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The California Labor Commission has ruled that a former Uber driver was an employee during her time with the company. Uber filed an appeal yesterday. But this probably won’t be the last battle fought on the front lines of the so-called gig economy.
“Got a car? Turn it into a money machine.” So says Uber’s website. Sounds tempting, huh? But Uber drivers pay for their own gas and their own insurance. They don’t get paid for waiting time.
“And that is, of course, one of the reasons why Uber has been so successful is because they don’t carry these costs,” says Gerald Friedman, chair of the economics department at the University of Massachusetts Amherst. Friedman says the ruling could set a precedent for millions of independent workers around the country, “and it’s going to encourage suits like this in other states.”
He says over the years, the independent contractor workforce has grown, partly because employers don’t have to pay things like overtime or health benefits.
John-Paul Ferguson, who teaches strategy at Stanford’s business school, says if Uber drivers are considered employees, that means higher labor costs, and ultimately, “We would probably see that passed on as slightly higher prices to end customers.”
But that won’t kill Uber’s success, Ferguson says. It’ll just give them less of an advantage over regular cab companies. As to how this ruling might affect other app-based services like Airbnb or TaskRabbit?
“There’s going to be a lot of careful parsing of how different firms have treated the people who are using their apps to provide services to people,” he says.
Ferguson says it’ll probably depend on what kind of contracts exist between the firms and the service providers.
The sharing economy has been praised for its flexibility for employees — and criticized for its potential for discrimination and lack of benefits. Here are a few stories on the issue:
In the Sharing Economy, Workers Find Both Freedom and Uncertainty
How Everyone Gets the ‘Sharing’ Economy Wrong
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