Today’s News & Commentary — April 3, 2017

The New York Times has a thorough feature about how Uber is using “psychological tricks” to subtly control the drivers who use the service. The article focuses on how the company “solves” the problem of how it cannot exert too much control over its drivers—currently treated as independent contractors—by using inducements: alerts questioning decisions to log out of the app, reminders of monetary goals, and sending drivers their next ride even before their previous ride is over. In turning the app into a video game, the article—and several researchers it cites—argue that Uber is in reality asserting quite a bit of control over drivers.

California Assemblymember Lorena Gonzalez Fletcher plans to introduce a bill allowing gig economy workers—like Uber and Lyft drivers—to unionize, according to the Los Angeles Times. Fletcher introduced a bill last year attempting to do the same, but pulled it after facing both business and labor opposition. The California push comes at the heels of Seattle’s ordinance allowing ride-hailing drivers to unionize and New York City’s informal union affiliation.

Mother Jones has an article providing more detail into how a private prison company put detained immigrants to work without pay, leading to a lawsuit that was certified as a class action a little over a month ago. By using “voluntary” workers, the prison company—the GEO Group—plausibly saved hundreds of thousands of dollars.

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Gig News: In First Uber Classification Arbitration, Driver Ruled Independent Contractor

The Recorder reports that Uber has “successfully persuaded a private arbitrator that a California driver for the transportation company is an independent contractor, not an employee, in the first arbitration in the United States to test that issue.”  While drivers continue to challenge Uber’s mandatory arbitration agreements in court, the arbitrator’s decision represents the outcome of the first of what could become many individual challenges by drivers asserting proper classification as employees, if arbitration agreements are enforced.

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Regressive Federalism

As we approach January 20th, labor advocates and other progressives are placing their hopes in a handful of states and cities.  The hope, as part of a “progressive federalism,” is that these states and cities will have the capacity to chart a course distinctly different from the one being pursued by the federal government.

Among these promising localities is New York, where both the state legislature and the the City Council and Mayor are already at work on a number of innovative and promising bills. But Josh Eidelson at Bloomberg Businessweek and Cole Stangler at The Village Voice report on a bill under development in New York that should be a concern to progressives and to labor. This bill, being pushed by Handy and by Tech NYC (“a newly formed statewide tech-industry trade association that includes Uber”), would allow companies to categorize their workers as independent contractors if those companies contribute to a “portable benefits” fund.  Although we haven’t been able to track down the official legislative language yet, news reporting on the bill suggests that it will function as follows: Gig-economy firms that wish to take advantage of the new law would contribute 2.5% “of the fee for each job performed by the gig economy worker” to a portable benefits fund. Workers would then be permitted to use the monies in their account to purchase a health or retirement plan, or perhaps other benefits.  In exchange, all those who work for participating firms would be classified as independent contractors under state law as long as they are permitted to choose their schedules and work for other companies.

Put somewhat bluntly, the proposed bill would allow gig firms to buy their way out of New York employment law for a fee equal to 2.5% of each job performed by their workers. Continue reading

Gig News: October 28, 2016

In a major ruling with widespread implications for gig economy workers in the United Kingdom, an employment tribunal in London found that Uber drivers are not self-employed independent contractors, but rather Uber workers.  The Guardian reports that “the case could open up the technology firm to claims from all of its 40,000 drivers in the UK, and force other companies in the so-called gig economy to review the way that they are employing staff.”  Drivers will now be entitled to the national living wage, as well as paid holidays and paid rest breaks.  Uber is likely to appeal the ruling.

In the United States, Uber has again been sued by drivers in New York who accuse Uber of wage theft.  Bloomberg BNA notes that the drivers originally filed a class action alleging violations of the Fair Labor Standards Act and New York Labor Law, but now four of the drivers “who haven’t opted out of arbitration agreements with Uber, will contend the National Labor Relations Act bars arbitration pacts containing class action waivers” as well as the same substantive FLSA and NY Labor Law violations.  As a result, “the six drivers in the original lawsuit who opted out of arbitration can more quickly move for court consideration of their ‘wage theft’ claims.”  The drivers contend that “Uber’s pay practices mean many drivers working more than eight hours a shift earn less than minimum wage and receive no overtime pay.”

Meanwhile, Uber is moving ahead with the formation of company-funded quasi-unions which will purport to represent drivers and yet promise not to strike.  According to Josh Eidelson of Bloomberg Businessweek, the Uber-funded Independent Drivers Guild was launched in partnership with the International Association of Machinists and Aerospace Workers (IAM) and claims to represent all 40,000+ Uber divers in New York City in arbitration hearings challenging driver deactivation, and also offers “such perks as discounted legal assistance and chances to air grievances at monthly meetings with Uber officials.”  However, the IDG wasn’t voted for by drivers and has no collective bargaining agreement, and some argue it represents an effort by Uber to resist true unionization.

