Have you been reading about the conflict between Uber and its workers? It has the potential to be one of the more interesting labor-management stories this year. Unfortunately, it’s not about labor-management cooperation.
I will admit I’ve never taken an Uber ride, but my son and his wife use it frequently in New York. They like it for its convenience and cost. While Uber has grown to be valued at approximately $62.5 billion, a number of serious issues remain in the business model, including whether the drivers are employees or independent contractors.
Uber and its competitors face lawsuits and regulatory battles in many of the cities in which they operate. The issue took a new turn in December 2015, when the Seattle (WA) city council voted to give Uber and other drivers the right to organize and collectively bargain wages and benefits.
The App-Based Drivers Association (APDA) website outlines their goals, which include protecting drivers’ rights, promoting safety, raising standards, and improving service. Dawn Gearhart from Seattle Teamsters Local 117 stated, “It was a huge victory for drivers who took a lot of risks; many have been deactivated, lost their jobs. Drivers have really worked hard to get to this point.”
Obviously, the companies take a different view of the employee/contractor relationship. Uber continues to maintain that drivers are independent contractors. As Eric Newcomer and Alexandria Arnold noted in Bloomberg, “The companies oppose claims that drivers are employees, rather than independent contractors who aren’t entitled to Social Security benefits, mileage reimbursements and other benefits.”
Bloomberg reports Sheila Bryson, a spokeswoman for ride-sharing company Lyft, wrote in an e-mail “Lyft drivers are entirely in control of where or when they work, and this flexibility is exactly why the service is so popular with people looking to make extra income. Unfortunately, the ordinance passed today threatens the privacy of drivers, imposes substantial costs on passengers and the city, and conflicts with longstanding federal law.”
Others believe the contractor/employee relationship is just the tip of the problems between the companies, their drivers, and the economy. Steven Hill, in his article How the Sharing Economy Screws American Workers states, “On the labor side, Uber drivers are not treated as employees but as freelance contractors. Most drivers, after they subtract their considerable driving expenses, don’t earn any more than taxi drivers. Many Uber drivers complain they don’t even earn minimum wage. They receive no benefits and can be cut off the app-based platform at any time. Recently Uber cut off hundreds of drivers (and possibly over a thousand) in Los Angeles and San Francisco because those drivers’ “acceptance rate” was too low. Many veteran drivers have figured out that, given the dramatic increase in congestion, drivers don’t make any money on short rides because they are stuck in traffic. They have begun refusing short rides, so Uber fired many of these drivers without warning. The message was clear: a low acceptance rate can get you fired.
“Think about it: if these drivers really are the CEOs of their own driving business, as Uber likes to claim, shouldn’t they be able to refuse a ride they know will cause them to lose money?”
The issues related to ride-sharing drivers will not be settled quickly. Even in Seattle, the need for additional clarifications from City Council and the almost guaranteed legal actions promise to drag the process out. Challenges raised by drivers in other cities will further amplify the split between the parties and threaten the entire process.
What do you think, are ride-sharing drivers from Uber, Lyft, and others employees of the company or independent contractors? The answer has serious impact on the drivers and their right to organize, the companies that assign them, and the consumers that utilize the services. Beyond this, the range of the implications of this type of employment are just beginning to be felt.