When tech companies are lauded for innovation or disruption, they are often taking advantage of existing infrastructure without paying to keep the system working. Uber has “disrupted” cabs in part because it doesn’t have to go through the processes that cab companies do to follow regulations and insure drivers. Airbnb undercuts hotels because it doesn’t have to meet the same standards. Electronic scooter companies are flooding the nation’s sidewalks without contributing to maintaining urban infrastructure.
Now, Uber is preparing to do the same thing to the American workforce.
This week, details emerged of the ride-hailing giant’s potential new venture: Uber Works. While we only know broad strokes right now, and the service is just in testing stages, a source inside Uber told the Financial Times that the company is “developing a short-term staffing business to offer 1099 independent contractors for events and corporate functions.”
The new service will reportedly seek to employ waiters, security guards, and service industry workers. Articles about Uber Works say that the plan is to hire “temporary staff,” but Uber has a history of playing fast and loose with what exactly “temporary” means.
Uber Works sounds like a curious move for the company, considering that it depends on workers’ statuses as independent contractors (usually a 1099 tax form) as opposed to employees (W-2), and this distinction recently caused Uber trouble.
Uber’s drivers have a case for being classified as employees. Yes, they drive in their car, but they place an Uber sticker on the windshield, work using an Uber app, and only work for Uber while the app is active. However, in April, a U.S. district judge ruled that Uber workers are not employees but freelancers, and as such, do not deserve employee status and protections. Had the judge ruled a different way, Uber’s business model might have collapsed over night. The savings on your Uber rides, at least partially, come out of the pockets of underpaid contractors.
This ruling opened the door for Uber to push more aggressively into the independent contracting space. We can likely expect the same results from Uber Works as we have seen from ride-hail services: These “independent contractors” will often do repeat work for the same companies, and even wear that company’s uniforms, but will be classified as freelancers.
The ruling, and others like it, have become more common as the country’s courts have become more conservative and Silicon Valley disruption has become the gold standard of American capitalism (GrubHub won a similar ruling earlier this year). It also seems that aging judges have trouble equating apps and programs to supervisors and managers.
Knowing the standards for independent contractors versus employees as outlined by the IRS, the rulings in favor of these companies are puzzling. According to the IRS, W-2 employees follow a work process defined by the company (true of Uber), complete workload assigned by a supervisor (true of Uber, if an app is a supervisor), and use equipment, tools and supplies required to perform the tasks provided by the company (true of Uber, if an app is a tool).
It’s hard to imagine a situation where Uber Works doesn’t push these boundaries even further. How can you wait tables without an assigned workload? How can you bartend without using equipment provided by a company? How can you be a security guard without following protocols defined by your boss?
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Of course, in the Trump era, the realities of business often don’t matter so long as the bottom line looks good. The recent Supreme Court ruling Janus v. AFSCME aims to destroy public unions under flimsy pretenses and signaled that the conservative Roberts Court will perform whatever contortions are necessary to serve the interests of capital.
Tech companies are not the only ones testing the limits of what an independent contractor can be in the Trump era. Truck drivers at the Long Beach port fought (and won some victories) against having an independent contractor designation despite driving company trucks delivering company cargo. The Cheesecake Factory was fined over $4.5 million this year for contractor violations.
The cases of Dynamex, Cheesecake Factory, and others like it are important when considering the implications of Uber Works. A program for temporary workers built by a company known for its worker misclassification efforts seems like an invitation for disaster. It’s hard to imagine a world in which this program doesn’t lead to more of the same misclassification that the labor movement is currently spending so much energy fighting.
Designation as an independent contractor helps businesses and hurts workers no matter how you look at it. Independent contractors do not receive health insurance; they pay higher rates on Affordable Care Act exchanges or do without. Contractors don’t accrue vacation, often aren’t paid overtime, aren’t guaranteed hours, and sometimes don’t even make minimum wage. Often, independent contractors lack legal protections from their companies and have a hard time taking actions over workplace abuses such as sexual harassment and assault.
Making any of this better is also difficult: It’s almost impossible for contractors to form a class-action lawsuit or organize a union.
As investors fall over themselves to bolster Uber’s financial position, as a society, we ought to consider what it is being disrupted. Uber’s profit, or rather profit potential (the company loses money on its rides), comes from worker exploitation as much as it does from the convenience of their app. Ultimately, it appears, its business was never really about a more effective mode of transportation but a more effective mode of subjugation.
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