Uber and Lyft Drivers’ Fight Against Independent Contractor Status Isn’t Going Away
Amid the pandemic, Uber and Lyft drivers are more precarious than ever. Even as the companies dodge court rulings, the battle for drivers to be legally classified as employees is growing.
A protestor displays a sign as Uber and Lyft drivers prepare to conduct a "caravan protest" amidst the coronavirus pandemic in LA in April. (Mario Tama / Getty Images)
In 2018, Black Car Limo driver Doug Schifter shot himself outside of City Hall in lower Manhattan. His public suicide was, he wrote, a bid to draw attention “to the plight of drivers.” Schifter saw that conditions were only getting worse, and warned in a letter posted on Facebook: “All that is needed now for a total disaster is a serious downturn in the economy reducing riders and there will be at least half million people hit hard. Downturns always come.”
Two years later, amid a pandemic, the economic downturn has arrived. A recent report from the New York City Taxi and Limousine Commission (TLC) shows a 75 percent drop in the number of taxi drivers; with 108,880 who drove in March dipped to 30,675 in June. That same month, drivers, including those on other ride-hailing apps, logged 251,696 trips per day compared to 750,000 daily trips in February. The result for drivers in New York City has been depressed earnings and unemployment.
As the incomes of thousands of app-based workers were wiped out due to the pandemic, drivers organized through the New York Taxi Workers Alliance won a decisive victory when a New York federal judge ruled that the state must pay drivers unemployment benefits. These standard protections, including minimum wage, overtime pay, and unemployment insurance, have long been denied to ride-hailing workers. But the pandemic has sharpened the demands in this roiling debate on employment status.
Long before the recent ruling in response to the pandemic, ride-hailing workers in New York were already eligible for unemployment benefits. In 2018, the New York State Unemployment Insurance Board ruled that Uber and Lyft drivers along with other “similarly situated” drivers were eligible for unemployment. Neither Uber nor Lyft have complied with the ruling and have declined to contribute to the state unemployment insurance fund on workers’ behalf, “a sum that would likely be worth at least tens of millions of dollars,” reported the New York Times.
Despite these successful rulings at the state level, Uber has found support from the federal Department of Labor and the National Labor Relations Board, both backing the company’s contention that ride-hailing workers are independent contractors. Although these findings are not binding on state agencies, which oversee unemployment benefits, the intended effect is to create a labor and unemployment law rigmarole in which ride-hailing workers are in a constant state of limbo, perpetually fighting back through a flurry of lawsuits and demands for enforcement of existing laws.
Despite the challenges posed by a legal strategy against a company with deep pockets and a fierce public relations arsenal, drivers are continuing to organize and working to define themselves as employees. Doing so means refusing Uber’s business model that obfuscates the employment relationship in exchange for a rolling parade of marketing terms — entrepreneur, customer, partner, and for legal purposes, independent contractors.
The struggle for employment status at Uber and other ride-hailing companies are a potent example of a potentially transformative reinvigoration of the labor movement.
Dodging
Joy Chowdbury started driving for Uber and Lyft in 2015 while studying at LaGuardia Community College in Long Island City to financially support himself, and his wife and young son in Bangladesh. Before switching over to ride-hailing companies, Chowdhury had driven a yellow taxi. In anticipation of making the switch, he purchased a Toyota Camry when suddenly Uber changed its fare pricing, making it harder for him to make car payments.
Like other drivers at the time, he told me that in making these changes without notifying drivers, Uber disregarded their financial obligations. “I felt disempowered as a driver, as a worker, and got involved with the Taxi Workers Alliance to learn how we can fight,” said Chowdbury on the phone about his politicization one recent afternoon, parked in his Toyota Camry. In New York’s June primary, he ran for Assembly District 34 with the campaign pledge to create a Gig Workers’ New Deal, modeled after Assembly Bill 5 (AB 5).
Last year California’s legislature introduced AB 5, to close the independent contractor loophole and bolster ride-hailing drivers’ worker protections. AB 5 is modeled after a Dynamex Operations West v. California Supreme Court ruling, which required businesses to use an “ABC Test” to determine whether a worker was an employee, according to the following three criteria: 1) the worker must be free from the company’s control; 2) perform work outside the company’s core business; and 3) run an independent business. Uber and Lyft failed this test according to the ruling in California last month.
In response to the California court’s ruling, Uber’s CEO Dara Khosrowshahi said: “If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly, so I think Uber will shut down for a while.” Khosrowshahi threatened a capital strike to shut down operations in the state until November, depending on the voters’ decision on Proposition 22, a $110 million ballot referendum backed by Uber, Lyft, Doordash, and other gig economy companies.
According to Gerald Friedman, professor of economics at the University of Massachusetts Amherst, “the reaction of Uber and Lyft exposes the true nature of their business model, and why it would be so dangerous if more widely adopted. Their success depends on offloading the social cost of providing income security onto the individuals, their workers, [or] the state through some other social insurance program, such as food stamps or Medicaid.”
Uber hasn’t had a shortage of regulatory and legal problems, running the gamut from sexual assault, gender discrimination, and wage theft. It’s these problems that transformed then CEO Travis Kalanick from boyish media darling to “entrant into the burgeoning pantheon of tech sociopaths,” in the words of the editors at n + 1.
