Uber Lobbies EU for Prop 22-Style Gig Worker Standards
Uber Lobbies EU Lawmakers Amidst Gig Worker Scrutiny
Uber is actively engaging with European Union legislators as they increase their examination of working conditions within gig economy platforms. The aim is to determine if new regulations are necessary to enhance the situation for gig workers.
The ride-hailing and food delivery company has recently released a white paper. This document seeks to persuade European policymakers to adopt what Uber terms a “new standard” for platform work arrangements.
Avoiding Full Employment Rights
Within the paper, Uber emphasizes the necessity of extending certain benefits to gig workers. This is largely to avoid a potentially unfavorable outcome – the obligation to provide the complete range of employment rights if drivers and riders were to be reclassified as employees.
The company is also attempting to direct the policy debate away from the topic of collective bargaining. Instead, it proposes that app-based workers require more “meaningful” representation. This representation, they argue, should reflect the diverse and individualized needs of workers and could be achieved through various ongoing engagement channels.
Seeking a Favorable “Deal” for its Business
Uber’s white paper is titled “A Better Deal,” and the company undoubtedly seeks the most advantageous outcome for its operations. This is as lawmakers consider whether new legislation is needed to ensure a fairer arrangement for app-based workers.
EU lawmakers must carefully assess the actual conditions experienced by platform workers in the coming months. They need to analyze the details behind tech companies’ public relations efforts to determine how to create a legislative framework that improves conditions. This framework should do so without disrupting the established European social contract.
Prop 22 and the European Context
Uber has stated its intention to pursue a result similar to California’s “Prop 22” on a global scale. This follows their success in defeating a law aimed at reclassifying gig workers in their home state last year.
However, the legal and social landscape differs significantly in Europe. Numerous platforms have faced legal challenges regarding employment classification, and courts have frequently ruled in favor of the workers.
Upcoming UK Supreme Court Verdict
On Friday, Uber faces a potentially significant regional court test. The U.K. Supreme Court is expected to deliver its verdict on a long-standing challenge brought by a group of former Uber drivers. The challenge concerns their classification as self-employed. (Although the U.K. is no longer part of the EU, the case’s outcome is likely to influence courts throughout the region.)
Addressing Algorithmic Micromanagement
Greater clarity and enforcement of existing employment laws could enable European policymakers to address concerns about platform companies. Critics allege these companies have exploited self-serving classifications and algorithmic micromanagement. This is seen as a way to circumvent the legal system, profit at the expense of society (through lost tax revenue), and exploit workers deprived of stable employment and its associated rights.
Furthermore, increasing consolidation within the on-demand sector concentrates the power of gig companies. This raises the question of how platform workers can expect “meaningful” representation or “improved” conditions when a few large platforms are absorbing competitors. Legislative intervention may be necessary to protect workers.
Khosrowshahi’s Vision for Gig Worker Rights
In a blog post accompanying Uber’s white paper, CEO Dara Khosrowshahi reiterated the company’s preferred “new standard” for gig worker rights. He stated it should be “grounded in the principles drivers and couriers say are most important to them: Flexibility and control over when and where they want to work, earning a decent wage, access to relevant benefits and protections, and meaningful representation”.
Khosrowshahi continued, stating that “To make a real difference, reform must also be industry-wide, requiring all platform companies to offer benefits and protections that are standardised across the sector, so that workers are protected no matter which apps they use.”
Concerns About a Lowered Labor Standard
While a universal standard for platform benefits may appear progressive, the concept of “relevant” benefits for gig workers carries the risk of establishing a labor standard significantly below existing employment standards. This could hinder any possibility of a better deal for a workforce subject to continuous algorithmic management.
Such an industry-wide standard could also diminish the incentive for gig platforms to compete by offering workers better terms. Therefore, policymakers must proceed cautiously to avoid solidifying an unfavorable outcome for the workers they aim to assist.
Principles Over Detailed Models
Uber’s white paper focuses on outlining key principles rather than presenting a detailed “deal” model for workers. The company states that such a model would require development in collaboration with stakeholders.
It also acknowledges that platforms are likely to remain subject to a variety of national regulations across the EU. Even if the Commission enacts legislation, it will take years to come into effect. Consequently, case law will continue to be crucial. However, Uber is keen to influence any overarching EU guidance that might exert pressure on Member States’ approaches to gig work policy.
