collective bargaining

The Uber Challenge Greenhouse, Steven . The American Prospect ; Princeton  Vol. 27, Iss. 1,  (Winter 2016): 30-37.

ProQuest document link

ABSTRACT  

[...]that when independent contractors cooperate to set prices, that constitutes an antitrust violation. When one

cuts through all this maneuvering and friction, it becomes clear that Über drivers and their various allies are

pursuing three strategies at once to make the company treat them better-have courts and the NLRB rule that the

drivers are employees, have states and cities give them collective bargaining rights as independent contractors,

and create a pro-rata benefits pool for app-based drivers and other gig-economy workers.

FULL TEXT  

Headnote

The aggressive on-demand ride company is the focus of a new struggle for workers' rights.

ast August 31, Takele Gobena, an Über driver, stood alongside Seattle City Councilman Mike O'Brien at a news

conference, complaining that his Über earnings came to less than the federal I minimum wage after factoring in

gas, insurance, and other costs. At the press conference, Gobena, a 26-yearold immigrant from Ethiopia, hailed

O'Brien's plan to introduce legislation that would allow Seattle's Uber and Lyft drivers to unionize and bargain

collectively, even though those companies insist their drivers are independent contractors and not employees. A

half-dozen drivers flanked O'Brien, holding signs saying, "Drivers need a voice."

Toward the end of his remarks, Gobena, a member of the App-Based Drivers Association, said, "I know Uber will

probably deactivate me tomorrow, but I'm ready because this is worth fighting for."

It didn't take that long. At 6:50 that evening, a few hours after several websites posted stories about the news

conference, Über emailed Gobena to notify him that he had been deactivated as a driver. The reason Über gave: His

auto insurance had expired.

Gobena rushed to inform the news media and Councilman O'Brien about his being deactivated (Uber-ese for

dismissed). Not only that, Gobena sent them iPhone photos of his insurance certificate, which wasn't to expire

until December. Several reporters contacted Uber to ask about the sudden deactivation, and as if by magic, Über

reactivated Gobena around 9 p.m. (Über denied deactivating him, even though news websites later posted a

screenshot of Uber's deactivation message on Gobena's phone.)

"We have made Über become a very valuable company, but they are treating us in an inhuman way," says Gobena,

who is studying business at the University of Washington. "Some days, I spend 16 hours on the road. Most of the

drivers do the same thing."

Gobena jumped at the opportunity to become an Über driver last year, after he saw advertisements saying Über

drivers earn at least $25 an hour. He borrowed money to buy a used Nissan Sentra for $14,000, and quit his $9.47-

an-hour job at Sea-Tac Airport, where he helped dispatch wheelchairs and electric carts for passengers with

disabilities. However, Gobena said that driving at least 55 hours a week-full-time for UberX and part-time for Lyft-he

earns considerably less per hour than in his previous job, after subtracting gasoline and other costs.

"It's more than hard to live on this," he tells me. "Working at Uber, I can't support myself."

AT ANY GIVEN MOMENT IN RECENT American history, one corporation has stood out as the "it" company, the

symbol of the new and the cool-think of IBM, then Microsoft, Apple, Google, Facebook, Amazon-now it seems to be

Ubers moment. In just six years, Uber has gone from start-up to upstart to juggernaut, pushing its way into more

than 250 cities and 67 countries. Boasting 1.1 million drivers worldwide and 400,000 in the United States, Uber is

one of the fastest-growing start-ups in history, with an eye-popping valuation of $62.5 billion, more than that of

General Motors. Uber has probably done more to transform-its executives would say "disrupt"-urban transportation

around the world than any other company in the last half-century. Its investors include such heavyweights as

Goldman Sachs, Microsoft, and JeffBezos.

Uber has also become the foremost symbol of the ondemand economy, with a super-convenient app that

consumers love because it often gets them a car faster than it takes to find a taxi. The company sees and depicts

itself as offering a cool, new, flexible employment model that is being copied by other companies, including Lyft,

Handy (housecleaning), Caviar (food delivery), Postmates (on-demand delivery), Washio (dry cleaning), and Luxe

(parking your car).

To many, however, Uber has become the foremost symbol of something else-something unlawful. Many labor

advocates view Uber as the leading practitioner of illegal worker misclassification because it insists that its

400,000 U.S. drivers are independent contractors rather than employees. Uber says its drivers-it calls them

"partners"-are their own bosses who have the flexibility to drive whatever hours they want and even drive for

competitors like Lyft and Sidecar.

