I have said this many times in my webinars on Independent Contractors vs. Employees – What You Need to Know – One of the best things UBER has done is not making cabs easier to get, but bringing the issue of independent contractors to the forefront. As a new lawsuit in NYC brought against Uber was announced today, here are some recent articles about the issue that it pays to stay on top of.
Reprinted from the NYTimes Friday April 22, 2016
Uber Settles, But Drivers Will Remain Freelancers
Mike Isaac reported from San Francisco and Noam Scheiber from Washington.
SAN FRANCISCO — Uber has long been embroiled in a debate over the status of its drivers: Should they be independent contractors or full-time employees? Uber says that as independent contractors, its drivers get flexibility. Their freelancer status also lets the company sidestep the costs of full-time employees, including paying minimum wage and the employers’ share of Social Security. But labor groups and lawyers have argued that Uber drivers should be classified as employees to receive worker protections.
On Thursday, Uber moved a step closer to getting its way. The company reached a settlement in a pair of class-action lawsuits in California and Massachusetts that will let it continue to categorize drivers in those states as independent contractors — a landmark agreement that could have lasting implications for the long-term viability of the ride-hailing service. Under the settlement, filed in the United States District Court in the Northern District of California, Uber will pay as much as $100 million to the roughly 385,000 drivers represented in the cases. The company also agreed to several concessions to appease driver concerns, including giving more information on how and why drivers are barred from using the app, as well as aiding in creating new “drivers associations” in both states.
“Importantly, the case is being settled — not decided,” Shannon Liss-Riordan, the attorney representing the drivers in the suit, said in a statement. “This case, however, with this significant payment of money, and attention that has been drawn to this issue, stands as a stern warning to companies who play fast and loose with classifying their work force as independent contractors,” Ms. Liss-Riordan said.
The settlement is a significant victory for Uber on the matter of its drivers’ status. By keeping its drivers as contractors, the San Francisco-based company can keep its costs low. And while the settlement applies only to two states and is nonbinding elsewhere, the agreement and the changes that Uber is adopting may influence regulators in other places where the issue has surfaced. Drivers value their independence — the freedom to push a button rather than punch a clock, to use Uber and Lyft simultaneously, to drive most of the week or for just a few hours,” Travis Kalanick, chief executive of Uber, said in a company blog post announcing the settlement.
“That said, as Uber has grown — over 450,000 drivers use the app each month here in the U.S. — we haven’t always done a good job working with drivers,” he wrote. “It’s time to change.”
The agreement, which is subject to approval by Judge Edward M. Chen, who is presiding over the cases, says Uber must pay $84 million to the plaintiffs represented in the case. Uber will dispense an additional $16 million if the company holds an initial public offering and the average valuation of Uber increases to one and a half times that of its last financing round. In December 2015, Uber was valued at $62.5 billion, making it the most valuable private technology company in the world.
The class actions that are being settled were originally filed in 2013 and became the biggest suits in terms of the number of drivers represented. Uber still faces litigation about driver status in other states, including similar lawsuits in Florida, Arizona and Pennsylvania. Last June, the California Labor Commissioner’s Office said Barbara Ann Berwick, a former driver for Uber, should have been classified as an employee, not an independent contractor. That case, which does not apply to drivers other than Ms. Berwick, is being appealed by Uber.
The settlement’s changes are aimed at reducing points of contention for drivers. In the past, Uber has been able to boot drivers from its platform with little explanation, something that Uber said it would no longer be able to do. The company published a lengthy document detailing all the reasons a driver may be deactivated, from unsafe driving and carrying a firearm — which is prohibited — to using drugs and alcohol.
Uber said it would also provide drivers with more information about their ratings system — a measurement based upon individual scores from passengers — and how ratings were calculated. The company is exploring creating an appeals process for Uber drivers who have been deactivated because of a low rating. Uber also agreed not to deactivate drivers who regularly decline to accept requests for rides from passengers, a practice that previously would contribute negatively to a driver’s overall standing with the company. Instead, drivers may be temporarily logged out of the app and unable to accept new requests if they are “consistently not accepting trip requests.”
“We know that sometimes things come up that prevent you from accepting every trip request, but not accepting dispatches causes delays and degrades the reliability of the system,” the company said in its newly published driver deactivation policy.Uber penalizes drivers who accept trips from riders and then cancel them shortly thereafter. Each city will have a maximum cancellation rate based on the average cancellation rate of the drivers in the area, the company said. It could eventually deactivate those who persistently exceed the rate. Uber said many of the changes were a part of its overall maturation process, as it has grown from a small start-up to a global organization in roughly six years.