Framing the Debate: Flexibility vs. Benefits
Platform companies have consistently framed employment classification as a trade-off between “flexibility and benefits.” They claim workers prioritize flexibility – defined as the ability to choose working hours – above all else. This occurs even as they employ datafication and tracking to manage service delivery through high-tech micromanagement of a non-employed workforce.
However, while workers may be able to log on to a platform to work “when they choose,” the absence of legal protections, such as a minimum wage, does not guarantee a livable income. This means that the “flexibility” of gig work may not translate into genuine freedom to choose working hours and conditions unless workers have alternative income sources.
A Paradoxical Defense of a Business Model
The platforms are often defending a business model that critics accuse of being inherently exploitative. Unions have labeled it extractive of human labor, accusing platforms of circumventing the social contract and the stability offered by traditional employment.
In a section of Uber’s white paper arguing against employment for platform workers, the company highlights “flexibility,” stating its model allows “drivers can connect freely to meet that demand or choose a quieter time of day if they wish”. However, individuals needing to earn a living may not be able to choose less busy times if paid per job, reducing their earnings. This raises questions about the true extent of flexibility and fair pay offered by Uber.
(Notably, many of these gig companies have invested substantial funds in developing automation technologies, suggesting that savings from avoiding employment-related taxes are being used to replace human workers. This raises concerns about the dignity of labor.)
The Future of Work: Examining the Gig Economy
In a December 2019 directive to the job commissioner, European Commission President Ursula Von der Leyen assigned Nicolas Schmit the task of evaluating methods for enhancing the labor conditions experienced by platform workers. This included ensuring the effective enforcement of existing regulations, with Von der Leyen emphasizing that dignified, transparent, and predictable working conditions are fundamental to the economic framework.
Following his appointment, Schmit adopted a measured stance regarding the often-debated topic of platform profitability versus worker entitlements. He conveyed to Euroactiv that he does not oppose platforms, recognizing them as an integral component of the evolving economy. He further argued that maintaining Europe’s competitive advantage in this economic sector is crucial.
However, Schmit also cautioned against permitting the utilization of advanced technologies to establish a new, disadvantaged underclass of workers. He stated that the 21st-century economy should not replicate the unfavorable working conditions prevalent in the 19th century.
The precise manner in which the Commission will reconcile the goal of “improving” precarious platform work through policy remains uncertain. Nevertheless, the urgency of addressing this issue has grown since Von der Leyen’s initial instruction. The COVID-19 pandemic has starkly highlighted the risks—both individual and societal—associated with the absence of a robust social safety net for platform workers, while simultaneously boosting demand for on-demand platform services, particularly in food and grocery delivery.
Uber’s recent white paper addresses the pandemic’s impact and the necessity for platform businesses to “go further” in supporting workers—specifically, “to ensure independent workers have access to benefits and protections when they need them most.” This occurs concurrently with Uber’s lobbying efforts against extending full employment rights and benefits.
“It is logical for them to advocate for a baseline level of benefits,” explains Joe Aiston, a senior associate in the employment group at international law firm Taylor Wessing, commenting on Uber’s push for a “new standard” for gig work as outlined in the white paper. “These could be considered appropriate minimum protections, and potentially easier to implement without causing substantial disruption to the business model.”
“Reclassifying all workers as employees or as workers would entail significant disruption to the business model—and would undoubtedly lead to increased costs for the company. This includes considerations such as minimum wage and holiday pay, as well as potential tax implications,” Aiston adds.
While an assessment of worker status does not automatically trigger tax liabilities, Aiston notes that the tests used are “quite similar.” Consequently, disputes over employment classification pose a tangible threat to Uber’s tax position—and, therefore, its potential profitability.
The European Commission has been actively collecting data to inform its approach to improving gig work, culminating in a conference on platform work last September. This year, however, significant decisions await EU legislators.
A formal consultation with representatives from both workers’ and employers’ organizations will be initiated later this month. Uber’s white paper is demonstrably aimed at influencing this process, suggesting a surge in self-serving attempts to shape the “improvements” to platform working conditions.
The specific policy measures under consideration remain unclear. However, in March of last year, the Commission released a 285-page study identifying the “main” challenges related to platform worker conditions: employment status, access to information, dispute resolution mechanisms, collective rights, and non-discrimination. (A comprehensive set of issues, indeed.)