Indeed, with its clout, cachet, and big-name backers, Uber has sought to redefine what an employee is. No way, it

says, should its drivers be considered employees, asserting that its relationship with them is attenuated-even

though the company hires and fires the drivers, sets their fares, takes a 20 percent commission from fares, gives

drivers weekly ratings, and orders them not to ask for tips. For Uber, there are manifold advantages to treating its

drivers as independent contractors. Not only does it avoid being covered by minimum wage, overtime, and anti-

discrimination laws, but it sidesteps having to make contributions for Social Security, Medicare, workers'

compensation, and unemployment insurance. It also escapes the employer obligations of the Affordable Care Act.

By some estimates, all this cuts Uber's compensation costs by more than 20 percent per driver.

Uber's aggressive expansion and unusual employment model-almost all driver interactions with the "boss" are

through Uber's smartphone app-have raised questions about what a 21st-century company's responsibilities are to

workers in-whatever you want to call it-the gig economy, the on-demand economy, the crowdsourcing economy,

the sharing economy, or perhaps the unsharing economy. (I'm flummoxed why anyone, except for public relations

reasons, would call Uber and Lyft part of a sharing economy when they are in essence little different from a taxi or

any other livery service that picks up riders and charges a fare.)

Uber's critics say the company is shrewdly seeking to evade all of an employer's traditional legal responsibilities

and obligations, while enjoying all the benefits of being an employer-including taking a hefty percentage of what its

workers earn. But many champions of Uber argue that the nation's employment laws have grown obsolete and

need to be updated because, in their view, Uber's employment model is so different from, so much looser and less

structured than, the models at traditional companies like General Motors and Procter &Gamble. In response, labor

advocates often argue that the nation's employment laws are not outmoded and that the problem is that many

people simply fail to recognize that Uber has a fairly traditional employer-employee relationship (with its

newfangled app and boasts of being a master disrupter confusing matters).

The company has even become a hot subject in the presidential campaign. Republican after Republican attacked

Hillary Clinton after she said, "This ?on demand' or socalled ?gig economy' is creating exciting opportunities and

unleashing innovation, but it's also raising hard questions about workplace protections and what a good job will

look like in the future." While any workplace expert would likely view her remarks as an anodyne truism, Rand Paul

rushed to tweet: "Services like Uber, Airbnb, and Lyft stimulate our economy and work towards lower prices. How is

this bad @ HillaryClinton? " Jeb Bush and Marco Rubio were quick to boast about patronizing Uber, while Grover

Norquist, the anti-tax crusader, said, "Did you notice what Hillary did? Shejust declared war on the future. Shejust

declared war on Uber."

A number of drivers have sued Uber, asking the courts to declare that they're employees-a move that Uber asserts

would hurt its business model and undercut the flexibility that so many drivers prize. If the drivers are declared

employees, not only would they gain a raft of legal protections, but they would gain the right to unionize and

bargain collectively. Taking another path to the same goal, the Seattle City Council, in an unusual move pushed by

the Teamsters union, voted unanimously on December 14 to give app-based drivers a right to unionize even if

they're considered independent contractors.

FROM UBER'S INCEPTION-it was founded in San Francisco in 2009-it has been seen as bold and brazen. Its

combative founder and chief executive officer is Travis Kalanick, 39, a UCLA dropout who founded and sold several

companies before starting Über.

"Tm a passionate entrepreneur," Kalanick told Vanity Fair. "I'm like fire and brimstone sometimes."

Kalanick and his company have been described as "creepy." He once joked to GQ magazine that his company

should be called "Boober" because it made it such a cinch for him to attract women. At a private dinner in

November 2014, a senior Über executive outlined a plan, disclosed by BuzzFeed, to spend a million dollars to hire

four top opposition researchers to investigate and expose private details about journalists "and give the media a

taste of its own medicine." The executive had a particular female journalist in mind, a frequent critic of the

company.

Kalanick views the taxi industry as his nemesis, as a medieval-like cartel that stifles competition and innovation

and plies politicians with money to get its way. This attitude helps explain why Uber has often barged into cities

elbows out, sometimes hiring scores, even hundreds, of drivers, before it has legal permission (which could be hard

for it to get considering the taxi industry's muscle and influence). 'You can either do what they say or you can fight

for what you believe," said Kalanick, who sometimes calls his adversary "the taxi medallion evil empire."

