Earlier this week, legislators in California passed a groundbreaking piece of legislation that will require companies to reclassify contract workers as employees in certain situations. While the bill, which is expected to be signed into law by Governor Gavin Newsom, will affect a wide array of companies, it had ride-share services like Uber and Lyft directly in its crosshairs. Lawmakers believe that the new law will require companies like Uber to consider drivers employees instead of contractors, which is how they are currently classified. Of course, Uber has other ideas. The company has started to insist that the law won't apply to Uber drivers because they aren't a core part of its business. But anyone who's ever booked an Uber might call that into question — so what's really going on here?
What the law says
Here's the deal: California's new law — which will go into effect on January 1, 2020 — uses a three-part test to determine if a worker should qualify as an employee of a company. If the worker's tasks are performed under the company's control, those tasks are central to the company's operation, and the worker doesn't have their own independent enterprise in that trade, then they are considered to be an employee. The legal test, established by a recent California Supreme Court ruling, would seem to pretty easily encompass Uber's huge fleet of rideshare and delivery drivers.
What Uber says
Except Uber says otherwise. On a conference call with media, the company's chief legal officer, Tony West, effectively said that drivers are not a core part of the company's standard business operations.
"Drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces," West stated on the call. This position returns to one of Uber's favorite defenses of its service: it's just a platform. Drivers are customers of that platform same as riders, Uber is just the thing that connects them. To back up this assertion, West rolled out "several previous rulings" that he claimed asserted that drivers do fall outside of the scope of Uber's standard business. Those rulings included two decisions made in arbitration, a process that forgoes an actual trial in court for a private conflict-resolution process that is almost always stacked in favor of the interests of corporations rather than individuals. Still, these decisions will serve as the basis of Uber's argument that drivers are just consumers of the company's product and not actually part of the business and therefore shouldn't be treated as employees.
What is actually going on
Alex Rosenblat, the research lead at the Data & Society Research Institute, says that Uber is attempting position itself as a technology company rather than a transportation company, as if it is entirely impossible to be both. "Uber has been making this rhetorical argument for years, but the fact that it is a technology company is neither here nor there," she tells Mic. "You can be in the transportation business and the technology business. Uber is trying to draw a meaningful, political distinction between those two things."
That's a plan that has produced mixed results for the company in the past, and it has used to justify all sorts of practices that otherwise probably wouldn't fly. For instance, Uber has used this "technology platform" argument to justify the fact that its drivers are not required to comply with the Americans with Disabilities Act (ADA). The ADA requires transportation providers to accommodate wheelchairs if the equipment can fit into the vehicle. But Uber, it will tell you, is not a transportation provider and doesn't need to ensure its drivers can support riders with disabilities. It's a position Lyft has taken, too, and that company has continued to stake out that position in federal court. The result is just 554 of the nearly 118,000 active vehicles across multiple ridesharing services offering wheelchair accessibility in New York City alone, according to the city's Taxi and Limousine Commission. These are the kinds of things that Uber has gone out of its way to avoid, all under the guise of just making technology and what people do with it is entirely up to them.
Except, of course, it isn't actually up to drivers how they choose to use the platform. Yes, Uber drivers get to pick their own hours — something that doesn't have to change if they are given employee status under the California law despite suggestion to the contrary by ridesharing companies — but they don't have much flexibility outside of that. As Rosenblat points out, Uber sets basically all of the parameters of a rider's operation. "Uber drivers are managed, albeit by automated functions and algorithms that enact the rules Uber sets for how drivers should behave on the job," she says, noting that the company "withholds key information drivers need to make informed decisions about the jobs they take, such as the destination of the passenger; it sets and changes pay rates unilaterally; it sets performance metrics for drivers’ behavior; and it deactivates (suspends or fires) drivers who don’t perform to the standards it sets."
If Uber were just a technology company — nothing but the digital equivalent of a set of pipes connecting one person to another to facilitate a service — it would look a lot different. Harry Campbell, founder of The Rideshare Guy and author of The Rideshare Guide, tells Mic, "Unlike real marketplaces like Etsy and Ebay though, where sellers are all selling unique products and can set their own prices, Uber tells drivers what types of cars they have to use, sets the pricing, and exerts more and more control." It's true that Uber exerts a considerable amount of control over what type of vehicle a person can drive, especially for a company that ostensibly is only interested in connecting people. Uber only allows four-door vehicles that can transport a minimum of four people at a time, won't allow cars more than 15 years old on its platform, and rejects any salvaged, reconstructed, or rebuilt vehicles. Uber previously even offered leasing programs for cars to get drivers on the road, which seems like a pretty transportation-y thing for a technology company to do. (Uber ended its leasing program earlier this year but still offers rental cars through partners to get people on the road.)
Are drivers part of Uber's core business?
So are drivers essential to Uber's business? The answer seems pretty obvious to those who know the company best. Regarding the idea that Uber is just a technology company, Campbell says, "I don't buy this argument for one second ... Without the drivers, Uber would have no business so I don't see how anyone could agree with their assessment with a straight face." That fact should be made clear by Uber's revenues, which are heavily reliant on ridesharing services. The vast majority of the company's revenue comes from siphoning 25 percent off the top of each ride completed through its service. Steven Hill, author of Raw Deal: How the “Uber Economy” and Runaway Capitalism Are Screwing American Workers, came to the same conclusion when asked about the importance of drivers to Uber's operations. "Yes, Uber drivers are absolutely an essential part of the ride-hailing company's business," he tells Mic. "Indeed they are the core of it. Without its drivers, Uber has no business."
Like Campbell and Hill, Rosenblat states plainly, "Uber drivers are essential to Uber’s business." But, she also raised the specter of what could happen if Uber's argument, transparently bullshit as it may be, actually wins out. "If Uber succeeds in convincing stakeholders that drivers are not core to its business, it will set the precedent for other employers to make the same distinction: if you hire and manage workers through an app and identify as a 'technology company,' you too can evade labor and employment laws," she says. That could turn workers into "consumers" of technology, "potentially shifting the frameworks for accountability and redress from labor and employment law to consumer protection," according to Rosenblat. That makes recognizing Uber's drivers as an essential part of the company all the more important. If they aren't, then we will have much bigger problems.