Workers in the ‘Gig Economy’

The law is beginning to engage with the new gig economy.

Today there are reports of a possible sham contracting test case in Victoria to establish whether riders working with food delivery companies such as Foodora and Deliveroo are independent contractors carrying on their own businesses, as those platforms assert, or whether they are in truth employees.

In the United Kingdom, the Employment Tribunal is to consider the status of Uber drivers.  GMB, a union representing private hire drivers, claims that the drivers are wrongly treated as independent contractors, saying: ‘Uber currently denies that its drivers are entitled to the most basic of workers’ rights. Uber’s defence is that it is just a technology company, not a taxi company, and that Uber drivers do not work for Uber but instead work for themselves as self-employed business men and women.  We will argue that Uber exerts significant control over its drivers in order to provide an on-demand taxi service to the public…We are seeing a creeping erosion of employment rights as companies misclassify their workers as self-employed so as to avoid paying them holiday pay and the national minimum wage.’

In the United States, in March 2015, a District Court in California in O’Connor v Uber Technologies, Inc dismissed Uber’s application for summary judgment of drivers’ claims that they were entitled to be paid and treated as employees.

The interlocutory judgment recorded Uber’s argument that ‘it is not a “transportation company,” but instead is a pure “technology company” that merely generates “leads” for its transportation providers through its software. Using this semantic framing, Uber argues that [the drivers] are simply its customers who buy dispatches that may or may not result in actual rides. In fact, Uber notes that its terms of service with riders specifically state that Uber is under no obligation to actually provide riders with rides at all. Thus, Uber passes itself off as merely a technological intermediary between potential riders and potential drivers.’  The District Court emphatically rejected that argument, on the ground that ‘Uber does not simply sell software; it sells rides…If…the focus is on the substance of what [Uber] actually does…it is clear that Uber is most certainly a transportation company, albeit a technologically sophisticated one.’

The Court went on to find that Uber’s revenue depended ‘on the generation of rides by its drivers’, and that it exercised substantial control over the amount of revenue it earned by unilaterally setting fares, the qualification and selection of its drivers, and their performance, including by terminating the accounts of drivers who it deemed not to be performing to its standards.  Uber’s many ‘suggestions’ as to how drivers should perform their work were found to arguably be instances of control.

The litigation later became a class action involving every driver who had worked with Uber since 2009.  However, there will be no final judgment, as the litigation settled in April 2016.

We still await definitive determinations of whether and when workers in the gig economy are really employees.  Technology is finding new ways of connecting platforms selling a service with consumers who want to buy that service.  Many of those services have to be delivered by people.  For whom are those people working: themselves, or the platform?  O’Connor is an early indication that courts may not always be bemused by the technology, but might instead focus on the substance of what the platforms actually do.