The taxi industry is hardly the darling of consumers-it is widely derided for poor service, underpaying drivers, and

blocking efforts to authorize more taxis as a way of improving service. Moreover, in many cities, it is lambasted for

shunning or shortchanging poor and minority neighborhoods-Über boasts that it does a far better job serving such

neighborhoods. All this has made the taxi industry vulnerable to Uber's attacks-and expansion efforts.

"We're in a political campaign and the candidate is Über, and the opponent is an asshole named Taxi," Kalanick

said at a conference last year. "Nobody likes him, he's not a nice character, but he's so woven into the political

machinery and fabric that a lot of people owe him favors."

Much of Kalanick's wrath is directed at taxi owners, but his company's rapid growth is very much hurting

struggling rank-and-file taxi drivers. Bhairavi Desai, president of the National Taxi Workers Alliance, says that as a

result of Uber's expansion, "the total number of fares is coming down" per yellow cab, in New York and many other

cities. Moreover, Desai adds, "the amount per fare is coming down" because UberX drivers are scooping up a lot of

the bigger-ticket rides to and from airports.

Kalanick's "make no small plans" approach seems to be, you can't make the world's biggest and best omelet

unless you're willing to break a whole lot of eggs. That's been his modus operandi in city after city.

When New York Mayor Bill de Biasio sought to place a cap on Uber's growth, the company steamrolled him and the

City Council with a blitz of robocalls, TV advertisements, and a clever addition to its app that enabled riders to

swamp the council with emailed protests. De Biasio withdrew his proposal.

When Über began service in Las Vegas in October 2014 without getting the proper licenses beforehand, city

officials declared it illegal and obtained a temporary injunction, while the police quickly fined numerous Über

drivers.

In Portland, Oregon, Steve Novick, the city's transportation commissioner, was outraged that he didn't learn of

Uber's plans to launch services at 5 p.m. on a Friday until a reporter texted him about it earlier that day. Novick

recalled a top Über official telling him, "We're providing a service and there is great demand in Oregon." Novick's

response: "Announcing that you're going to break the law is not civil."

"Lyft seems like a respectable company, and Über seems like a bunch of thugs," Novick told The New York Times.

In Paris, Über continued to operate even as taxi drivers smashed windows and slashed tires of Über drivers, and

even after the French government had said the company didn't have authority to operate. Über told its drivers, "If

you get fined, come to us and we'll support you." Über finally suspended operations in France after Uber's top

official there was arrested and charged with six criminal counts, including running an illegal taxi service and using

deceptive practices. Italy and Spain have challenged Uber's legality, while South Korea brought criminal charges

against Kalanick and 28 other Über officials last March, accusing them of running an unlicensed taxi service.

"I think of them as robber barons," Barry Korengold, president of the San Francisco Cab Drivers Association, told

Vanity Fair. "They started off by operating illegally, without following any of the regulations and unfairly competing.

And that's how they became big. They had enough money to ignore the rules."

JOHN BILLINGTON MADE A GOOD living when he became an UberX driver in Los Angeles three years ago. "You

used to make great money with these guys," he says.

But no more. When Billington started, Uber's fares in L.A. were $2.50 a mile and 35 cents a minute, he said, but

Über (which charges different rates in different cities) has since reduced fares there to $1 a mile and 18 cents a

minute-generally cheaper than taxi fares. "To go from the airport to downtown used to cost [passengers] $50; now

you make $20 to downtown," Billington says. "They got this commercial on the radio saying you can make $500 a

day. That's mission impossible."

Billington, who says he has a 4.9 Über rating out of a perfect 5, says he no longer provides bottles of water to

passengers. "As soon as they dropped fares the first time, I stopped providing water," he says. "With these low

fares, how can people be expecting water?"

In his first year, Billington grossed $1,500 to $2,000 a week, but now that has dwindled to $700 to $800 a week, he

said. And that's before the $120 he spends each week on gas, not to mention the cost of insurance, a weekly car

wash, a monthly oil change, and depreciation on his Nissan Altima. The company's minimum fare in L.A. is $4.65

for a two-mile ride, for instance-and out ofthat, Uber takes $1.65 for its "Safe Rides Fee" (covering its expenses for

driver background safety checks and other safety features) and a 20 percent commission (60 cents) on the

remaining $3.

