Uber Technologies, Inc., is a technology company offering ride-hailing, food delivery, and other services. Uber is a major player in the gig economy, which is characterized by independent contractors completing short-term contracts. In the case of Uber, drivers decide when and how often they drive, accepting or rejecting ride requests from passengers through the Uber app. Though Uber relies on independent contractors rather than employees, drivers are still organizing to fight for better pay and working conditions.
The employee classification of Uber drivers has been the subject of great debate. According to the National Labor Relations Board (NLRB), Uber drivers are independent contractors rather than employees, but many disagree with that classification. This is a widespread concern because employees receive benefits and protections that independent contractors do not. For example, independent contractors have no right to bargain collectively. Worker classification poses a major threat to gig economy companies that rely on low-cost, flexible labor. If drivers are reclassified as employees, labor costs at these companies would increase. Uber contends that reclassification would mean, in the long run, that it would have to limit the number of drivers or schedule drivers in advance, eliminating the ability for drivers to work as often or as little as they desire.
California legislators passed Assembly Bill 5 in 2019, which classified contract workers for companies such as Uber as employees. The bill expanded the 2018 California Supreme Court decision known as Dynamex. They established a three-point test, often referred to as the ABC test, to determine if a worker is an employee: (1) the company controls the employee’s work; (2) the employee’s work is a core part of the company’s business; and (3) the workers don’t typically engage in providing their service to other companies.
However, Uber and Lyft successfully lobbied to be exempt from Assembly Bill 5 with Proposition 22 in 2020. Uber garnered support from California voters for the proposition by agreeing to provide added benefits such as paying drivers 120 percent of the state’s minimum wage when they are driving a passenger or en route to a pickup. Uber plans to push for similar legislation on a national level.
Even though independent contractors do not have the right to bargain collectively, Uber drivers have banded together to take on the industry. For example, Rideshare Drivers United in Los Angeles, California, is a lobbying group that has organized several strikes to promote better pay and working conditions. In Seattle, Washington, a law allows Uber and Lyft drivers to unionize. A years-long fight over the law came to an end after the city removed provisions that allowed drivers to negotiate pay if they organized. Instead, the Drivers Union, an association for app-based drivers in the area, has backed Seattle Mayor Jenny Durkan’s Fare Share plan to improve pay for Uber and Lyft drivers by 30 percent.
Though drivers in New York have been able to unionize since the formation of the Independent Drivers Guild (IDG), a union that Uber helped create in 2016, drivers lack bargaining rights. IDG represents more than 80,000 drivers in New York City alone and advocates for more than 250,000 drivers in New York, New Jersey, Connecticut, and Illinois. A legislative proposal in Connecticut, backed by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and IDG, aims to compromise with Uber and Lyft by increasing drivers’ rights without reclassifying their employment status. This means gig workers could collectively bargain for better pay without being eligible for all of the protections afforded to employees.
Uber faces the same challenges internationally. In the United Kingdom, Uber announced it would reclassify its 70,000 U.K. drivers as employees after it lost a national Supreme Court case. Additionally, hundreds of Uber drivers in Canada have joined the United Food and Commercial Union (UFCW), a labor union that represents 1.3 million people in the United States and Canada. UFCW supports Uber drivers in the fight to address health and safety, pay, and harassment concerns. Shortly after the worker classification ruling in the United Kingdom, Uber introduced proposed changes to Canada’s provincial labor laws to give gig workers some benefits without changing their classification. UFCW has decried the tactic as an attempt to circumvent labor laws.
It’s clear that Uber’s fight is far from over. Uber will continue to defend its business model and attempt to influence regulations as the fight over worker classification continues.
Despite these challenges, Uber has become incredibly popular around the world, attracting more than 3.9 million drivers who complete more than 14 million trips each day.
Questions
1. Why is worker classification a threat to the gig economy?
2. How would Uber drivers potentially benefit from unionizing?
3. In your opinion, do you think Uber drivers should be able to unionize and bargain collectively?