Yet many of the policy changes Uber announced as part of its settlement — particularly changes to its protocol on deactivating drivers over their cancellation and acceptance rates — appear designed to defuse the plaintiffs’ arguments that Uber drivers should be classified as employees rather than independent contractors, as the company maintains.
“This is Uber relinquishing a small amount of control in two areas where critics have argued that the Uber-driver relationship looks like hiring and firing,” said Seth Harris, a former deputy labor secretary in the Obama administration and co-author of a recent paper arguing that Uber drivers occupy an ambiguous middle ground between contractor and employee. “It’s a tweaking of the relationship to move the classification closer to the factors that define independent contractor and a little bit further away from factors that define employee.” Other legal experts said that Uber drivers would appear to retain many of the characteristics of employees even under the company’s proposed changes.
For example, the fact that drivers whose acceptance rates are too low could be shut out of the app for short periods of time, and that those with unacceptably high cancellation rates could eventually be deactivated from the platform, may suggest a level of control that is normally reserved for employees rather than contractors.
“Ultimately this is a deterrent to drivers actually refusing to accept trips,” said Rachel Bien, an employment lawyer at Outten & Golden LLP who has litigated similar cases. “If it’s the kind of business that needs a driver to be at a certain place at a certain time regularly, it’s not a business that’s suitable for independent contractors, who should have the freedom to choose which jobs they want to do and when they want to do them.”
Ms. Bien also points out that unlike what is frequently the case with true contractors, Uber drivers will not be able to negotiate the price of the service they provide customers. They will also continue to be deactivated if their ratings from customers are low and don’t improve. The proposal to create an association of drivers in California and Massachusetts that would meet with company officials quarterly to discuss issues of importance to drivers also raised eyebrows in some quarters.
“If Uber is going to be genuine about this, I think it’s a very, very good move forward,” said Joesph Sandoval DeWolf, president of the California App-based Drivers Association, an organization that claims to represent more than 2,500 ride-sharing drivers in Southern California. But he expressed skepticism that this would be the case, saying that whenever the association has asked to meet with Uber to discuss drivers’ concerns in recent years, it has been told that Uber will only meet with individual drivers, not any association representing them, which he said was not effective.
Reprinted from the NYTimes – Wednesday May 11, 2016
A Guild, Short of a Union for NY Uber Drivers – Noam Scheiber and Mike Isaac
Uber announced an agreement on Tuesday with a prominent union to create an association for drivers in New York that would establish a forum for regular dialogue and afford them some limited benefits and protections — but that would stop short of unionization. The association, which will be known as the Independent Drivers Guild and will be affiliated with a regional branch of the International Association of Machinists and Aerospace Workers union, is the first of its kind that Uber has officially blessed, although Uber drivers have formed a number of unsanctioned groups in cities across the country.
“We’re happy to announce that we’ve successfully come to agreement with Uber to represent the 35,000 drivers using Uber in New York City to enhance their earning ability and benefits,” said James Conigliaro Jr., the guild founder and assistant director and general counsel at the International Association of Machinists District 15, which represents workers in the Northeast. The agreement is Uber’s latest attempt to assuage mounting concerns from regulators and drivers’ groups about the company’s labor model, which treats drivers as independent contractors. That model helps Uber keep its labor costs low, but it excludes drivers from coverage by most labor and employment laws, such as those that require a minimum wage and overtime.
That has spurred public disagreements, and many drivers have organized in unofficial groups to gain more rights. The prospect of unionization has loomed at times; lawmakers in Seattle voted last year to approve a bill allowing drivers for Uber and other ride-hailing apps to form unions. In response, Uber, which is based in San Francisco, has been striking deals to tamp down the problems — with the proviso that the company be able to continue classifying its drivers as contractors and stop short of allowing drivers to unionize. Last month, for example, Uber reached a settlement in a prominent class-action lawsuit with drivers who had contested their contractor status. Under the settlement, the company agreed to pay as much as $100 million and put less pressure on drivers to accept all rides; drivers will, however, continue as freelancers.
Uber faces other labor-related hurdles. Along with Lyft, a competing ride-hailing service, the company this week withdrew operations from Austin, Tex., after losing a battle with the City Council over the nature of its background checks for drivers.