A closer examination of the study reveals detailed discussion of low remuneration and income insecurity as “significant stressors” for platform workers.
Pay is poised to be a central point of discussion, particularly given another directive from Von der Leyen to Schmit, requesting a legal instrument “to ensure that every worker in our Union has a fair minimum wage.”
A frequent critique of platform work is that earnings may fall below the legal minimum wage, as compensation is typically tied to completed gigs or deliveries, rather than encompassing downtime spent seeking work. If the EU’s fair minimum wage for “every worker” excludes platform workers, the Commission would effectively endorse a tech-enabled “underprivileged” worker class—precisely what Schmit cautioned against.
Uber’s white paper addresses the issue of pay by focusing on “fair and transparent earnings” or “decent” pay for platform workers, without directly addressing the minimum wage question.
The technology company also expresses its “readiness to lead the industry by advocating for changes to the way platform workers are paid.” However, it clarifies that it will not alter remuneration without a sought-after industry-wide framework (“for flexible earning opportunities, with industry-wide benefits and protections that all platform companies must offer independent workers”).
“This could encompass universal standards, such as the Proposition 22 legislation recently enacted in California. Alternatively, it could be based on a European model of social dialogue, where platform workers, policymakers, and industry representatives collaborate to establish earning principles for the industry,” Uber proposes.
“For instance, in Italy, the food delivery industry and the General Labour Union reached an agreement affirming the self-employed status of couriers while mandating industry-provided working standards, including provisions for earnings, injury coverage, third-party insurance, and training.”
“Crucially, any earning model must be based on a level playing field across the industry to ensure all independent workers have a consistent earnings baseline, regardless of the platform they choose to work with,” Uber emphasizes.
The stakes are undeniably high for all parties involved: for the rights of gig workers, for the profitability of platform giants, and for the credibility of EU lawmakers in upholding a socially progressive agenda.
However, the bloc may not necessarily introduce legislation at this juncture. A Commission spokesperson suggested that policymaking could be deferred if platforms and workers reach a consensus agreement on what “better” precarious work entails. (Though achieving such an agreement may prove challenging.)
The upcoming formal consultation with “social partners” will unfold in two phases, according to the Commission spokesperson.
“The initial phase will solicit their perspectives on the need for a potential EU initiative to improve the working conditions of individuals working through platforms. The second phase will involve consultation on the possible content of such an initiative,” she explained, adding that the Commission will “carefully assess the responses from social partners.”
“Provided social partners do not opt to negotiate an agreement among themselves, the Commission intends to present a legislative initiative by the end of 2021,” she further stated.
The spokesperson confirmed that the policy areas identified as presenting challenges—and where “improvements may be needed”—include “precarious working conditions, transparency and predictability of contractual arrangements, health and safety concerns, and adequate access to social protection.”
When asked to clarify whether “precarious working conditions” encompasses low and unstable remuneration, she declined to elaborate, stating: “The [aforementioned list] represents the extent to which we can go regarding the initiative at this stage.”
Employment Status in the Gig Economy
A central challenge remains regarding employment status, as highlighted in a study of gig worker conditions initiated by the Commission, among other policy considerations.
The report indicates that certain platforms operate in a gray area between self-employment and traditional employment, strategically adjusting their practices to exert control over workers without formally recognizing them as employees.
Legislative Considerations
Unless Member States broaden the definition of “employee” or establish a presumption of employment status for platform workers through legislation or legal precedent, platforms will likely continue to rely on self-employed labor.
Reclassification of individual cases is possible under EU or national law, but is unlikely to fundamentally alter the prevailing trend.
The report suggests that protecting economically dependent self-employed platform workers by ensuring minimum working standards is advisable.
Furthermore, clarifying which platform practices are incompatible with self-employment for platform workers should be considered by the EU and Member States.
Upcoming Legal Decisions
A significant ruling is anticipated in the U.K. concerning Uber’s ride-hailing service.
A 2016 employment tribunal challenge to Uber’s classification of drivers as self-employed is reaching its final judgement on Friday, with the U.K. Supreme Court expected to deliver its verdict after five years of appeals.
This ruling will likely impact the approximately 45,000 drivers operating on Uber’s London platform, and potentially across the entire U.K.
