The word “gig” has distracted society from important questions about the gig economy that are surprisingly traditional: whether a business has employees or contractors, and how it can avoid payroll taxes and legal liability. Countless business models have been built under the guise of gigs, Uber and Lyft two of the best known cases.
But with state governments like California facing increasing revenue shortfalls and an estimated 57 million gig workers in the United States noting a lack of employer protections and fair wages, the matter has shifted to the courts. As the protections governing the traditional employer-employee relationship have been increasingly subverted, workers have responded by turning to the courts to rectify this loophole that has allowed their employment conditions to become a form of indentured servitude. And the courts are largely ruling in their favor. These are also consistent with a growing number of decisions in other countries, such as the UK, where Uber is now appealing a lower court ruling that its drivers should be classified as employees “entitled to employment protections such as a minimum wage and holiday pay,” and in Canada, where the country’s Supreme Court has recently ruled that Uber drivers were entitled to sue for traditional benefits and vacation pay.
Over the past decades, the rise of neoliberalism has enabled employers to tilt the terms of our capitalist economies heavily toward capital and away from labor, via the evisceration of unions, the deconstruction of the welfare state, and the privatization of public services. The growing use of the independent contractor classification represents the latest attempt to exploit and amplify this power imbalance. What makes this trend particularly galling is that the main economic drivers of this transition to serfdom fancy themselves as enlightened, socially “woke” corporations but in fact all embrace employment practices more evocative of the 19th-century robber barons.
In the judgments, the courts explicitly highlighted the massive imbalance in the so-called “contractor” relationship between the companies and their respective workforces, which invalidates any notion of the “contractors” being genuinely independent. The Canadian Supreme Court specifically cited the inequality of bargaining power between the plaintiff and Uber, noting that the driver was in fact powerless to negotiate any of its terms of his engagement with the company. In other words, Uber exercises full control over them as employees, but it attempts to escape its obligations by designating the drivers as independent contractors. Consequently, the UK Court of Appeal characterized Uber’s description of the work relationship “a sham.”
In a genuinely independent contractor relationship, the quid pro quo is higher pay as an offset to the lack of paid benefits. But companies in the gig economy generally don’t operate this way: Uber and Lyft pay minimum wages that in many instances compel employees to work 70-80 hours per week to make a living. That considerably impinges on the contractor’s supposed work-time flexibility, as well as rendering it virtually impossible to afford decent benefits, such as adequate health insurance, let alone sick pay or vacation leave. In the words of a recent report of the National Labor Relations Board’s Office of the General Counsel (NLRB GC), “Uber drivers—who earn about $9–$10 an hour—can’t expand revenues because they can’t control prices or expand their customer base—the only thing they can do is drive more hours.”
While they are called “independent contractors,” their independence is illusory because the so-called “entrepreneurs” in reality “do not even have basic control over how they deliver rides… [and] are ‘supervised’ by semi-automated and algorithmic systems that track their acceptance rates, time on trips, speed, customer ratings, and other factors, and drivers can be ‘deactivated’ based on these factors.” That’s not a co-equal work relationship between an employer and an independent contractor; it’s more a form of indentured servitude.
Taken from here