"So Über gets $2.25 for the ride, and the driver gets $2.40," Billington says. "When you consider gas and other

things I pay for, Uber is making more than me off the ride." He scoffs at Uber's assertion that its drivers are

independent contractors, calling it "a load of nonsense."

"They treat us like employees, but we get none of the benefits," says Billington, who has joined a lawsuit seeking to

have Über drivers declared employees. "They're telling us what rides we have to pick up. They dictate fares. We

don't get a say in what the fares will be. They keep close track on your ratings, and they threaten to deactivate you

over various things."

Billington, 47, isn't covered by workers' compensation or unemployment insurance and doesn't receive paid

vacation days or holidays. Nor does he have health insurance or paid sick days. "Hopefully I just don't get sick," he

says.

THOUGH ÜBER HAS 48,000 DRIVERS in Los Angeles, 35,000 in Chicago, 30,000 in New York, 27,000 in Washington,

D.C., and lots more in other cities, the company vigorously asserts that it is not an employer. Rather, it insists it is

merely a platform, much like Etsy or eBay, that connects buyers and sellers-in its case, riders and drivers. Its

drivers are their own bosses, it maintains; Über bosses hardly enter the picture.

In a recent speech, David Plouffe, President Obama's 2008 campaign manager and now Uber's chief adviser, called

the e-hailing company a godsend for drivers. "Platforms like Über are boosting the incomes of millions of American

families," he said. "They're helping people who are struggling to pay the bills, earn a little extra spending money or

transitioning between jobs."

Plouffe cited an internal Über study that found that 87 percent of drivers say a major reason they chose Uber was

that they wanted to be their own boss and set their own schedule. In defending against a California class-action

lawsuit that seeks to have Uber's drivers declared employees, the company submitted declarations from 400

drivers who said they love their flexible hours and therefore prefer being independent contractors.

"Uber is not my employer," said Jon Shehab, a driver in San Diego, in one of those declarations. "I can make a

stronger argument that Uber is my employee than that I'm their employee. Über books my business for me. Über

collects my money. Über sends me statements about how much money I've made. Über deposits money in my

account. If anything, Uber is my employee."

Shehab added: "Having been an employee and an independent contractor in the past, I'm definitely an independent

contractor with Uber. I don't have a supervisor, I don't have a manager, and I don't even have a telephone number

for Über."

In a second declaration, Carlos Oliva, an UberX driver in Los Angeles, said: "Even if Über wanted to make me an

employee, I wouldn't want to be one. I would quit before I would accept an offer to be an Über employee. I value my

freedom as an independent contractor too much, and I don't want Über to tell me when or where I have to drive."

But Shannon Liss-Riordan, the plaintiffs' attorney in that class-action lawsuit, says one of her paralegals spoke to

50 of the drivers who had submitted declarations and explained to them that under California law (unlike the laws

of most states), ifthe drivers are considered employees, Über would have to pay for business-related expenses

including gas, insurance, and auto maintenance. Liss-Riordan says almost all 50 drivers responded that they'd love

that and would therefore prefer to be considered employees.

Under California law, the principal factor in determining whether a worker is an employee or independent

contractor is whether the employer "to whom service is rendered has the right to control the manner and means of

accomplishing the result desired." Other factors to be weighed include the amount of skill required, the length of

time services are performed, whether the work is part of the company's regular business, and whether the parties

believe they have an employer-employee relationship. Über trumpets that last factor, but it certainly wasn't

dispositive when California's Labor Commissioner ruled last July that an Über driver in San Francisco was an

employee, not an independent contractor. That case involved just one driver, but Über fears-and many drivers

hope-that the commissioner's ruling will be a harbinger for a far broader decision. Many states have slightly

different tests than California's, often weighing whether the worker's role is entrepreneurial. Über argues that its

drivers are indeed entrepreneurial because they decide when and where they drive, but many drivers say there is

virtually nothing entrepreneurial about Über work-yes, they pick their hours, but that isn't terribly entrepreneurial.

In a similar lawsuit against Lyft, Vince Chhabria, a federal district court judge in San Francisco, complained that

the multi-factor test for classifying workers is from "the 20th Century" and "isn't very helpful in addressing this 21st

Century problem." He wrote that the court was being "handed a square peg and asked to choose between two

round holes."

