Uber lobbies for ‘Prop 22’-style gig work standards in the EU

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Dara Khosrowshahi onstage at TEchCrunch Disrupt
Image Credits: Bloomberg / Contributor / Getty Images

Uber is shooting its shot at EU lawmakers as they dial up scrutiny of working conditions on gig platforms to decide whether new rules are needed to improve the lot of gig workers.

The ride-hailing and on-demand food delivery giant has published a white paper today in which it lobbies European policymakers for what it couches as a “new standard” for platform work.

In the paper Uber talks of the need to expand some benefits to gig workers — seeking to eschew the nightmare scenario (for Uber) of having to fund the full suite of employment rights if its drivers and riders were reclassified as workers/employees.

It’s also trying to steer policy discussion away from issue of collective bargaining — with the paper floating the notion that app workers need more “meaningful” representation, which they say is needed to reflect varying (aka individualized) needs, and suggest could be achieved via a variety of channels of ongoing engagement between platform and worker.

Uber’s white paper is framed with the title: “A Better Deal”. And the ride-hailing giant is unquestionably after the best possible deal for its business as lawmakers look at whether new laws are needed to ensure a fairer deal for app-based workers.

The question EU lawmakers will need to pay close attention to in the coming months is exactly what kind of deal platforms workers are getting and, as they dig into the detail underlying tech giants’ PR, whether and how to create a legislative framework that improves conditions for armies of “contractors” without undermining the much vaunted European social contract.

Uber has said it will push for a California style “Prop 22” outcome globally — after successfully defeating a law to reclassify gig workers in its own backyard last year.

But the legal and social context is very different in Europe, where many platforms have faced litigation on the issue of employment classification and courts have frequently found in workers’ favor.

On Friday Uber faces perhaps its biggest regional court test yet when the U.K. Supreme Court is expected to hand down its verdict on a long-running challenge by a group of former Uber drivers to its classification of them as self-employed. (The U.K. is now outside the EU but the outcome of the case is nonetheless likely to influence courts across the region.)

Greater clarification and enforcement of existing employment laws could be a way for policymakers in Europe to clamp down on platform giants that, critics say, have used self-serving classifications of algorithmic micromanagement as a high-tech hack of the legal system to profit at the expense of society (in lost tax revenue) and off the labor of individual workers deprived of stable employment (and its associated rights).

At the same time, increasing consolidation in the on-demand space is concentrating the power of gig giants. So how can platform workers expect “meaningful” representation or “improved” conditions when a handful of mega platforms are busy closing off the possibility of something better by assimilating the competition — unless there’s a legislative intervention to protect them?

In a blog post accompanying Uber’s white paper today, CEO Dara Khosrowshahi reiterates the tech giant’s preferred “new standard” for gig worker rights should be “grounded in the principles drivers and couriers say are most important to them: Flexibility and control over when and where they want to work, earning a decent wage, access to relevant benefits and protections, and meaningful representation”.

“To make a real difference, reform must also be industry-wide, requiring all platform companies to offer benefits and protections that are standardised across the sector, so that workers are protected no matter which apps they use,” Khosrowshahi goes on.

A universal standard for platform benefits may sound progressive, but the notion of “relevant” benefits for gig workers risks fixing this labor force to a floor far below agreed standards for employment — closing off any chance of a better deal for a class of workers who are subject to persistent, algorithmic management.

Such an industry-wide standard may also kill the imperative for gig platforms to compete with each other by offering workers a better deal. So policymakers need to tread carefully to avoid cementing a bad deal for workers they claim they want to help.

Uber’s white paper is pushing for some key principles at this point, rather than delineating a detailed “deal” model for workers — which the company says would need to be developed in consultation with stakeholders.

It also says it recognizes that platforms are likely to remain subject to a patchwork of national rules across the EU. And even if the Commission opts to legislate it would be years before such laws take effect — so case law will remain hugely important. But Uber is evidently keen to try to steer any overarching EU guidance which might exert top-down pressure on how Member States approach and apply policy in the area of gig work.

Platform giants have long sought to frame employment classification as a question of “flexibility vs benefits” — claiming workers value flexibility (which they define as meaning “the ability to choose when to work”) above all else, even as they apply datafication and tracking to manage individuals’ service delivery via high-tech micromanagement of a non-employed labor force.

