digibyte - San Francisco-Based Uber Driver Is An Employee - another blow for the on-demand economy
- Summary:
- In another legal blow against the so-called on-demand economy, The California Labor Commision has ruled that a San Francisco-based Uber driver is an employee.
In another legal blow against the so-called on-demand economy, The California Labor Commision has ruled that a San Francisco-based Uber driver is an employee. As per this ruling, Uber now owes this driver $4,000.
Uber is appealing, but the legal rulings classifying Uber drivers as employees are piling up (see: similar Florida ruling).The issues come back to basic math: multiply the employee classification times the projected number of Uber or Lyft drivers, and that's not a small expense for these companies and their investors to reckon with.
Uber is quick to point out that these classification rulings apply to a single worker. Uber also claims that they offer flexibility different to what an employee would get. Unfortunately for Uber, while that flexibility thing sounds lovely, one agency that is not flexible in its definitions of an independent contractor is the Internal Revenue Service - and some states have even stricter rules.
In its ruling, the California Labor Comission seemed to be very clear on why Uber's "new platform" message was, in fact, an end-around. Excerpt:
Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation. The reality, however, is that Defendants are involved in every aspect of the operation.
Uh oh. Naomi Bloom, an HR expert who has seen her share of independent contractor shell games fall apart, offered Uber a history lesson on Twitter:
@jonerp Haven't these folks studied the Microsoft contractor case? http://t.co/KkXBKz4tMB
— Naomi Bloom (@InFullBloomUS) June 18, 2015
She wasn't done:
@InFullBloomUS Oh I have. And I've judged. :) They're employees
— Jon Reed (@jonerp) June 18, 2015
Bloom sees a broader issue at play here:
@jonerp Having been a pioneer in the "on demand" or "gig" economy since 1987 (actually did a stint in mid-70's), rules are easy to follow.
— Naomi Bloom (@InFullBloomUS) June 18, 2015
And the knockout punch:
@jonerp But hubris, disruption mania, and/or VC-enablers appear to convince founders that the rules don't apply to them. Tough noogies!
— Naomi Bloom (@InFullBloomUS) June 18, 2015
My (quick) take
So far, the impact of these rulings on Uber and Lyft has been minimal. But I do expect in the U.S. that many of these "on-demand" workers will ultimately be classified as employees. That won't stop Uber and Lyft from "disrupting", but it's more than a minor bump in the road.
A greater concern is to the freelancers involved. Whether or not they are employees in a legal sense, the future of work is shaping up as a mandatory swap of employee benefits for flexibility. Flexibility is great in theory, but flexibility by choice and flexibility by necessity are two different matters entirely. The former is liberating, the latter is a bare knuckle ride amidst the rising costs of living.
Image credit: Funny racedriver young man driving between clouds concept © ra2 studio