

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FOUR major gig economy firms in Milan have been ordered to employ 60,000 delivery riders and pay €733 million (£635m) in fines in a huge victory for workers’ rights.

The decision follows last Friday’s landmark Uber ruling in the British Supreme Court that found drivers for the company were workers and not self-employed.

Authorities in Italy’s largest city gave Deliveroo, UberEats, JustEat and Foodhino-Glovo 90 days to comply with their order.

Deputy Prosecutor Tiziana Siciliano said: “The vast majority of these riders are employed with occasional self-employment contracts … but it emerged without a shadow of a doubt that they are fully included in the organisation of the company.”

Ms Siciliano also said an IT platform that managed the workers, ranking them according to performance, forced them to labour like slaves without basic employment rights.

“This system actually forces the rider to accept all orders in order not to be demoted in the ranking and get less work,” she said. “This is the reason why it is impossible to take holidays or sick leave.”

Prosecutor Francesco Greco declared that the ruling meant “it is no longer the time to say that they are slaves. It’s time to say that they are citizens.”

The order also places obligations to provide safe bicycles, accident compensation and training to the riders.

 JustEat said it was launching an internal investigation into its workers’ safety and said it had made changes to its business model to “introduce a safer, more controlled and direct system with our workers — as employees.”
 
 But UberEats, Deliveroo Italy and Foodhino-Glovo said they did not agree with the order.
 
“The online food delivery is an industry that operates in full compliance with the rules and is able to guarantee an essential service,” they said.

A worldwide boom in food delivery because of lockdowns imposed by coronavirus has put the spotlight on the plight of couriers worldwide who often lack proper employment rights.

The European Commission launched a public consultation on the rights of gig economy workers on Wednesday. The standing committee of China’s National People’s Congress also began consideration of a draft law strengthening legal protections for workers in “flexible” employment last month following protests over the mistreatment of gig economy workers.

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How does the Uber decision impact the gig economy as a whole?

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The Supreme Court held that “Uber drivers were not in business on their own account”

We take a deep dive into this judgment which has had a final say on whether Uber drivers (and potentially other gig economy individuals) are workers.

A. ISSUES

  • Were Uber drivers working under workers’ contracts (and therefore qualify for the national minimum wage, paid annual leave and other workers’ rights)?
  • If so, were the drivers working under such contracts whenever they were logged into the Uber app (and not just when they were driving passengers to their destinations)?

B. PROCEEDINGS BELOW

  • The employment tribunal found that the drivers were “workers” as defined under s.230(3) of the Employment Rights Act 1996 (ERA), more commonly known as the limb (b) workers. The tribunal further found that the drivers were working for Uber London during any period when a driver had the Uber app switched on, was within the territory in which he was authorised to work and was able and willing to accept assignments.
  • The EAT and the Court of Appeal dismissed Uber’s appeal of the tribunal decision and the issues ultimately ended up in the Supreme Court. The case was heard on 21 and 22 July 2020 and the judgment was handed down on 19 February 2021.

 

C. BACKGROUND KNOWLEDGE

Section 230(3) ERA

The term “worker” is defined by s.230(3) as:

an individual who has entered into or works under (or, where the employment has ceased, worked under) –

(a) a contract of employment or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer or any profession or business undertaking carried on by the individual;

and any reference to a worker’s contract shall be construed accordingly.

Limb (b) has three elements:

(i) a contract whereby an individual undertakes to perform work or services for the other party;

(ii) an undertaking to do the work or perform the services personally;

(iii) a requirement that the other party to the contract is not a client or customer of any profession or business undertaking carried on by the individual

This case was concerned with the first element of limb (b) viz., whether there was a worker’s contract. There was no dispute between the parties as to whether the services were performed personally (which they were) and that Uber was not a client or customer of the drivers.

The issue of whether there is a right of substitution in the contract and whether this was actively utilised in practice by the workers is an issue that is more pertinent to the second element of limb (b). This issue did not arise in this case (see below Section E Analysis).

Bates van Winkelhof v Clyde & Co

Lady Hale Bates van Winkelhof maintained that employment law distinguishes between three types of people:

  • those employed under a contract of employment;
  • those self-employed people who are in business on their own account;
  • intermediate class of workers who are self-employed but who provide their services as part of a profession or business undertaking carried on by someone else.

D. SUPREME COURT JUDGEMENT

ISSUE 1: WERE DRIVERS WORKING UNDER WORKERS’ CONTRACTS (AND THEREFORE QUALIFY FOR THE NATIONAL MINIMUM WAGE, PAID ANNUAL LEAVE AND OTHER WORKERS’ RIGHTS)?

The central plank of this judgment centres whether Uber drivers are to be regarded as working under contracts with Uber whereby they undertook to perform services for Uber as opposed to in business on their own account. The conclusion that Uber drivers are workers and not in business on their own account is based on three premises which will be considered below.

1. THAT WRITTEN TERMS OF A CONTRACT BETWEEN THE DRIVERS AND UBER ARE NOT A STARTING POINT IN DETERMINING THEIR WORKER STATUS.