Thing is: Sure you can log on to such a platform to work “when you choose” but without legal protections such as a mandatory minimum wage there’s no guarantee that gig work “flexibility” will sum to a livable income for the individual. Which in turn means platform workers may not have de facto flexibility/freedom to choose when and how they work — unless they have other income to rely on.

The platforms are therefore often pushing a paradoxical defence of a business model that critics accuse of being abusive by design — with critical unions dubbing it exploitative and extractive of human labor, accusing platforms of circumventing the social contract and stability offered by traditional employment.

In a section of Uber’s white paper that argues why “employment is not the answer for platform workers” the tech giant points on cue to “flexibility” — saying its model means that “drivers can connect freely to meet that demand or choose a quieter time of day if they wish”. Yet people who need to earn a living may not be able to “choose” a quieter time of day if they’re being paid by the job, since doing so would reduce their earnings, so how much flexibility (or pay decency) does Uber really offer?

(Related: The large sums of money many of these gig giants have spent on trying to accelerate the development of automation technologies; ergo, money they save on not paying employment-linked taxes is being ploughed into trying to replace human workers entirely. So where’s the dignity in that?)

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Decision time for the gig economy

In her December 2019 mission letter to the job commissioner, the European Commission president Ursula Von der Leyen tasked Nicolas Schmit with looking atways to improve the labour conditions of platform workers” — including by ensuring that enforcement of current laws is working — writing that: “Dignified, transparent and predictable working conditions are essential to our economic model.”

Soon after Schmit got his instructions, he sounded a balanced tone on the contentious issue of platform (profits) versus worker (rights), telling Euroactiv that he’s “not against platforms”, and sees them as “part of our new economy” — arguing too that it’s “important for Europe, not to lose the edge with this economy”.

But he also warned that the bloc must not allow high-tech tools to be used to embed a new “underprivileged” worker underclass, saying: “We cannot have the economy of the 21st century with working conditions that are more comparable to those in the 19th century.”

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Quite how the Commission will square the circle of “improving” precarious platform work in policy terms remains to be seen. But the imperative for it to do good work here has only increased since Von der Leyen issued the instruction: The coronavirus pandemic has shone an excoriating spotlight on the risks — individual and societal — of the lack of a proper social safety net for platform workers, even as on-demand platform work (especially in areas like food and grocery delivery) has been fired up as a side effect of COVID-19.

Uber’s white paper riffs on the theme of the pandemic and the need for platform businesses to “go further” in supporting workers — aka “to ensure independent workers have access to benefits and protections when they need them most”, as it puts it — even as it lobbies against providing all the rights and benefits of employment.

“It makes sense for them to be pushing for a minimum standard of benefits,” says Joe Aiston, senior associate in the employment group at international law firm Taylor Wessing, discussing Uber lobbying for a “new standard” for gig work in the white paper. “As sort of appropriate minimums/protections. And perhaps things which are easier to give without significant disruption to the business model.

“Whereas having to reclassify everyone as employees or as workers would involve quite significant disruption to the business model — and is obviously going to result in significant extra cost for them as a business. Both from the point of view of things like minimum wage and holiday pay, but also the potential knock-on effect from a tax perspective as well.”

And whilst analysis of worker status does not automatically make those people employees for tax purposes,  Aiston says tests are “pretty similar”. Hence litigation over employment classification presents a clear risk to Uber’s tax status — and thus to its (potential) profitability.

On the issue of how to improve gig work, the European Commission has been gathering evidence as it works toward determining how best to proceed — including holding a conference on platform work last September. But big decisions are looming for EU lawmakers this year.

Later this month the Commission will launch a formal consultation of workers’ and employers’ representatives. And Uber’s white paper is clearly targeted at that process so we’re likely to see a number of self-interested attempts to influence platform working condition “improvements” kick off in earnest.

Exactly what will be in play, policy wise, isn’t yet clear. But, last March, the Commission published a 285-page study in which it said the “main” challenges identified vis-à-vis the working conditions of platform workers include: Employment status; information available to the workers about their working conditions; dispute resolution; collective rights and non-discrimination. (So pretty much a full house, then.)

Dig into the actual study and it also discusses low remuneration and insecure income in plenty of detail and as “significant stressors” for platform workers.

Pay certainly looks set to be a significant area of discussion/contention — not least because another of Von der Leyen’s instructions to Schmit asked him to put forward a legal instrument “to ensure that every worker in our Union has a fair minimum wage”.