Today’s News & Commentary — May 24, 2016

Nowadays, you can order a pizza by tweeting an emoji and have it delivered to you in a car equipped with a built-in pizza warmer. But technology hasn’t just changed the way that pizza arrives on your doorstep; apparently, it has changed the way that employers underpay workers as well. The New York Times reports that New York Attorney General Eric Schneiderman has filed a lawsuit against Domino’s Pizza alleging that the computer system it provides its franchisees “systematically undercounted hours worked by employees, shortchanging them hundreds of thousands of dollars.” The suit comes on the heels of a number of recent legal victories against Domino’s franchisees in the Empire State, but differs from those actions in that it targets the franchiser for “forcing franchisees to use a computer accounting system even though it was aware it was flawed.” In fact, Schneiderman claims, “Domino’s corporate executives knew about the violations, denied responsibility and failed to take action.” Accordingly, Schneiderman promises to “prove that the Domino’s corporate franchiser is legally responsible for rampant wage theft occurring at its stores.” Exactly how rampant is the problem? According to Schneiderman’s office, “78 percent of franchisees listed instances of subminimum wages, and 86 percent . . . listed instances of unlawfully low overtime rates.”

As the recent dust-up over SEIU’s proposed agreement with Airbnb suggests, the growing gig economy has forced a bit of an existential crisis upon organized labor. Writing in Fast Company, Sarah Kessler takes a closer look at how unions are responding to rapidly advancing technology and its spiraling effects on the economy. On the one hand, says SEIU president Mary Kay Henry, “technology gives [unions] a leg up in being able to connect people to each other and activate them.” Some unions have also expressed willingness to organize gig workers, even if the shape of that organization does not fit the contours of a traditional union. On the other hand, however, “[e]ncouraging on-demand companies to rely on a workforce of independent contractors who lack the rights and protections of employees” may be “bad public policy.” That’s why the AFL-CIO — of which SEIU is no longer a part — continues to insist that “working people in the gig economy share a single common designation: employees.”

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Today’s News & Commentary — May 12, 2016

According to a report published Wednesday by Oxfam America, workers in the U.S. poultry industry are under such pressure on the processing line that they are routinely denied bathroom breaks. As a result, some workers have taken to wearing diapers to make sure that they can take care of their basic needs without drawing the ire of their supervisors. In response to the report — which is titled No Relief: Denial of Bathroom Breaks in the Poultry Industry — the National Chicken Council insisted that it was “troubled by these claims,” but also characterized the report as “paint[ing] the whole industry with a broad brush based on a handful of anonymous claims.” Yet VICE News observes that Oxfam’s findings “are the result of three years of research, hundreds of interviews with current and former poultry workers, medical experts, and worker advocates, and are in keeping with other studies on the same subject.” For example, a 2013 report by the Southern Poverty Law Center and the Alabama Appleseed Center for Law and Justice found that 80% of surveyed poultry workers said that they were not allowed to take bathroom breaks when they needed to take them.

What might the new association for Uber drivers in NYC mean in the long run? The New York Post editorial board contends that the “compromise could be the beginning of the end of Uber” if it eventually leads to a full-fledged drivers’ union. The Post insists that “[a] true union would be death to Uber’s business model, which relies on drivers to work as independent contractors, not unionized employees.” This model, the Post argues, is essential because it helps Uber keep fares low and provides drivers with the flexibility to choose their own hours.” And ensuring that “[e]very customer gets service from a self-employed professional, not a clock-puncher” is a matter of critical importance, or so says the Post: “If ever there was a cause for progressives to champion, saving the app-based firms is it.”

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On The Uber Settlement & What’s Next For Drivers

There are two ways to think about whether a settlement is a good deal from the perspective of the plaintiffs.  One is whether, in light of all the facts and law relevant to the particular litigation, plaintiffs’ attorneys got as much for their clients as they could.  No one, other than those intimately familiar with the case, can assess that question perfectly.  The second is whether the settlement amounts to progress for the plaintiffs from a broader, less litigation-specific perspective.  Here, outside observers can have more to say.

It will take time to fully digest the Uber settlement, announced today, but a few things seem clear.  First, Uber prevailed on what is, by far, the most important issue.  The primary question in this case, and the one with the greatest practical relevance, is whether whether Uber drivers can continue to be misclassified as independent contractors or will be treated as employees.  As Uber proudly announced today, “Drivers will remain independent contractors, not employees.”  Uber drivers did secure some genuine benefits.  There are financial payments to the drivers (up to $8000 for those that drove the most; less for those who drive less), and drivers can now inform passengers that tips can be accepted.  There are also some improvements to how and when drivers can be deactivated.  And Uber has also agreed to help establish a drivers “association.”

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