In January 2017, as protestors gathered at airports to oppose President Donald Trump’s travel ban and taxi drivers organized through the New York Taxi Workers Alliance called a strike, stranding passengers at JFK airport, Uber became a scab. In the words of Uber investor and tech entrepreneur Hadi Partovi, “This is a company where there has been no line you wouldn’t cross if it got in the way of success.”
Uber has crossed the line yet again with its opportunistic decision to put up a billboard declaring cynically that “If you tolerate racism, delete Uber. Black People have the right to move without fear.” The legal scholar Veena Dubal, who has recently been the target of Uber for her support for ride-hail workers, wrote on Twitter: “Can’t decide if this is gaslighting or cognitive dissonance.”
This isn’t Uber’s first attempt to circumvent regulation with canny PR stunts. The company has used a slew of tactics to dodge responsibility — ranging from in-app notifications intended to turn customers and drivers against regulations, to stalling tactics through lawsuits, mobilizing public opinion against workers’ interests, and, more recently, exploring a franchise model.
These costly strategies are no secret and Uber admits that it would be “adversely affected if Drivers were classified as employees instead of independent contractors.” To fight that threat to its business model, Uber has used mandatory arbitration agreements to make it harder for workers to take the company to court to challenge their classification as independent contractors.
Robber Barons
In the summer of 2018, in the wake of the high-profile suicides of drivers, the New York Taxi Workers Alliance galvanized the support of Mayor Bill de Blasio and the city council to rein in Uber, winning a raft of legislative changes, including wage regulations and a cap on new vehicles. The result was a pay floor and cap on ride-hailing vehicles, all meant to guarantee workers a living wage by preventing the oversaturation of the ride-hailing market.
In response to these changes, Uber and Lyft first tried lawsuits to reverse these worker gains. As that strategy failed, Uber went after workers themselves. The company aggressively pushed back by restricting drivers’ access to the app to avoid paying them wages while idle in their vehicles, forcing drivers to sleep in their cars to meet the newly imposed quotas, which favored drivers who were most active. On Twitter, drivers voiced their discontent with screenshots of the limited hours they were allowed to reserve on the app.
According to Brendan Sexton, executive director of the Independent Drivers Guild (which is partly funded by Uber in a labor compromise to gain a foothold in the business and advocate for workers): “It took more than two years for us to win our fight for a minimum wage and only a couple months for the apps to find a way to skirt the rules by manipulating driver access to the apps.”
Not long ago, Uber was poised to muscle its way to becoming a tech robber baron of a new Gilded Age. In her recent book, Nicole Aschoff draws the parallel with the “seismic technological and social shifts” that came in the 1920s: “If the automobile was the defining commodity of the twentieth century, the smartphone is the defining commodity of the twenty-first.” But rather than fetishize a new machine and imbue it with fantastical powers of technological determinism, Aschoff examines how life has become “more precarious than ever” by looking at how social relations evolve in a fraught ecosystem in tandem with technology.
It is in this context the pocket-sized smartphones people use to tap and swipe on the Uber transportation platform have come to define not only what Aschoff calls the “boundary between the public and the private.” But it is also what David Weil, dean of the Heller School for Social Policy and Management at Brandeis University, defines as a “fissured workplace,” where the bosses “change the boundaries of the firm itself” and “employee-employer relationships into arm’s-length market transactions.”
The incentives for companies like Uber are too hard to resist: “shifting employment to other parties allows an employer to avoid mandatory social payments (such as unemployment and workers’ compensation insurance or payroll taxes) or to shed liability for workplace injuries by deliberately misclassifying workers as independent contractors.” Uber owes New Jersey $650 million for unpaid unemployment insurance. In California, Uber and Lyft drivers have filed over 1.3 billion in wage claims and both companies collectively owe the state $413 million in unpaid unemployment insurance.
Since Travis Kalanick’s ouster, the macho posturing of the boyish CEO has been replaced by the reasonable equipoise of the buttoned-up Khosrowshahi who publishes op-eds in the New York Times that amount to appeals by turns to his good intentions and helplessness. He acknowledges that “current employment system is outdated and unfair,” but stops short of taking responsibility for the conditions that system produces.
Khosrowshahi would like people to believe that Uber is in the grip of immutable forces and the company, like its drivers, has its hands tied: “Uber is ready, right now, to pay more to give drivers new benefits and protections. But America needs to change the status quo to protect all workers, not just one type of work.” Either American companies protect all workers or leave Uber alone. Either drivers choose their rights and protections afforded to them as workers or the flexibility of independent contractors.
Drivers admittedly do sign-up to drive for Uber and other ride-hailing apps because of the flexibility these platform transportation companies afford them. Two years after arriving in NYC from Guinea in 2015, forty-four-year-old Issaga Diallo started driving for Uber because the flexibility in his schedule allowed him to practice salah, the ritual prayers performed five times a day by Muslims, and attend his doctor’s appointments.
Mamadou Allou Bah, forty-five, has been driving livery and yellow taxis alternately since 2003, and transitioned to working for Uber in 2014 because of the flexibility. Like other professional drivers with twenty-five years of experience in the industry, he doesn’t find a contradiction between his rights as a worker and the flexibility of driving for a ride-hailing company. He wants Uber to treat him as a worker because the company is making money gains with drivers’ labor: “Without drivers, there is no Uber or Lyft.”