"Some factors," Chhabria added, "point in one direction, some point in the other, and some are ambiguous."

But some leading employment-law experts say the Über situation isn't ambiguous. Benjamin Sachs, a labor law

professor at Harvard, says, "The more I learn about Über, the clearer it becomes to me that it is a relatively typical

employment relationship and ought to be treated as such." In his view, if Uber's drivers were truly independent

contractors, Über would give them more freedom, for instance, to do rides only to and from the airport, or wouldn't

bar them from giving their phone numbers to passengers so they can give them rides outside the Über system.

To Jeremias Prassl, a law professor at Oxford University, Uber also presents a clear-cut case. "In figuring out

whether someone is an employee or an independent contractor, we can save a lot of hassle by asking ourselves,

Who is the employer?" he says. Under Prassl's analysis, Über is a fairly typical employer, performing all of an

employer's functions. It exercises firm control over the employment relationship from hiring to termination. It sets

the wages (in this case, the fares). It provides the drivers with their work and pay (by funneling passengers to them

through its app). It receives the fruit of the drivers' labor (through its 20 percent commission and fees). And it

provides an essential tool that makes the drivers' work possible-the vaunted Uber app.

Wilma Liebman, former chair of the National Labor Relations Board, concurs: "There's a strong case that Über

drivers are employees, given what I know about the nature of Uber's control over its drivers and given that they are

providing a service that is integral to the key business of Über." She points to two NLRB cases: The first involved

Roadway Express, in which the drivers were found to be employees, largely because they were doing the work

integral to the company's delivery business. In the other case, drivers for Dial-a-Mattress were found to be

independent contractors because their work was not integral to the company's business of selling mattresses. The

Über drivers are like the Roadway Express drivers, Liebman says, in that their work is integral to Uber's business.

Similarly, Sachs says it is clear that people who obtain, say, a snow-shoveling or painting job through TaskRabbit

are not employees of TaskRabbit. He argues that TaskRabbit is much more like eBay-a mere platform and

intermediary-than Uber and Lyft are.

Federal District Court Judge Edward Chen has scheduled the Über trial for June 20 in San Francisco. Efforts to

have workers at "on-demand" companies classified as employees aren't confined to Uber. Liss-Riordan has sued

numerous other such companies, including Lyft, Post- mates, Washio, and Caviar, seeking to have their workers

declared employees. In addition, she has asked the National Labor Relations Board to declare that Uber's ban on

class-action arbitration claims is illegal. In weighing that case, the labor board will first have to decide whether

Über drivers are employees, and if it decides they are, that would open the door to app-based drivers unionizing.

Jessica Santillo, an Über spokeswoman, has warned of grim consequences if the drivers are declared employees.

Such a ruling, she said, would mean the drivers "would drive set shifts, earn a fixed hourly wage and lose the ability

to drive using other ridesharing apps as well as the personal flexibility they most value." She added, "Drivers would

have to drive when assigned to drive-in shifts prearranged by Über, resulting in a loss of flexibility." Drivers, she

continued, would have "no ability to control earnings," and that given their "fixed schedules, drivers would lose the

ability to be entrepreneurial and maximize earnings based on when and where they drive."

Disagreeing, Sachs says Über would not be forced to adopt pre-arranged shifts for its drivers if they are deemed

employees. Many drivers fear that if a court rules that they are employees, Über would bar them from working

more than 40 hours a week to avoid paying overtime, although Über wouldn't be required to set a 40-hour ceiling.

Indeed, if Über took moves its drivers disliked-adopting prearranged shifts and a ceiling of 40 hours-a smart

competitor might seek to woo away drivers by promising them flexibility much like what exists now, with no pre-

arranged shifts and limit of 40 hours.

"A finding of employee status doesn't require that Über do anything differently [in terms of scheduling] from what

it's doing now," Sachs says-other than one minor burden: requiring Uber to comply with California's rest break laws.

Liss-Riordan notes that many Über fans complain that her lawsuit is seeking to bring down their beloved company.

"We're not trying to bring Uber down," she says. "We're just trying to get them to comply with the law. Obviously a

lot of people like the service that Uber has brought to the world. We're just trying to make sure the drivers get what

they're entitled to under the wage and hour laws."

