This era of apps has unleashed the gig economy, with millions of people working for multibillion-dollar companies in businesses ranging from ride-sharing to restaurant pick-up to grocery delivery. Without all those people driving cars for Uber, delivering meals for Foodora or fetching groceries for Instacart, these businesses would not exist. And yet many giants of the gig economy insist their workers are not employees, and they are not employers.
Instead, they argue that their workers are self-employed contractors. It’s a legal status that helps to support corporate valuations; in regulatory filings, Uber cites the push to classify its gig economy labour as employees as a major profitability risk. Labour laws provide employees with things such as minimum wage, benefits and the right to unionize. If its drivers were employees, Uber concedes, “We would incur significant additional expenses.”
So what does it mean to be an employee in 2019? The rise of the gig economy has brought that question to the fore.
In Canada, Foodora workers last week voted on whether to unionize. The results have not been disclosed, as the issue sits with Ontario Labour Relations Board. Foodora argues the workers cannot unionize because they are not employees.
Legal decisions in the United Kingdom and France have also looked at whether gig economy workers are employees, but it is California, birthplace of the gig economy, where that legal future is being most aggressively questioned.
Last year, the state’s Supreme Court issued a ruling on the status of workers at Dynamex, a delivery company. The workers, who had previously been employees and wore Dynamex uniforms, were treated as contractors. In a narrow decision on minimum wages and overtime, the court ruled in the workers’ favour. More importantly, it highlighted something called the ABC Test.
The California court said that only someone whose working conditions satisfy three basic criteria can be classed as an independent contractor.
First, the worker must be free from the company’s control. Second, they must perform tasks outside the usual scope of the company’s business. Third, they must have their own independent business in the same field.
Uber and its peers believe workers’ ability to set their own hours is a key factor in their self-employed status. But an Uber driver, when on the job, is under the direction of the company’s algorithm. And driving customers is Uber’s core business.
California lawmakers have taken up the issue. It is now at the state Senate, after the state Assembly in May passed a bill that would codify the court’s position on the ABC Test. If it becomes law, it would be a demarcation in how society treats those in the lower-wage regions of the digital economy.
Uber and competitor Lyft, seeing the tide roll against them, recently suggested they can do more for their workers, but they are still fighting against what they deride as “century-old” labour laws. They are right that these laws are old. But protections for low-wage and low-skill labour, the members of society with the least bargaining power, should not be a historical relic.
Gig economy leaders insist that flexible schedules make their workers somehow unique. But simply offering a flexible schedule has not allowed companies in other industries to reclassify themselves as something other than employers, and their employees as non-employees.
When society mulls the question of who is an employee, we should look at a logical interpretation of the term. Tax authorities in Canada have long looked askance at part-time contractor relationships that are really, on closer examination, employment relationships. The ABC Test tries to get at the same thing. It suggests that if something looks like a job, then it should be legally classified as a job.
The corporations behind the gig economy like to promote the idea that they’ve created something new, and they are not wrong. The millions of people using their services testify to that.
But we also live in an economy where things are not easy for low-skill and low-income workers. The loss of their ability to be treated as employees, including the right to unionize and collectively bargain, will tend to put downward pressure on their wages. It is surely possible for app-based businesses to offer progress to consumers, without paying for it through a retreat in working conditions.