It’s a common criticism of platform work that earnings may fall below the legal minimum for a worker (as pay by gig jobs typically only generate earnings during a job or on completion of a delivery, not for all the down time spent waiting to score a gig or pick up the goods). So if the EU’s fair minimum wage for “every worker” ends up meaning “except platform workers” that will sum to the Commission rubberstamping a tech-enabled “underprivileged” worker class — just as Schmit said it mustn’t.

Uber’s approach to the issue of pay in its white paper sidesteps the minimum wage issue by talking only of “fair and transparent earnings” (or “decent” pay) for platform workers.

The tech giant also says it’s “ready to lead the industry by advocating for changes to the way platform workers are paid” — though it makes it clear it won’t budge on remuneration without the sought for industry-wide enabling framework (“for flexible earning opportunities, with industry-wide benefits and protections that all platform companies must offer independent workers”).

“This could include universal standards, such as the Proposition 22 legislation recently introduced in California. Or it could be based on a European model of social dialogue, where platform workers, policy-makers and industry representatives work together to set earning principles for the industry,” Uber suggests.

After Prop 22’s passage, Uber is taking its lobbying effort global

“For example, in Italy the food delivery industry and the General Labour Union signed an agreement confirming the self employed status of couriers while requiring the industry to provide working standards for couriers, including provisions about earnings, injury, third-party insurance and training.”

“Critically, whatever the earning model, it must be based on an industry-wide level playing field to ensure all independent workers have a consistent earnings baseline, whichever platform they choose to work with,” Uber adds.

Clearly, then, the stakes are high all round on this one: For gig workers’ rights; for platform giants’ profits; and for EU lawmakers’ credibility in claiming a socially progressive agenda.

Although it’s not 100% certain the bloc will come with legislation at this point, either. A Commission spokeswoman suggested policymaking could be off the table if platforms and workers can come to a consensus agreement over what “better” precarious work looks like. (But, yeah, good luck with that.)

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The formal consultation of “social partners” that’s set to kick off later this month will consist of two stages, per the Commission spokeswoman.

“The first stage seeks their views on the need of a possible EU initiative to improve the working conditions of people working through platforms. In the second stage, they will be consulted on the possible content of such an initiative,” she said, noting that the Commission will “carefully assess social partners’ replies”.

“Provided social partners do not decide to negotiate an agreement among themselves, the Commission intends to put forward a legislative initiative by the end of 2021,” she added.

The spokeswoman confirmed that the policy areas where challenges had been identified — and where “improvements may be needed” — include “precarious working conditions, transparency and predictability of contractual arrangements, health and safety challenges and adequate access to social protection”.

Asked to confirm whether “precarious working conditions” includes low and unstable remuneration she declined to specify, saying: “I’m afraid the [aforementioned list] is as far as we can go regarding the initiative at this stage.”

Employment status

Among a number of policy considerations summarized at the end of the Commission-instigated study into gig worker conditions is the statement that employment status remains a core challenge.

“Some platforms seem to operate at the margins between self-employed and employee, adjusting practices to maximise control over platform workers without unequivocally assuming the role of employers,” the report observes, noting the discrepancy between the (plodding) pace of case law clarifying where the employment classification line lies and the “fast-changing business practices characterising platform work”.

“Unless Member States widen the concept of employee or introduce a rebuttable presumption on the employment status of platform workers [through legislation or case law], platforms are likely to continue or expand their reliance on labour from self-employed individuals,” it continues.

“Reclassification of individual cases may happen on the basis of EU law or on national legislation, but it is unlikely that this will drastically reverse the main trend.”

“Actions aimed at protecting self-employed platform workers who are economically dependent on the platforms to ensure some minimum standards as to their ‘working conditions’ seem advisable,” the report also adds — while an associated “policy implication” suggests that the EU and Member States “should consider clarifying which platform practices are incompatible with self-employment for platform workers”.

Clarification of self-employment tests — or of practices that should fail the test — is one way for pan-EU policymakers to move. Though, again, it remains to be seen which ideas the Commission will choose to champion as it takes more feedback on the gig economy.

On the employment classification case law front, a major decision is looming in the U.K. in relation to Uber’s ride-hailing business. A 2016 employment tribunal challenge to Uber’s classification drivers as self employed is headed for a final judgement on Friday — when the U.K. Supreme Court is expected to deliver its verdict on a case that has seen Uber lose a number of appeals over the last five years.