FOR INDER PARMAR, AN UBERX driver for nearly three years in New York City, the job has grown worse as Über

has pushed to expand.

"If Über brings in 1,000 more drivers this week, they will tell everyone to welcome them, but the business is being

depleted," Parmar says. "There's one pie. Last year, the pie was shared by 20,000 Über drivers. Now it's being

shared by almost 30,000.1 am making less money. I don't know about other drivers, but I don't see how they can

say they're making more money."

Parmar is upset that Uber is continuing to charge ahead in its effort to add more drivers in New York-part of its

global strategy to increase market share and revenues. In late November, Uber ran advertisements on New York

City buses, saying anyone who signed up to drive would earn a minimum of $7,000 in December.

Parmar, 53, who immigrated to the U.S. from India at age 16, receives no benefits through Über, but he says he is

fortunate because his family gets health insurance thanks to his wife's job at a bank.

He, too, did well in his first year with Über, but then the company dropped its New York prices by 30 percent. His

pay receipts show that he used to average around $2,000 a week, driving 2 p.m. to 2 a.m. six days a week-but by

last summer, his weekly gross fell to about $1,500 a week. From that he had to subtract around $100 a week for

gas, around $100 a week for tolls, and $400 a week to rent a Toyota Camry with insurance.

For Parmar, grossing $1,500 a week for 70 hours of driving comes to around $21.50 an hour, before factoring in his

many expenses. That was substantially less than the $28 an hour that two researchers-Alan Krueger, a Princeton

economist, and Jonathan Hall, Uber's director of policy research-found to be the median gross pay for Über drivers

in New York in an analysis of October 2014 data. (The $28 an hour they found comes to $58,000 a year for a 40-

hour-a-week driver, and is far below the $90,000 a year that Uber was boasting its drivers in New York averaged in

2014.) According to Krueger and Hall's Uber-backed study, the median gross pay for Über drivers in 20 cities was

around $17.50 an hour-including $16 in Chicago, just under $17 in Los Angeles-and that was before subtracting the

drivers' costs and before Über further reduced fares in 48 cities in January 2015.

"I went personally to Uber's office in Queens and I said, 'How do you justify this 30 percent cut in fares?'" says

Parmar, who recently cut back his Über hours to part-time so he could also drive for a friend's black-car service.

"They said, 'Since we've dropped the price, we're going to have more customers.'

"I told them, 'I'm not selling apples, I'm not selling donuts. I'm driving a car. I can do 15 or 16 rides a night. If the

price is 30 percent less, I get paid 30 percent less.'

"They said the cheaper the price, the more customers you'll have. I can't drive 100 customers a night. I'm not a

machine. I cannot work 18 hours a day."

WHEN DAVID PLOUFFE, THE MASTER strategist, gave a major speech in Washington in November, it contained a

big surprise. While many in the audience expected him to defend Uber by saying its drivers make a good living, he

took a sharply different tack, emphasizing that driving for Über can mean a welcome, supplemental part-time

income. Plouffe told of a special-education teacher in Denver, who decided to drive an hour or two a week in her

spare time so she could save money for a vacation to Ft. Lauderdale.

In his speech, titled "Uber and the American Worker," Plouffe noted that half of all Über drivers in the U.S. drive

fewer than 10 hours a week and that most (Über says 6l percent) have full-time or part-time jobs outside of Über.

"For most people, driving on Uber is not even a part-time

job," he said. "It's just driving an hour or two a day, here or there, to help pay the bills."

Plouffe left unanswered why he took such a surprising tack. Was he signaling that Über desperately needs more

drivers and is targeting financially squeezed Americans who might want to supplement their income by ferrying

riders around town a few hours a week? (One big problem Plouffe acknowledged is that just 40 percent of Über

drivers remain active a year after taking their first trip.) Or perhaps Plouffe was deliberately downplaying any

notion that Über work is a real job, to help convince judges and critics that Uber's drivers aren't real employees-hey,

these are just minor, independent gigs. Indeed, Judge Chhabria, in the Lyft case, voiced uncertainty about this very

issue, asking whether "drivers who work more than a certain number of hours should be employees while the

others should be independent contractors."

What is clear is that labor advocates and even a growing number of companies are worried that many on-demand

workers, especially the full-time ones, receive no benefits-neither health insurance, nor paid sick days, nor

unemployment insurance.

