Gig News: NYC Drivers Group Accuses Lyft of Wage Theft

Yesterday, a New York Assembly Member and the Independent Drivers Guild (IDG) called for an investigation into ride-hailing company Lyft for allegedly cheating drivers out of certain wages. They claim the company is deducting New York State sales taxes and a “Black Car Fund” surcharge on interstate rides, even though they are only supposed to be applied to rides that both begin and end within the state. When drivers confronted Lyft about the mistaken charges, the company claimed they were other administrative costs, not taxes—even though they were the same exact rates as the actual taxes.

Lyft denies the charges, according to the Washington Post, claiming that it is completely upfront with drivers about what commissions and fees apply.

The letter was penned by Assembly Member Robert Rodriguez, who represents areas of East Harlem and Randalls and Wards Islands. The IDG is an affiliate of the Machinists Union and advocates for ride-hailing drivers in New York City. IDG had a controversial start: it serves as a critical outlet for drivers and is recognized by companies like Uber, who have agreed to meet with the group every month; however, it is partially funded by Uber, and part of the deal involved a promise from the Machinists Union to refrain from attempting to unionize the drivers for five years. As one piece highlights, IDG has taken full advantage of this deal—largely to the benefit of its member-drivers.

Though their press release highlights instances of Lyft’s overcharging, they also call for the state to investigate similar companies—e.g., Uber and Juno—for the same misdeeds. The action comes at the heels of last week’s revelation that Uber had been underpaying its New York drivers over two-and-a-half years, taking a cut of commission before taxes and fees, instead of after.

Today’s News & Commentary — January 17, 2017

Donald Trump’s nominee for Labor Secretary, Andrew Puzer, may be having second thoughts about taking the job following intense criticism of his nomination.  CNN reports that Puzder “has voiced second thoughts in recent days, because of a relentless barrage of criticism from Democrats, labor unions and other liberal groups, a business ally and GOP sources tell CNN.”  Puzder is apparently discouraged by the required paperwork and attacks on him by Democrats, organized labor and worker advocates.  At the earliest, Puzder’s confirmation hearing would be next month.  In response to the report, Puzder tweeted that he looks forward to his hearing.

Meanwhile, Trump’s plans to increase American jobs through increased American production of goods continues to generate significant skepticism.  With respect to production of iPhones, according to technology site BGR, “if iPhone factories came to the US, you can be sure that robots would be the only ones getting more jobs.”  Any increased American production would reflect that the “relative cost of skilled labor in the US and China is such that it’s cheaper to build a robot than it is to hire one US worker to replace one Chinese worker in the supply chain.”

Education increasingly defines the ability of Americans to succeed economically.  The Associated Press notes that “Americans with no more than a high school diploma have fallen so far behind college graduates in their economic lives that the earnings gap between college grads and everyone else has reached its widest point on record.”  College-educated workers have disproportionally benefited from new jobs and wage increases following the 2008-09 Great Recession, and are far more in demand by employers.  The education gap is most significant for white men, but is true across the board, and developing the skills of non-college-educated workers is critical.

Continue reading

Uber and Progressive Federalism

As Jon reported last night, an individual arbitrator has issued an award finding a California Uber driver to be an independent contractor rather than an employee.  The award is wrongly decided. I won’t engage in a complete analysis here, but, to find employee status, the arbitrator relies primarily on four California cases, three of which involved FedEx drivers. The arbitrator concludes that the facts of the Uber case resemble previous cases in which workers were found to be independent contractors. She holds:

Uber drivers are not supervised; supply the cars they drive; do not wear Uber uniforms or signage; can drive simultaneously for any competitor, including Lyft, Uber’s biggest competitor; are paid for each ride and have the unfettered option to work as little or as much as they want and whenever they want in the geographical location assigned to their platform.

