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Uber, Gig Companies Seek Labor Deals to Avoid Workers Becoming Employees

The debate of whether a gig worker is an employee continues to heat up.
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Uber and Amazon-backed Deliveroo are among a group of food-delivery companies seeking deals with workers and unions in the hope of avoiding new laws that could compel them to classify delivery drivers as employees, WSJ reports.

Why It Matters: Gig-based companies have been under recent scrutiny. Uber is appealing the U.K. Supreme Court to overturn a decision that its drivers “effectively work for the company.” Swiss courts have also stopped Uber from using independent contractors in the Gevana, which has led to a company-first of using third-party employees. The writing on the wall is clear — classifying contractors as employees would upend Uber’s business model or any comparable company.

Gig-economy companies say, “reclassifying workers as employees would add to costs, reduce workers’ flexibility and result in lost jobs.”

  • Uber says the Geneva move cost 1,000 couriers their jobs.

A Potential Solution:

  • Gig companies are “championing a recent labor agreement with a small right-wing union in Italy as an alternative,” which under a deal agreed to in September with Uber, Deliveroo, and others provide the equivalent of $12 an hour in pay, plus equipment and insurance. No holiday pay or sick leave was included.
  • Though large unions have said the deal leaves workers worse off than if they were treated as employees, it remains in force.”

A Look Into The Future: The next battleground countries in this fight are France and Spain. Back in the States, President-elect Joe Biden has said “he wants to introduce collective bargaining for contractors, and the Independent Drivers Guild—a New York-based drivers’ group—called for states to offer such arrangements to gig workers” following California’s vote to keep Uber and Lyft drivers as independent contractors.

Justin Oh:

If governments insist on classifying gig workers as employees, the increased costs will be passed onto the consumer and drive up the price of gig usage (rides, deliveries, etc). 

In general, I believe governments doing this would stifle innovation. There probably should be some middle ground solution that allows for better treatment and benefits for gig workers, but doesn’t put the cost burden on the service.

If labor costs do go up, I believe certain products like ride-hailing should be defensible, since many now treat it as a utility. 

But other products like grocery or food delivery might see a huge hit, since many consumers already see them as adding too much cost versus getting the goods themselves. Even I avoid spending $20 for a delivered Chipotle burrito after fees, taxes, and tips!

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