The Supreme Court ruling will likely have ramifications for the ~45,000 drivers who Uber says operate on its platform in London — and likely more widely across the U.K.

It could also ripple out beyond that, given the active attention now being paid to improving the lot of gig workers by EU policymakers.

Last year a French court of last resort ruled that a former Uber driver should have been considered an employee instead of a self-employed partner. It found there was a relationship of subordination between the company and the driver — flagging issues such as the inability of drivers to set prices; build their own customer base; or choose how to execute a task. “The driver participates in a managed transportation service and Uber unilaterally defines the operating terms,” it wrote.

However, Uber denied the case set a precedent while also claiming to have made a number of changes to how its platform operates since the challenge was lodged in 2017 — suggesting drivers have been given more control over how they use Uber and now have greater “stronger social protections” (such as free accident insurance).

The case underlines the difficulties of relying on complaint-based case law to shape coherent outcomes for platform workers, plural.

The length of time such challenges take to reach a final outcome also give the platforms plenty of time to reconfigure their operations so they can at least try to claim specific findings no longer apply.

So legislation may indeed be required to lock in improvements for the conditions of gig workers.

“It’s true to say that things can change — so if Uber, following [the Supreme Court] decision materially change how the business model works then it’s possible they could then bring the drivers outside of the definition again,” says Aiston, although he points out the required changes in that context may, as it turns out, not be “acceptable” to Uber.

“We’ll have to wait to see what the variables the Supreme Court decides push it one way or the other but they would have to make a determination as to whether it works in the context of their business model to make such potentially significant changes to how things work,” he goes on, adding: “I suspect that they may already have been putting in place changes to how the business model works — perhaps to prepare for the judgement.

“So I guess the point there is the case law is so context-specific that that’s an argument to say that actually legislation and specific definitions are key rather than perhaps relying on very specific case law.”

The Commission’s study also notes a number of challenges holding back policymaking in this area — even things as basic as clearly defining platform work; or gathering sufficiently comprehensive data to inform evidence-based policymaking.

“Once someone is classified as a worker, rather than an independent contractor, then that does potentially increased their ability and right to collectively bargain — so it’s another potential knock on effect should the Supreme Court decision go against Uber,” adds Aiston. “It might lead to the potential for a greater ability for their drivers/riders to collectively bargain so that will be something the relevant unions are looking out for keenly as well.”

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Attempts to regulate and legislate are, meanwhile, in train in Europe at a national level. Such as in Spain where the government has sought for several years to crack down on platforms using so called “falsos autonomos” (aka falsely self-employed workers), and is in the process of reforming labor laws to reflect and capture platform work.

That national labor reform process could result in platforms being required to hire delivery workers, per recent reports — and such moves give platform giants added incentive to lobby the Commission for “more flexible” pan-EU rules which may at least limit how far national law can travel to influence rules on the grounds elsewhere in the bloc (so limit potential damage to their business model).

The U.K. government has also suggested legislation is coming. It conducted a major review of modern working practices back in 2017 — which included looking at gig work. And among the Taylor Review’s recommendations was that the current (U.K.) legal classification of “worker” should be updated to better reflect gig work — with the report suggesting “dependent contractor” would be a more appropriate framing now — and also that greater focus should be paid to the control exercised over workers by platforms.

The review led to a government plan to bolster worker rights, as it was billed with much fanfare. However, the “Good Work Plan” reform package unveiled at the end of 2018 was instantly dismissed as weak and lacking substance by labor unions (versus the government trumpeting it as a massive expansion of workers rights). Not that it seems to have done much to address gig work specifically, as yet.

A commitment by the U.K. government as part of that plan in 2018 by the U.K. government to legislate to improve the clarity of employment status tests — in order to “reflect the reality of the modern working relationships” — has not amounted to anything yet.

The planned legislation may have been delayed as a result of the pandemic. Aiston suggests it’s also possible the government is waiting for the Supreme Court judgement in the Uber tribunal case to inform its policy thinking. So for all Uber’s slick regional PR push to influence policymaking, it may have relatively little say in the matter versus European case law and the court of public opinion.

“If the Supreme Court judgement does against [Uber] in the sense that the drivers were workers I think that’s probably going to make things at least a bit more difficult for them. Because in the UK at least they’re going to have decide that well either we accept that all drivers are workers or — depending on reasons given for the judgement — can we adjust our business model to bring it away from that analysis,” says Aiston.