The decision could also have broader implications, given the increasing attention EU policymakers are giving to improving conditions for gig workers.
Precedent and Challenges
Last year, a French court determined that a former Uber driver should have been classified as an employee, citing a relationship of subordination due to the driver’s inability to set prices, build a customer base, or control task execution.
Uber disputes that this case establishes a precedent, while also claiming to have implemented changes to its platform since 2017, granting drivers more control and “stronger social protections” like accident insurance.
This case highlights the difficulties of relying on individual legal challenges to create consistent outcomes for platform workers.
The lengthy time required for these challenges to conclude also allows platforms to modify their operations and potentially argue that previous findings are no longer applicable.
The Need for Legislation
Therefore, legislation may be necessary to solidify improvements in the conditions of gig workers.
As Aiston notes, even if Uber modifies its business model following a Supreme Court decision, those changes may not be “acceptable” to the company.
He emphasizes that the context-specific nature of case law supports the need for legislation and clear definitions rather than relying solely on specific legal precedents.
Policymaking Challenges
The Commission’s study also identifies challenges hindering policymaking in this area, including defining “platform work” and gathering comprehensive data for evidence-based policies.
A favorable Supreme Court ruling for drivers could grant them the right to collective bargaining, a potential outcome keenly anticipated by relevant unions.
National Level Regulations
Several European countries are already attempting to regulate platform work at the national level.
Spain, for example, is addressing the issue of “falsos autonomos” (falsely self-employed workers) and reforming labor laws to encompass platform work.
This reform could require platforms to hire delivery workers, prompting them to lobby the Commission for more flexible pan-EU rules to limit the impact of national laws.
The U.K.’s Approach
The U.K. government also suggests that legislation is forthcoming, building on a 2017 review of modern working practices, including gig work.
The Taylor Review recommended updating the legal definition of “worker” to better reflect gig work, proposing “dependent contractor” as a more appropriate framing and emphasizing the importance of platform control over workers.
The resulting “Good Work Plan” was criticized by labor unions as weak and lacking substance, and has not yet significantly addressed gig work specifically.
Legislation to clarify employment status tests, intended to “reflect the reality of modern working relationships,” has been delayed, potentially due to the pandemic or awaiting the Supreme Court’s Uber ruling.
Uber’s Response and Future Outlook
Despite Uber’s PR efforts to influence policymaking, the outcome may depend more on European case law and public opinion.
A ruling against Uber could force the company to either accept drivers as workers or adjust its business model to avoid that classification, though the latter may be unpopular from a public relations standpoint.
Uber and other gig economy companies are increasingly offering benefits packages, such as insurance, to demonstrate their commitment to worker well-being.
However, these efforts fall short of the full range of rights reclassified platform workers could receive, suggesting further changes may be necessary.
Nuances in Employment Law
U.K. employment law is more nuanced than some national laws, recognizing the category of “worker” (distinct from employee and self-employed).
Some other European countries and the U.S. have a more limited classification system, with only employed and self-employed categories.
European courts will consider the U.K. Supreme Court’s decision, though they are not bound by it, and its influence on similar judgements across Europe is anticipated.
The U.K.’s “worker” classification may make it easier for courts to reclassify drivers, assuming the Supreme Court aligns with the Court of Appeal’s previous ruling.
Pan-EU Standardization and Potential Disruptions
If EU policymakers were to establish a pan-EU standard similar to the U.K.’s “worker” classification, it would present both opportunities and risks for platforms like Uber.
This would allow them to influence key parameters to mitigate the threat of employment litigation and potential tax increases.
Alternatively, lawmakers could establish a list of “dos and don’ts” for platforms to ensure fair working conditions, potentially disrupting the business model of on-demand giants reliant on low-cost labor.
The Commission’s proposed platform regulation (Digital Markets Act) aims to promote fair dealing between intermediating platforms and businesses, and a similar approach for gig platforms is conceivable.
While preferable to legally employing hundreds of thousands of workers, such regulations would end the free ride these companies enjoyed during their initial scaling phase.
A period of considerable adjustment is inevitable for the platform economy in Europe, requiring business models to adapt to changing employment laws.
Organizations will need to weigh the pros and cons of adjusting their business models, either by reducing control over workers or by accepting worker status and adapting pricing structures.
