Photo: Open Grid Scheduler (Public domain)

Gig Companies Are Looking To Bypass Labor Laws Everywhere

By nivekbr | Policy, Not Politicians | 11 Nov 2020

Following win in California, talk of plans to undermine workers’ rights in the U.S. and abroad.



Following their successful propaganda campaign in California, in which Uber, Lyft, and other gig companies spent over $200 million to convince California voters that they deserve exemption from labor laws, a report from Megan Rose Dickey in TechCrunch confirms that they intend to continue this fight elsewhere:

“On Uber’s earnings call this week, Uber CEO Dara Khosrowshahi said the company would ‘more loudly advocate for laws like Prop 22’ throughout the U.S. and worldwide.”

The report also contains a quote from a group called Gig Workers Rising:

“Billionaire corporations just hijacked the ballot measure system in California by spending millions to mislead voters. The victory of Prop 22, the most expensive ballot measure in U.S. history, is a loss for our democracy that could open the door to other attempts by corporations to write their own laws.”

On a related side note: it appears that Biden’s transition team includes current employees of Lyft and Uber, among several other tech companies, according to a report from Ars Technica.

This effort comes after California passed a law known as AB5 which would require gig companies to classify their workers as employees, instead of independent contractors. The first response to this came from Uber and Lyft, both of which pulled the typical management extortion tactic of threatening jobs if the workers didn’t submit to their whims. At the same time, they tried to paint themselves in a good light by trying to frame their position as pro-worker, touting the flexible hours, as if that flexibility was mutually exclusive with drivers being classified as employees. However, as Kari Paul pointed out in The Guardian:

“Uber and Lyft claim they cannot reclassify their employees while allowing them to continue to choose their own hours, a feature central to the gig economy. But there is nothing in the law that prevents this, said John Coté, the communications director for the San Francisco city attorney, Dennis Herrera, who is one of the parties bringing the lawsuit against the ride-hailing firms.”

As for what the law does say, the legal distinction between an employee and an independent contractor is somewhat fuzzy. California’s AB5 was an attempt to clarify these distinctions by putting a three-part standard in place. According to this standard, in order for a worker to be considered an independent contractor, it is required that “1) they are free from the company’s control; 2) they are doing work that isn’t central to the company’s business; and 3) they have an independent business in that industry.” Uber’s first attempt to skirt the law consisted of making changes to their app and the information available to drivers before accepting a ride request, changes which have been characterized as giving drivers “the illusion of more autonomy.” Outside of California, this is also one of the issues at the core of a case in New York, as well as cases in the UK and Canada. As Marshall Auerback wrote in Salon:

“In the judgments, the courts explicitly highlighted the massive imbalance in the so-called ‘contractor’ relationship between the companies and their respective workforces, which invalidates any notion of the ‘contractors’ being genuinely independent.”

The flexible schedule has also been used as an appeal to the supposed benefit to workers. Author Alex J. Wood wrote an entire book entitled Despotism On Demand that does a much more thorough job of covering this topic than is possible here, but there is one line early in the book that sums up the basic idea here nicely: “whether flexibility is positive or negative for individuals rests on their bargaining power.” As the multimillion-dollar campaign illustrates, and as backed up by the court decisions, the bargaining power lies disproportionately with the companies. The book also uses a phrase that more adequately describes the situation: “precarious scheduling.” The author notes how the gig economy has, to borrow a phrase from Darth Vader, altered the deal:

“Previously, managers had to maintain a core of workers with stable schedules on whom they could rely to cover the central operational functions of the business. However, the connectivity provided by smartphones and other portable and wearable devices means that this barrier to flexibility is beginning to be overcome, through the algorithmic management of workers.

This trend is most apparent in the algorithms of online labor platforms such as Uber, [etc.], all of which use algorithmic rating systems to control and discipline labor, and to ensure the efficient matching of demand and supply. Workers not deemed productive enough according to an algorithm’s parameters find that work quickly dries up, and in some cases they are even ‘deactivated’ (i.e., fired) from the platform.”



The Salon article mentioned above also highlights the issue of wages and how they relate to the overall picture, describing how, “in a genuinely independent contractor relationship, the quid pro quo is higher pay as an offset to the lack of paid benefits,” but this isn’t often the case for gig drivers. Instead, the low wages end up forcing long hours that essentially negate any benefit of flexibility, “as well as rendering it virtually impossible to afford decent benefits, such as adequate health insurance, let alone sick pay or vacation leave.”

This was supposedly another area that was supposed to be addressed with the changes to Uber’s app, which included a “new bidding system” in which a base rate is set by Uber, and drivers can increase the rate by 10% increments. Riders are then matched first with the driver that has the lowest rate, and drivers with higher rates are matched up as more requests come in. Described by The Guardian as “an effort to prove its employees are contractors with freedom to set their own wages,” this arrangement alone seems to imply that drivers do not actually “have an independent business.” Veena Dubal, an associate professor of labor law at University of California-Hastings, described this change as “incentivizing a race to the bottom.” Dubal also said that the maneuver by Uber overall “seems like a trick.”

Auerback used the phrase “paving the way to serfdom,” and described the practices of gig companies as “evocative of the 19th-century robber barons.” If that seems harsh, and calls up images of the Labor Wars of the late 19th and early 20th century, well, it should. People died fighting for the rights these companies are trying to subvert.

As pointed out in a 2019 Vox article, the business model of these gig companies depends on subverting these rights, and they acknowledge it, at least to their investors. In a filing with the Securities and Exchange Commission from Apr. 2019, Uber states that classifying drivers as employees would “fundamentally change” their financial outlook:

“If, as a result of legislation or judicial decisions, we are required to classify Drivers as employees … we would incur significant additional expenses for compensating Drivers, potentially including expenses associated with the application of wage and hour laws (including minimum wage, overtime, and meal and rest period requirements), employee benefits, social security contributions, taxes, and penalties.”

This all adds up to an extremely one-sided extractive relationship at the expense of workers.

It doesn’t end with ride sharing, either. According to a report in The Register, most of Uber’s revenue now comes from delivery services. Former Uber CEO Travis Kalanick, the one who once said that he “would happily replace his human drivers with a self-driving fleet,” apparently has a new company called CloudKitchens, the goal of which is to replace restaurants with “ghost kitchens,” described in Forbes as “consisting of no staff, only a few cooks, and the food will be delivered by gig-economy workers through Uber Eats, DoorDash, Grubhub and similar services.”

While workers may have lost one battle in California, the war isn’t over. In light of the resurgence of the labor movement in the U.S., it could prove more difficult for those companies to take advantage of workers than they expect. While the NLRB doesn’t (yet) recognize gig workers’ right to unionize, that doesn’t rule out collective action. They could go the route of the Portland Voodoo Doughnuts workers and work with the IWW, which organizes “the worker, not the job.” There are also examples of other unions already making efforts on behalf of gig workers, with good results.

All is not lost here, this will just be another thing we have to keep an eye on in the coming years.



Originally published on Medium.


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Mountain hermit turned rabble rouser. Maker of strange noises. Deeply disturbed, but not surprised. He/him.

Policy, Not Politicians
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