"We need to provide basic protections to people so they'll be taken care of when they're sick or when they want to

retire," says Shelby Clark, chief executive of Peers, a nonprofit that assists on-demand workers and companies. He

acknowledges that some companies hesitate to give benefits to on-demand workers for fear that this will make it

more likely that their workers will be ruled to be employees. He says the fear that workers might be declared

employees has nothing to do with companies' fear that their workers will unionize: "Unionization hasn't even

entered the conversation."

But Katherine Stone, an employment law professor at UCLA, has the opposite view. "The reason they don't want

these workers to be employees is they want to stop a union," she says.

In a somewhat surprising move, 39 business leaders, labor advocates, academics, and foundation heads joined

together to sign a statement, posted November 10, that called for creating an elaborate system of portable

benefits to help provide protections to on-demand workers. "As our country has at prior moments of workplace

change," the statement said, "we must find a path forward that encourages innovation... creates certainty for

workers, business and government and ensures that workers and their families can lead sustainable lives and

realize their dreams." Its signers included Logan Green and John Zimmer, the co-founders of Lyft; Andy Stern,

former president of the Service Employees International Union; Apoorva Mehta, Instacart's chief executive; and

Anne-Marie Slaughter, president of New America.

The statement, called Common Ground for Independent Workers, went on to say, "We are in agreement that flexible

work should not come at the expense of desired economic security. We need a portable vehicle for worker

protections and benefits."

The statement didn't go beyond generalities, proposing vague "portable," "pro-rata," and "universal" benefits. It

stopped short of saying what benefits workers should have. The idea is that pro-rata payments, perhaps for each

hour worked, would go into a fund or funds that help finance benefits-perhaps health insurance, parental leave,

workers' compensation, or all of the above.

The Common Ground statement contained more questions than answers. "Who should contribute financially (and

how much)?" it asked, meaning, should the employer, the worker, or the customer contribute? (One can easily

imagine that many companies will want the worker or customer-not the company-to pay the contributions toward

the portable benefits.) The statement also asked, "What type of organization (or organizations) should administer

these benefits and protections?"

David Rolf, a signatory of the statement and president of a large service employees' union local in Seattle,

acknowledges that some from the left and labor criticized the statement on the grounds that it might encourage

employers to use more on-demand workers and jettison traditional benefits in favor of these newfangled, perhaps

cheaper, portable benefits. Some also criticized the statement for not stressing the advantages of full-time work

and for doing little to define who is an employee and who isn't.

The statement was inspired in part by an article that Rolf and Nick Hanauer, a Seattle-based investor and co-

founder of Second Avenue Partners, wrote for last summer's issue of the journal Democracy. In the article, "Shared

Security, Shared Growth," they proposed a system of robust, well-funded portable benefits-called Shared Security

Accounts-that would cover a panoply of things, from health insurance to pensions to parental leave. Every

employer would in theory pay into workers' accounts, and because these accounts would be portable and

universal, workers could tap into them, even when they change jobs.

Rolf would love to see dozens of companies lining up tomorrow to finance a smart system of portable, pro-rata

benefits. He says he sees some interest in the idea, adding that things are moving forward, albeit slowly. His more

immediate hope is that in a deep-blue city or state, like Seattle or San Francisco or California or New York, "workers

would demand enactment of a citywide or statewide mandate requiring all employers" to make pro-rata payments

for portable benefits-"X percent into a health-care fund, Y percent into a pension fund, Z percent into a paidtime-off

fund, another percent for income replacement in case of loss of employment." Such a law, Rolf says, would be a

boon for workers in an era when more and more companies are moving away from traditional employer-employee

relationships and from providing benefits.

In Rolfs home city, however, some on-demand workers-namely, the Uber and Lyft drivers-are not waiting for such

an idealistic scheme to be enacted. They've pursued a theoretically quicker strategy to win benefits and higher

pay: unionization. Working with the International Brotherhood of Teamsters, hundreds of app-based drivers have

helped persuade the Seattle City Council to vote approval-8 to 0-of a bill that would allow them to unionize.