Under the terms of the deal in New York, which will be in effect for five years, a group of drivers who are guild members will hold monthly meetings with Uber management in the city, where they can raise issues of concern.
The drivers will be able to appeal decisions by Uber to bar them from its platform, and can have guild officials represent them in their appeals. In addition, they will be able to buy discounted legal services, discounted life and disability insurance and discounted roadside help for problems they encounter while driving.
Yet unlike a traditional union, which contractors typically cannot form, guild members will not be able to bargain over a contract with the company that would stipulate fares, benefits and protections. Uber will continue to determine most of these elements unilaterally, albeit with more input from drivers
The machinists union has also indicated that for the duration of the five-year agreement, it will refrain from trying to
The machinists union has also indicated that for the duration of the five-year agreement, it will refrain from trying to unionize drivers, from encouraging them to strike and from waging campaigns to have them recognized as employees rather than independent contractors.
“It’s important to have immediate assistance in the industry and this is the structure that provides that,” said Mr. Conigliaro.He emphasized, however, that drivers did not waive any labor rights by joining the guild, and that if Uber drivers were found to be employees at any point during the agreement, the union could try to unionize the drivers at their request.Uber said the agreement would help smooth relationships with drivers, whose frustrations have grown with recent fare cuts and policy changes .“Communication is important,” said David Plouffe, Uber’s chief adviser. “On price cuts, we haven’t always had the best forum to discuss and share data — how price cuts work, what we see afterward.”
Mr. Plouffe said that as a result of discussions with drivers in certain parts of the country, Uber had adopted a number of changes, like a pilot program to charge riders when a driver has to wait for more than two minutes. With the agreement, Uber also wins an ally in its effort to change the New York State law that levies a nearly 9 percent tax on black car rides but that does not apply to taxis. (There is a 50-cent surcharge on yellow taxi trips.) Uber says the law unfairly singles out parts of its service. Under the terms of the deal, the machinists union will help Uber lobby the State Legislature to treat all hired vehicles equally.
Mr. Plouffe said the money likely to be saved from changing the law would flow to drivers’ bottom lines, and some of it would be used to help set up a benefits fund that the guild would administer and whose scope it would determine. Among the potential new benefits is paid time off for drivers. Uber was not seeking to replicate the guild idea outside New York, which differs from other cities in that a much higher fraction of Uber drivers use the platform full time or close to full time, Mr. Plouffe added. Also on Tuesday, Uber said the Freelancers Union, which supports independent workers, will advise the company on how to create portable benefits for its drivers and other gig economy workers. Sara Horowitz, the group’s founder and executive director, praised the agreement as a bold step that would become “part of a larger strategy for this new work force.”
The agreement drew a mixed reaction from drivers. Eric Grant, a veteran Uber driver who recently served on a panel in Seattle that heard appeals from fellow drivers who had been deactivated — part of a special pilot program in that city — said Uber’s new appeals program was a much-needed change. “One of the issues they have had in the past is that they deactivate people willy-nilly, without any appeals process,” Mr. Grant said.
Others, particularly those involved in competing attempts to organize Uber drivers in New York, were skeptical. Abdoul Diallo, who helped found an association of drivers in New York, which is called the Uber Drivers Network and claims about 5,000 members, said that the new organization sounded “bogus” and that the guild was no substitute for an actual union.Mr. Diallo said deactivation was relatively far down the list of concerns for most drivers in his organization. “First and foremost, price cuts and commissions matter most to drivers,” he said.
The machinists union said no topic was off the table in the guild’s discussions with Uber, including fares and commissions.Mr. Diallo’s group, meanwhile, is encouraging drivers to sign cards that will allow the Amalgamated Transit Union to represent them; more than 5,000 drivers have signed.
Others, particularly those involved in competing attempts to organize Uber drivers in New York, were skeptical. Abdoul Diallo, who helped found an association of drivers in New York, which is called the Uber Drivers Network and claims about 5,000 members, said that the new organization sounded “bogus” and that the guild was no substitute for an actual union.
Mr. Diallo said deactivation was relatively far down the list of concerns for most drivers in his organization. “First and foremost, price cuts and commissions matter most to drivers,” he said. The machinists union said no topic was off the table in the guild’s discussions with Uber, including fares and commissions. Mr. Diallo’s group, meanwhile, is encouraging drivers to sign cards that will allow the Amalgamated Transit Union to represent them; more than 5,000 drivers have signed.