But to find independent contractor status on this basis, the arbitrator has to ignore some other highly relevant cases, including a 2006 California decision involving drivers who worked for a courier company, JKH Enterprises, Inc. v. Dep’t of Industrial Relations. In JKH, the court found that the drivers were employees despite the following:

[T]he drivers are free to decline to perform a particular delivery when contacted by the dispatcher, even if the driver has indicated his or her availability for the day . . . .  All drivers [] use their own vehicles . . . They pay for their own gas, car service and maintenance, and insurance . . . . The drivers’ cars do not bear any JKH marking or logo. And the drivers themselves do not wear uniforms or badges that evidence their affiliation or relationship with JKH.  Some of the drivers perform delivery services for other companies as well . . . .  The drivers receive no particular training. . . . All drivers set their own schedules and choose their own driving routes.  Their work is not supervised.  Indeed, JKH only has a vague idea of where its working drivers are during the business day. . . . The drivers take time off when they want to and they are not required to ask for permission in order to do so.

So, this particular Uber arbitration award is wrongly decided. Of much broader importance, however, the award brings home something critical about progressive federalism: namely, progressive states need to clarify that gig workers, like Uber drivers, are employees within the meaning of state employment law. Continue reading

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

Today’s News & Commentary — December 29, 2016

One of the nation’s largest labor unions is preparing to respond to Trump with less.  Writing for Bloomberg Businessweek, Josh Eidelson reports that an internal memo shows the Service Employees International Union (SEIU) is planning a 30 percent budget cut over the next year.  The memo cites fear that a Republican-controlled federal government will enact policies that impede collective bargaining.  The SEIU represents 2 million workers nationally and has been spearheading the Fight for $15 movement.

Trump’s chosen Secretary of Labor similarly inspires concern that the federal government will be hostile to workers outside of the collective bargaining relationship.  Accoring to Mother Jones, a review of old interviews shows that Andy Puzder has previously complained on the record about overtime rules and protective regulations, calling workers “overprotected” and questioning the need for mandatory breaks.

Workers in New York State can at least have confidence in their state government.  The National Law Review reports that the New York State Department of Labor has amended minimum wage regulations to increase the salary basis threshold for executive and administrative employees, irrespective of the status of a similar planned increase of the federal threshold.  The new thresholds in New York depend on employer size and whether the employer is located in greater New York City .

Continue reading

Today’s News and Commentary — December 6, 2016

New York City is on the verge of passing historic legislation that would pave the way for representation of fast food workers by advocacy organizations.  According to Buzzfeed, “the law would require fast food employers to automatically deduct fees from the pay checks of workers who choose to be represented.  The money would go a member organization of their choosing, tasked with advocating on the worker’s behalf.  It looks and sounds an awful lot like a union, in an industry where unionization is all but impossible under the current system.”  Notably, such a law would allow for worker representation without overcoming the substantial obstacles to unionization of fast food workers.  Organizations would not represent workers in collective bargaining negotiations, but would be able to organize and lobby on their behalf.  Payroll deductions would “look more like recurring donations than union dues, with workers able to choose how much they wish to contribute from each paycheck.  Organizations receiving the funds will need to be non-profits, registered with the city’s Department of Consumer Affairs, that advocate on behalf of workers.”  Council members expressed confidence that the legislation will pass.

Amazon is on the verge of significantly automating retail shopping, by announcing plans to open a grocery store with no cashiers or checkout lines.  Quartz reports that Amazon “will open a grocery store in Seattle, Washington, in early 2017, where customers will be able to walk in, pick up the items they want to buy, and walk out.  To achieve this, Amazon will launch an app called Amazon Go (also the name of the store) which hungry customers will use to register that they’re in the store.”  Given that the Bureau of Labor Statistics estimates there are nearly 3.4 million cashiers employed in the United States, such automation could have a significant effect on jobs.  CNBC notes that the New York Post ran a front page today calling Amazon’s foray “the end of jobs.”  Business Insider predicts that such automation will be much more difficult for President-elect Donald Trump to counter-act that the outsourcing of manufacturing jobs, and represents much more of a threat to jobs than outsourcing.

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.