Seattle's Mayor Ed Murray said he wouldn't sign the bill, but since it was approved by a veto-proof majority, it will

become the nation's first law allowing app-based "independent contractor" drivers to unionize. Under the measure,

companies would be required to give the City of Seattle a list of its drivers, and if a union wins the backing of a

majority of a company's drivers the company would have to bargain with the union. (Rolf and his powerful union

local backed the effort, advancing several different strategies to improve the lot of workers in the on-demand

economy.) Already, Über drivers from numerous other cities have contacted the Teamster organizers in Seattle to

ask for help in getting similar unionization statutes enacted in their cities.

Über argues that the Seattle legislation has two big legal flaws-first, that cities can't enact laws on unionization for

private-sector workers because that subject is preempted by federal law, specifically by the National Labor

Relations Act. Second, that when independent contractors cooperate to set prices, that constitutes an antitrust

violation. The legislation, Über asserts, would create a conspiracy to artificially drive up transportation costs paid

by the people of Seattle.

But Leonard Smith, a Teamsters organizer in Seattle, argues that since the National Labor Relations Act covers

only employees-and not independent contractors-preemption doesn't apply to such contractors. Smith maintains

that cities and states are free to enact laws to help independent contractors unionize, as is the case with farm

workers and government employees (also not covered by the NLRA). Elizabeth J. Kennedy, a law professor at

Loyola University in Baltimore who is advising the Teamsters, adds that the City of Seattle would be creating a

framework for the drivers' cooperation that would in turn create a so-called state action immunity defense to help

make the drivers' cooperation legal under antitrust laws.

Uber and Lyft are likely to file lawsuits to block the measure. More than 300 Uber and Lyft drivers have attended

pro-union meetings in Seattle. Not only do they want benefits like paid sick leave and workers' compensation, but

most Über drivers are unhappy that the company slashed the per-mile fare to $1.35 from $2.35.

Many echo Takele Gobena in saying they earn too little and work too many hours. "We're for a union," Gobena said.

"The union will give us a chance to negotiate with the man. Über doesn't see us. They tell us what to do. They don't

hear our concerns. When we have a union, we'll have the power to negotiate. Right now we have no way to solve

our problems."

When one cuts through all this maneuvering and friction, it becomes clear that Über drivers and their various allies

are pursuing three strategies at once to make the company treat them better-have courts and the NLRB rule that

the drivers are employees, have states and cities give them collective bargaining rights as independent

contractors, and create a pro-rata benefits pool for app-based drivers and other gig-economy workers. While these

efforts could pose a major challenge to Uber's business model and bottom line, it could finally give Takele Gobena

and tens of thousands of other drivers, as he put it, a "way to solve our problems." D

Sidebar

CEO TRAVIS KALANICK HAS LED OBER TO HIREHONDREDS OF DRIVERS IN CITY AFTER CITY WITHOUT GETTING

LEGAL PERMISSION.

TASK RABBIT, WHERE PEOPLE GO TO FIND GIGS, IS MORE LIKE A PLATFORM, SAYS SACHS. UBER IS MORE LIKE

AN EMPLOYER

Sidebar

SEATTLE UBER DRIVERS AREN'T SEEKING TO BE DEEMED EMPLOYEES, BUT SEEKING COLLECTIVE BARGAINING

RIGHTS AS INDEPENDENT CONTRACTORS.

AuthorAffiliation

Steven Greenhouse was a reporter at The New York Times for 31 years and was its labor and workplace reporter

from 1995 to 2014. He is currently a visiting researcher at the Russell Sage Foundation. He is author of The Big

Squeeze: Tough Times for the American Worker and is currently working on a book about thefuture of America's

workers.

DETAILS

Subject: Independent contractors; Cooperation; Labor law; Legislation; Labor relations; Wages

&salaries; Employees; Employment; Collective bargaining; Press conferences

Publication title: The American Prospect; Princeton

Volume: 27

Issue: 1

Pages: 30-37

Number of pages: 8

Publication year: 2016

Publication date: Winter 2016

Database copyright  2018 ProQuest LLC. All rights reserved. Terms and Conditions Contact ProQuest

Publisher: American Prospect

Place of publication: Princeton

Country of publication: United States, Princeton

Publication subject: Political Science

ISSN: 10497285

CODEN: APROEY

Source type: Magazines

Language of publication: English

Document type: Feature

Document feature: Photographs

ProQuest document ID: 1754859773

Document URL: https://search.proquest.com/docview/1754859773?accountid=33337

Copyright: Copyright American Prospect Winter 2016

Last updated: 2017-11-23

Database: ABI/INFORM Collection