What Uber Drivers Seeking Minimum Wage Are Missing
Uber drivers have won an employment tribunal case in the UK, making them entitled to holiday pay, paid rest breaks and the National Minimum Wage. The ride-hailing company has long argued that its chauffeurs are self-employed contractors, not employees; the tribunal disagreed, however, setting a major precedent for the company and its relationship with workers. GMB, the union for professional drivers in the UK, initiated the two "test cases" in July. It's described the decision as a "monumental victory" that will impact "over 30,000 drivers" in England and Wales.
"Uber drivers and thousands of others caught in the bogus self-employment trap will now enjoy the same rights as employees," Maria Ludkin, GMB's legal director said. "This outcome will be good for passengers too. Properly rewarded drivers are the same side of the coin as drivers who are properly licensed and driving well maintained and insured vehicles."
This misses a couple of things
- This might well kill Uber, such that the only "victory" here is that drivers have one less employment option and choice of work style. The latter is perhaps the most important -- why does every single job have to be punch-in-punch-out with standard benefits and holidays and work hours and work rules? Why is there no room for a diversity of work experiences from which to choose?
- One of the things that many Uber drivers like about Uber is that there are no set work hours or productivity expectations. Well, that goes out the window with these rules. Today, if Uber pays drivers only based on what they work, they don't really care how hard they work or how many jobs they take or where they choose to cruise or even if they choose to cruise at unproductive hours, like 5AM. Currently, if you want to drive back and forth on a country lane at 4:30AM waiting for a fare, you can go for it -- you are taking the risk. But if the company is paying minimum wage per hour, everything changes. Suddenly they must now demand minimum productivity expectations, which will include limits on working in unproductive locations or at unproductive hours. The company will start to rank drivers and cut the lowest productivity / lowest activity ones.
I went into these issues in more depth here.
Tom Lindmark:
Actually, there are productivity rules within Uber. Prior to their legal setbacks in California they often deactivated drivers for excessive non-acceptance of trips. Subsequently, they have adopted a policy of mandatory "time outs" for three consecutive refusals. Uber also has a habit of unilateraly reversing trip charges for customers who complain about service and debiting the driver's account for the refund. The driver is typically not given the opportunity to defend his performance.
Recently, the company introduced a new wrinkle. Drivers now can be assigned a new fare while they are proceeding to pickup an accepted fare. The logic is that the second fare is closer to their location, however, there is no option to accept or reject the new fare. It is simply assigned. The driver can cancel the fare, but excessive cancellations are subject to deactivation.
Lest you think I'm anti-Uber, let me assure you that I am not. I think they did a superb job of reingeneering a hide bound industry. Having said that, I do not understand why they cling so steadfastly to the fiction that the drivers are independent contractors in the face of facts that contradict that assertion and, perhaps more importantly, in the face of public opinion which consistently results in their loss in cases like the U.K. Bettter to lead a charge to some sort of alternative classification which will benefit the drivers and at the same time avert a situation which you correctly describe as their death knell.
Lastly, at the present time it seems that either the public users or Uber itself and perhaps both are capturing the lions share of the surplus in the ride share business. If that persists Uber will continue to suffer a decline in service quality as better contractors opt out to pursue options which properly reward their efforts. To be sure there will always be individuals willing to drive for Uber under the current regime, but the experience will be significantly degraded. Pursuing their current model will ultimately limit their eventual market share as others offer superior service. Effectively, they risk giving away the gold mine they currently own.
October 31, 2016, 4:32 pmpoitsplace .:
It is amazing how many people are ending employment options under the banner of "fairness" and "helping the working class". These people are blind to reality, only some magical sort of "fairness", by which they mean everyone should get paid pretty close to the same amount without regard for productivity, ability, ingenuity, etc. It never occurs to them that forcing salaried workers to get overtime will cut their hours/value/money. It never occurs to them that setting some required benefit for a full time worker...will NECESSARILY have the side effect of reducing some group's hours by creating a natural monetary barrier. And then they'll be surprised again when they lower the bar for hours, only to find that once again the hours are reduced.
October 31, 2016, 4:44 pmCapnRusty:
The "people" who are in a position to make the rules that everyone else has to live by are, by and large, people in government.
October 31, 2016, 5:10 pmJ_W_W:
They want Uber dead and they don't give a rats ass about inconveniencing riders. After all the cabbies will get paid and the former Uber drivers will be unemployed.
I'm getting really really really sick of leftists.
October 31, 2016, 5:57 pmJim Collins:
There is a goal to all of this. It is so that they can be unionized. Look at December 1st, when the amount that you can make and be a salaried employee goes up. Salaried employees are usually not union members. Now when this changes they may have to join a union to keep their jobs.
November 1, 2016, 6:57 amPeabody:
I'm only familiar with employee vs contractor designations in the US, but could you please describe how it is so obvious that Uber drivers are employees? To my reading, IRS guidelines pretty clearly would designate them as contractors.