The Supreme Court maintained that to state that a contract is a starting point is at odds with the purpose of statutory protection afforded to workers. Employers are often in a position to dictate contract terms and the individual performing the work has little or no ability to influence those terms that give rise to the statutory protections stipulated under the National Minimum Wage Act or the Working Time Regulations.

This approach is further supported by the fact that there is prohibition on contracting out of such statutory protections as can be found under s.203 (1) ERA which renders as null and void any provision or agreement that purports to exclude or limit the operation of the statute.

2. THE STARTING POINT FOR DETERMINING WORKER STATUS IS THAT ENDORSED IN THE CASE OF CARMICHAEL V NATIONAL POWER.

The House of Lords decision in Carmichael v National Power [1999] 1 WLR 2042 stated that where there is no written contract between the parties or at least where the written contract did not represent the true nature of the relationship, it would be appropriate to look at the following factors:

  • the language of the correspondence between the parties;
  • the way in which the relationship had operated;
  • evidence of the parties as to their understanding of it.

The Supreme Court stated that although written terms should not be ignored they are not to be treated as a starting point for analysis, especially where the bargaining power of the parties means that the individual had no say in drafting the terms and the written agreement would not represent how the parties actually conducted themselves. The Court also maintained that often the objective of the written terms is to circumvent altogether the statutory protections that would otherwise be afforded to the individuals concerned.

3. IN DETERMINING THE STATUS OF AN INDIVIDUAL WORKER, THE DEGREE OF CONTROL EXERCISED EMPLOYER IS OF UTMOST IMPORTANCE: THE GREATER THE CONTROL, THE MORE LIKELY THE INDIVIDUAL WILL BE CLASSIFIED AS A WORKER.

Key indicators of this control are subordination and dependence upon another person (employer) in relation to the work done. The greater the subordination and dependence, the greater the degree of control exercised by the employer.

CONCLUSION

Applying the above analyses, the Supreme Court identified five aspects of the employment tribunal’s findings to support the conclusion that Uber drivers were working for and under contracts with Uber.

  • The remuneration paid to the drivers is fixed by Uber and the drivers have no say in it.
  • The contractual terms under which they work are dictated by Uber.
  • Once logged onto the Uber app, the driver’s choice of accepting or rejecting requests is constrained by Uber, for example if the acceptance rate falls below a certain percentage then a penalty is imposed on the driver by way of being logged out for 10 minute before they can be logged back on.
  • The way the services are delivered by the drivers is tightly controlled by Uber, for example under the rating system, if it falls below a certain level for a period of time Uber can effectively terminate the contract with that driver.
  • Restriction of communication between driver and customer means that the drivers have little or no ability to improve their economic position through professional or entrepreneurial skill other than working longer hours whilst constantly meeting Uber’s measures of performance.

ISSUE 2: WERE THE DRIVERS WORKING UNDER WORKERS’ CONTRACTS WHENEVER THEY WERE LOGGED INTO THE UBER APP (AND NOT JUST WHEN THEY WERE DRIVING PASSENGERS TO THEIR DESTINATIONS)?

Put the question another way: during what periods where the drivers working?

The tribunal at first instance found that a driver was working under a worker’s contract when:

  • he had the Uber app switched on;
  • he was within the territory in which he was authorised to use the app; and
  • he was ready and willing to accept trips

Uber argued that the drivers were only working under workers’ contracts when they were actually driving passengers to their destinations. This is because, they argued, the driver had a right to turn down work even when they were logged onto the app and so the driver had no contractual obligation to undertake work for Uber whilst logged onto the app.

The Supreme Court rejected this argument on several grounds:

  • that the driver has the right to turn down work does not preclude a finding that he is employed under a worker’s contract so long as there is an “irreducible minimum of obligation” i.e. if there is an obligation to do some work, then the right to turn down work is not fatal.
  • the Welcome Packet issued to drivers at the start referred to logging onto the Uber app as “going on duty” and instructed drivers that “Going on duty means you are willing and able to accept trip requests“.
  • in reality, there was more than an irreducible minimum of obligation because a penalty would be imposed on those who turn down work too often.

E. ANALYSIS

This judgment is consequential not least because it does not just affect Uber but the companies in the wider gig economy which will have to (if haven’t done so already) review and rearrange their working model, in some cases quite drastically. As part of this effort, any analysis that relied on previous judgments that focused on the right of substitution will have to be adjusted to take into consideration this judgment. Although the substitution analysis is relevant to the second element of limb (B) under s.230(3) ERA (namely, personal service), this judgment will form the bedrock of determining the worker status going forward.

A key takeaway is that the Supreme Court has somewhat relegated the importance of written agreements between the parties as a mere factor to consider, and not a starting point for substantial analysis. This does not mean that employers should pay less attention to the written agreement but it does mean that the employers have to place greater weight and effort into aligning the written agreement with the actual practical aspects of how the workers work.

Another key commercial impact of this judgment is that attempts to maintain the quality of their brand will likely be construed as tools for control that enhance subordination and dependence of workers on the organisations.

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