In an Elon Law Now commentary, Professor Eric Fink, a labor and employment law expert, examines the impacts on workers of on-demand services like Uber and Taskrabbit.
Prof. Fink’s commentary follows:
“App-based on-demand services have emerged as the latest hot business trend. Companies like Uber, Postmates and Taskrabbit enable users to arrange rides, deliveries and other services at a moment’s notice. The business model has brought greater convenience and reduced costs for customers, while attracting enormous infusions of venture capital for the companies. But for the workers who actually perform the services, the picture is less rosy.
“As a recent report by the National Employment Law Project (NELP) explains, the success of companies like Uber is attributable in significant part ‘to the efficiency with which they squeeze labor from their workforces, spreading business risks downward to their workers, without whom they cannot succeed but to whom they have no commitment or accountability.’ These companies do so by positioning themselves as intermediaries connecting people in need of services with other people willing to provide those services.
“Disclaiming the legal obligations of employers, the companies insist that the workers are ‘independent contractors’ operating their own micro-businesses. As a result, the workers assume the legal risks and financial costs of doing business, which in a traditional employment relationship would be the employer’s responsibility. Uber drivers, for example, must provide their own vehicles and pay for the maintenance, gas, insurance and various other costs of operation. These expenses put a substantial dent a driver’s income. While Uber touts supposedly typical driver earnings in the $90-100,000 range (figures that have repeatedly been called into question, after accounting for expenses, it is questionable whether Uber drivers really earn more than traditional taxi drivers.
“Workers classified as independent contractors also lack protection under wage and hour, anti-discrimination, workplace safety, workers compensation, unemployment compensation and other employment laws. In consequence, they are exposed to risks and vulnerable to exploitation that such laws are intended to shield against. Independent contractors also lack the protection that federal labor extends to employees who seek to organize and act collectively to enhance their bargaining power in dealing with the employers. Indeed, independent contractors who engage in collective action may face not only retaliation by the companies for which they work, but substantial liability under antitrust law.
“The nature of work in the on-demand economy may also have an adverse impact on workers’ satisfaction and well-being. Jobs consist of discrete ‘gigs’, with workers performing ‘disassembled microtasks’ that offer little opportunity for skill enhancement and can fuel alienation (think Charlie Chaplin on the assembly line in ‘Modern Times’). Irregular and unpredictable schedules can prove disruptive and stressful.
“The economic and social costs associated with these problems go unaccounted for in most discussions of the on-demand economy. To rectify the problem, NELP has proposed a set of legal reforms to ensure that on-demand gig workers do not sacrifice basic and essential protections when they enter the on-demand economy. These proposals include:
Extending coverage under certain labor and employment laws regardless of nominal classification of workers as ‘employees’ or ‘contractors’;
Enabling workers to organize and bargain collectively over their terms and conditions of work;
Establishing standards for wages and working conditions in various service sectors;
Protecting workers’ privacy by regulating surveillance and data collection by companies;
Guaranteeing paid sick leave and retirement plans;
Enhancing access to jobs through universal broadband internet service and job-matching services.
“Of course, these proposals would entail costs that would either cut into company revenue or be passed on to consumers. Yet, these costs are not absent from the existing on-demand economy. They are borne by workers, out-of-sight and out-of-mind to the public that enjoys their services and the companies that profit from them. An important goal of the legal system is to allocate the costs of social activity in an efficient and equitable manner. Reforms like those suggested by NELP would help achieve that goal in the on-demand economy.”
More information about Elon Law Professor Eric Fink is available here.
Elon Law Now is a recurring series of legal issues analysis and commentary by members of the faculty at Elon University School of Law.