It seems the vast majority of those supporting Uber drivers to be classified as employees are either opposed to Uber, want govt control, or simply fall for shallow arguments that is unfair that drivers don't get holiday pay, labor protection, etc.
November 1, 2016, 8:57 amGoneWithTheWind:
I believe that killing Uber was the intent. Mission accomplished.
November 1, 2016, 9:36 amJTW:
"This might well kill Uber, such that the only "victory" here is that drivers have one less employment option and choice of work style. The latter is perhaps the most important"
Which is the whole point of the legal action and decision. European governments have been trying to kill Uber for years.
Classifying them as taxi operators allows them to do that, through requiring all Uber drivers to have a taxi license and the training and certification to go with it. Taxi licenses which are extremely limited in number (most often there are none to be had unless an existing license holder retires) and extremely expensive (in Amsterdam for example a person wanting a taxi license can expect to pay tens of thousands of Euros for it).
Certification for taxi drivers is similarly highly restricted and very expensive, the mandatory training courses, exams, and processes to get certified can take years and cost tens of thousands of Euros as well (especially in major cities like London, where you're basically required to know the shortest route between any two points in the greater area by heart and be able to reproduce that route verbally and in writing without error at a moment's notice, including diversions for anything the examinator throws your way).
So yes, classifying Uber drivers as employees and therefore taxi drivers instantly makes them all subject to those rules, regs, fees, and fines, which means they will have to stop providing competition to the "real" taxi branch who of course control those unions.
November 1, 2016, 11:50 amsteamboatlion:
Two things I don't get:
1. How does a court think "bring your own car, get paid based on output, and work your own hours" is anything like being a full-time employee and should therefore attract traditional employee benefits and conditions?
2. Why do people who clearly want a full time traditional job become Uber drivers in the first place, instead of finding an actual full time job? (unless they're union stooges)
November 1, 2016, 12:50 pmJ K Brown:
"Why is there no room for a diversity of work experiences from which to choose?"
Guild socialism, which is more popular in countries like France, but still has a presence in English-speaking countries.
Not to mention the need to not give individuals the idea they have traditional liberty to determine the hours they work and the pay the accept.
For instance, it is a primary principle that an English free man of full age, under no disability, may control his person and his personal activities. He can work six, or four, or eight, or ten, or twelve, or twenty-four, or no hours a day if he choose, and any attempt to control him is impossible under the simplest principle of Anglo-Saxon liberty.
Yet there is possibly a majority of the members of the labor unions who would wish to control him in this particular today; and will take for an example that under the police power the state has been permitted to control him in matters affecting the public health or safety, as, for instance, in the running of railway trains, or, in Utah, in labor in the mines. But freedom of contract in this connection results generally from personal liberty itself; although it results also from the right to property; that is to say, a man's wages (or his trade, for matter of that) is his property, and the right of property is of no practical use if you cannot have the right to make contracts concerning it.
The only matter more important doubtless in the laborer's eye than the length of time he shall work is the amount of wages he shall receive. Now we may say at the start that in the English-speaking world there has been practically no attempt to regulate the amount of wages. We found such legislation in medieval England, and we also found that it was abandoned with general consent. But of late years in these socialistic days (using again socialistic in its proper sense of that which controls personal liberty for the interest of the community or state) it is surprisingly showing its head once more.
--Popular Law-making: A Study of the Origin, History, and Present Tendencies of Law-making by Statute, Frederic Jesup Stimson (1910)
November 1, 2016, 6:20 pmTom Lindmark:
I don't think it's necessarily obvious that Uber drivers are employees, however, one of the key tests is control that may or may not be exercised over the independent contractor (IC). In theory an IC is able to accept or reject offered work, while an employee is compelled to accept the work offered. To the extent that Uber compels acceptance of offered work via disciplinary actions if the offer is refused then they can be deemed to be acting as an employer and the ICs can be deemed to be employees.
For the record, I don't support the designation of Uber drivers as employees. My point was that from a political standpoint, Uber is probably fighting a war that it can't win. Uber needs to exercise some level of control in order to maintain service levels and in doing so exposes itself to a reclassification of its relationship with its drivers. Government entities have a vested financial interest in classifying Uber drivers as employees. Specifically, it opens Uber up to the payment of payroll taxes, unemployment insurance contributions, disability fund payments etc. Combine this with SJWs who see Uber drivers as victims and unions who see a potential new source of members and you have a powerful coalition which will push for reclassification. That's why I think Uber needs to get out ahead of this and find some compromise classification which doesn't destroy their business model.
November 3, 2016, 10:08 amEfuet Andrew Atem:
Tom, thanks for the explanation, you did a great job here. In my opinion, the control they are trying to have on drivers is excessive and unnecessary. Arguably, this is what is causing the reclassification. They are bent on controlling the price, they are bent on obliging drivers to accept demands, etc...
November 7, 2016, 11:39 am