“They may be keen to do the latter, on the basis that they are obviously keen to keep people being self-employed rather than workers but I guess from a PR perspective that might not look great for them to do that. Once a judgement has been made that they are workers, one view is that you just need to accept that now and move on and acknowledge that they have those rights.”

He points to examples of gig economy companies trying to “pre-empt or negate” the risk of reclassification of “self-employed” contractors as workers by putting in place benefits packages — such as Uber offering free or low cost insurances to drivers and riders in Europe — “to show that they are a ‘good’ company and they want to look after people”.

Such efforts fall short of the suite of rights reclassified platform workers could get so there’s more movement that could happen here — and may have to in order to keep the travelling public on side.

“They tend not to go to the extreme and say well we’ll acknowledge that they’re workers and therefore they’re entitled to minimum wage and their rest breaks and that kind of thing. So it’s something to look out for as well with these gig economy businesses,” Aiston suggests. “I think it will become more competitive from that perspective.

“Whether or not they acknowledge that people are workers is one thing but I think you can see a definite move towards gig economy businesses realizing that they have a duty to look after people… Obviously that serves a dual purpose of people getting some benefits but also it being a positive thing from a PR perspective and the point of view of the public view of these companies.”

It’s also worth noting that U.K. employment law is more nuanced than some national employment law — as it does already recognize the concept of a “worker” (i.e. not an employee and not self-employed) — while Aiston notes some other European countries (and also the U.S.) have a more limited set of classifications (i.e. employed versus self employed).

“European courts will look to things like the Supreme Court decision in the UK. And whilst they’re not bound by that decision you can imagine that the way that this swings will have at least some kind of knock-on effect to how any similar judgements are taken across Europe,” he suggests. “The interesting thing to bear in mind is that in the UK we have this middle classification of a worker. Whereas in most European countries you’re either self employed, a contractor or an employee. So there’s a bigger dichotomy elsewhere in Europe.”

“In a way the UK’s in a better position because we have this middle ground. And some people might say that has made the UK courts be in a position more easily to reclassify — assuming that the Supreme Court goes the same was as the court of appeal did [in the Uber employment tribunal case], which was to state that these drivers were in fact workers. So it’s important to note there’s a difference there,” he adds.

“In the UK you can understand why it has perhaps been a bit more easy for a court to make a decision that the driver should fit within this middle category where they attract some protections but not all of them.”

UK workplace rights reform doesn’t look disruptive to gig economy giants

If EU policymakers were to decide to create a pan-EU standard akin to “worker” that would present a huge opportunity/risk for Uber et al. — with the chance to influence key parameters in their interests as a means of reducing the threat employment litigation poses to their core business model (and staving off a larger tax bill).

Though there will clearly be costs involved in an expansion of the level of protection offered to gig workers. The question for tech giants would be how much they can shrink those costs — aka what’s the bare minimum in “relevant” standards they can sell across Europe?

Alternatively, EU lawmakers could seek to stipulate and enforce a list of “dos and don’ts” for platforms vis-à-vis workers — as a way to establish appropriately “fair” operational employment limits — which in turn might have the potential to be disruptive to the business model of on-demand giants whose profits (often still theoretical at this point) depend on access to plentiful, low cost labor supplied by lots of people they claim not to employ.

Setting a list of specific operational requirements for platforms is exactly what the Commission has proposed in an overarching platform regulation that EU lawmakers set out in December (the Digital Markets Act) — in that case aimed at intermediating platforms which have the most market power to push for fair dealing with other businesses (and foster digital competition).

Something similar for gig platforms that aims to ensure a fair deal for workers is at least conceivable.

It would surely be preferable to Uber et al. versus being legally required to put hundreds of thousands of on-demand workers on the payroll. But it would also put an end to the free ride these giants used to scale in the first place.

So it may not be the end of the road for the platform economy in Europe but a period of considerable adjustment looks inevitable — and business models will need to adapt to changing (and/or better enforced) employment laws.

Aiston says organisations will have to weigh up the pros and cons of adjusting their business models — with a view to either seeking to keep arrangements away from employee or worker status (but potentially reducing how much control they can apply, e.g. over price); or to accept people are workers and adapt the business model and pricing structure accordingly (such as by, say, restricting the ability to work for rival platforms).

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