Work in the Gig Economy: TaskRabbit, Uber &Co as Employers?

Employment law has long struggled to adapt to new forms of employment – who should be responsible for the protection of workers rights, from minimum wage and working time to discrimination law, in today’s fragmented economy? These fundamental questions are now returning to public discussion as a result of the meteoric rise of so-called ‘crowd-work’, where online platforms match individual workers and customers to perform ‘gigs’, ‘rides’, or ‘tasks’. Leading crowd-work platforms have already become household names, from Uber for taxi drivers and Amazon’s Mechanical Turks for digital services, to TaskRabbit for domestic work.

The economic implications of employment classification are significant: even by conservative estimates, Uber’s current business model avoids in excess of US $ 4.1bn in workers’ compensation, tax, expense reimbursement, and other employment-related costs. It is unsurprising, then, that a recently leaked offering for off-market investments in the company highlighted the ‘adverse material effect’ of employee classification on a consistently loss-making business valued in excess of US $60bn, and that we learned last week that the platform has settled two class-action lawsuits brought by its ‘driver partners’ seeking employee status in California and Massachusetts for a lump sum payment of US$ 84m, and several changes to its business model.

The claimants’ lawyers welcomed a ‘historic settlement’, and Uber’s CEO Travis Kalanick hailed the agreement as a major step in the company’s process of ‘growing up’. Whilst the settlement might thus offer all parties some temporary reprieve, it is unlikely to address any of the fundamental questions surrounding the employment status of Uber drivers, and ‘gig economy’ workers more generally. From Uber’s perspective, the settlement does nothing to discourage similar lawsuits from driver partners in other US states, particularly in light of previous findings that they should be classified as employees. Even if approved by a Court (rival provider Lyft’s earlier settlement has recently been rejected as ‘short-changing’ drivers), it would be of little precedential value in other jurisdictions, including the United Kingdom, where similar lawsuits are pending. The settlement is a similarly hollow deal for workers: many will continue to face precarious working conditions including long hours and low wages. It is also unclear how further litigation might be brought: crowdwork platforms including Uber are increasingly attempting to rely on contractual clauses designed to deter class-action lawsuits and/or mandating compulsory arbitration.

Most importantly, however, the settlement leaves the underlying legal question unresolved: are Uber’s drivers independent contractors, or employees, and thus entitled to a wide range of protective rights, from minimum wage laws to collective bargaining? As an exasperated District Judge noted in one of the now-settled cases, the legal tests developed to answer that question during the 20^th century in the context of platform work is akin to being ‘handed a square peg and asked to choose between two round holes.’

How, then, should policy makers respond? A recent U.S. report by former Deputy Secretary of Labor Seth Harris and Princeton economist Alan Krueger suggests the introduction of a third, intermediate category: the ‘independent worker’ would be entitled to some protection, including collective bargaining and elements of social security provision, whilst not enjoying recourse to basic standards such as wage and hours protection. With respect, this is fundamentally flawed: as the UK experience (where a third ‘worker’ category has long existed) shows, the square peg still won’t fit, whether a judge is looking at two or three round holes.

Instead, I suggest we should abandon the traditional focus on the employee question, and focus on the concept of the employer: which entity, or indeed combination of entities, is responsible for organising work under the platform’s business model? In a forthcoming paper, written jointly with Martin Risak of Vienna University, we argue that instead of dwelling on the well-rehearsed debates as to employee or independent contractor status, the courts should analyse the multilateral contractual relationships involved in the organisation of crowdwork from a different angle: by adopting a functional concept of the employer, employment law might be able to sidestep the current impasse, and allocate rights and responsibilities in a flexible, yet coherent manner.

The paper briefly introduces crowdwork, highlighting salient aspects for subsequent debate and reviewing the regulatory challenges: one of the very purposes of employment and labour law is to draw a distinction between the genuinely self- employed and those requiring protection, bringing the latter within its protective scope. The multiplicity of contractual relationships and competing legal characterisations in the arrangements between platforms, workers, and customers, on the other hand, sits uneasily with the traditional binary divide. We then turn to the functional- typological concept of the employer, developed on the basis of a catalogue of five employer functions, and illustrate how this functional concept could operate in practice, identifying the relevant employer (or indeed employers) in a range of scenarios, whether the platform exercises all employer functions, or whether that exercise is parcelled out amongst several actors.

A brief conclusion argues that the successful identification of the relevant employer for each function would restore coherence to the scope of employment law, resolving questions as to employee (and indeed customer) status in its wake. Adopting such a functional concept of the employer may well require a small conceptual leap, at least in English law – but, as Simon Deakin of Cambridge University has suggested, ‘if technology can evolve, so can the law.’

Jeremias Prassl is an Associate Professor in the Faculty of Law at the University of Oxford, and a Fellow of Magdalen College. He is the author of The Concept of the Employer (OUP 2015), and an editor of The Contract of Employment (OUP, forthcoming) and Chitty on Contracts (32^nd edn, Sweet & Maxwell, 2015).