Uber business model does not justify a new ‘independent worker’ category
http://www.epi.org/publication/uber-business-model-does-not-justify-a-new-independent-worker-category/
Whether drivers for ride services such as Uber and Lyft are employees or independent contractors has become an important issue for city administrators, labor policymakers, and the businesses and drivers themselves. But an increasing number of voices argue that the drivers are neither, that some work relationships arranged through digital platforms in the so-called gig economy differ so fundamentally from traditional employee or independent contractor relationships that we need a new, third category of worker.
For the most part the assertions of the need for a new category have had little substance beyond a claim that technology has changed the nature of the work that gig workers (or “app workers”) perform, making current legal categories antiquated. But a recent proposal by Seth Harris and Alan Krueger for a third status called “independent worker” (Harris and Krueger 2015a) has elevated this policy discussion in several ways. First, they provide specific empirical claims as to why they believe the “[n]ew and emerging work relationships arising in the ‘online gig economy’ do not fit the existing legal definitions of ‘employee’ or ‘independent contractor’ status.” Harris and Krueger offer Lyft and Uber drivers as exemplars of these new relationships. Second, their proposal delineates the legal protections that so-called independent workers should have and those that do not fit gig work. Harris and Krueger argue that clarifying gig workers’ legal status would facilitate innovation and would provide greater protections for workers than the courts might if forced to choose between two ill-fitting categories.
In this paper we examine Harris and Krueger’s empirical claim that the “immeasurability of work hours” for gig workers places them in a gray area between employee and independent contractor and negates the possibility of applying the Fair Labor Standards Act (FLSA) to work done through some digital apps. Denial of these rights is central to their policy proposal and of major consequence, but the labor protections that so-called independent workers would not enjoy compared with bona fide employees include, in addition to coverage by the FLSA, rights under the National Labor Relations Act, state workers’ compensation laws, and unemployment insurance.
This paper is limited to the issues of measuring and controlling drivers’ hours and the implications for establishing the need for a third status of independent worker. We also challenge Harris and Krueger’s proposal to deny certain protections to independent workers. This paper does not examine all of the issues required to assess whether Uber drivers are employees rather than independent contractors, as do Harris and Krueger (2015a), Sachs (2015), and Rosenblat (2016). We do believe for a host of reasons that Uber drivers are employees—for example, they don’t set their own fares or freely choose their own customers, their performance is measured and controlled by Uber, their driving is essential to Uber’s business, and the economic reality is that they are not independent businesses but small cogs in Uber’s powerful multinational business. But we leave this analysis for further work and note that early court and state agency rulings are coming down on both sides of the issue.
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