From Quartz, Alison Griswold discusses the National Labor Relations Board (NLRB) memo that said that Uber drivers are independent contractors but notes that local ordinances are more likely to affect the classification of Uber drivers as employees or independent contractors. Alison writes:
The NLRB ruling is a blow to people who believe Uber drivers are wrongly classified as contractors. But for practical purposes, it seems unlikely to change much. Uber drivers have functionally been independent contractors since the company started, in that Uber treated them that way and so they’ve always operated without any of the benefits afforded to traditional employees. One question is what will come of legislation passed by the city of Seattle in December 2015 that gave local Uber drivers the right to form a union. That law has now been tied up in litigation for years.More to the point, by far the best advances in working conditions for Uber drivers to date have come not from any sort of national lawsuit or legislation, but from concerted local pressure. In New York City, for instance, the city council last December approved a first-of-its-kind wage floor for ride-hail drivers. The pay rules that took effect in February raised take-home pay for drivers to $17.22 an hour, or the contractor equivalent of the city’s $15-an-hour minimum wage. They are expected to lift average incomes by $10,000, or 44%, for roughly 70,000 professional ride-hail drivers in the city.
New York City is only one place, but it’s also one of Uber’s biggest markets, meaning these rules are not inconsequential. The company disclosed in a recent IPO filing that the pay rules are already hurting its financial performance. Now that New York has hammered out a framework for bettering the lot of ride-hail drivers, it will also be easier for other cities to follow.
On the other side of the US, California legislators are working to codify an employment-status test that makes it harder to argue workers are contractors. The so-called ABC test says workers are employees if the company controls what they do, if their jobs are essential to the company’s core business, and if they aren’t really running their own business through that gig. The ABC test could potentially cripple the business model of many gig-economy companies, which depend on large, diffuse networks of contractors to provide services and deliver goods at the touch of a button.