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UK Passes Important Ruling on Uber Driver Employment Status: Will the US Follow?

On Feb. 19, the United Kingdom’s Supreme Court ruled that Uber drivers must be treated as workers and would no longer be considered self-employed. Uber drivers James Farrar and Yaseem Aslam began this case in 2016; now they reap the rewards in the form of workers’ rights. Two of the most important benefits that come with this new classification are mandatory minimum wage and vacation time. This ruling was Uber’s third and final chance at appeal against the 2016 ruling in favor of Farrar (general secretary of the App Drivers and Couriers Union) and Aslam. Despite Uber’s protests, the Supreme Court determined that drivers were in a subordinate position to Uber and would have to work longer hours to increase their earnings

Despite Uber’s claims that it was exclusively responsible for connecting drivers to passengers, the Supreme Court ruled that its actions in setting ratings and fares, assigning rides, requiring certain routes, and disciplining drivers via its rating system constituted an employer/employee relationship. This conclusion forces Uber to take responsibility for the restrictions it has placed on drivers. Whether or not Uber decides to change its contract stipulations or allow for employment negotiations, the company must pay its drivers appropriately as employees starting after the decision was made.

In addition to issuing minimum wage and vacation time, Uber may also be required to pay the 20 percent value added tax (VAT) on fares. Jolyon Maugham, a barrister specializing in tax and employment law, emphasizes the impacts of this Supreme Court ruling such that, “The Supreme Court has fundamentally answered two questions at the same time: one is whether drivers are workers for Uber, and the other is whether Uber is liable to pay VAT to HMRC.” While the terms are still liable to argument, VAT would put Uber on the hook for over £1 billion, plus interest. 

The Court’s ruling now provides Uber economic incentives to not oversupply the market in cities now that they have to assure minimum wage and vacation time. The direct benefits for the city that these decisions will impact will include decreased pollution, poverty, and even congestion. There are no certain predictions for the specific environmental benefits of a relatively stable or even decreasing number of Ubers on the road, but the possibility is certainly something to look forward to in an environmentally conscious future. Additionally, there might be some impact on other forms of transportation if Uber and other ride-hailing apps are not allowed as much road space. 

Since Uber drivers are now working from the time they log on the app until the time they log off, drivers will have more security. Many drivers have reported that they spend much of their time waiting for people to book rides on the app, so ensuring that they are ‘on the clock’ even when passengers aren’t yet in their car will protect their income stability. 

If Uber were to change their conditions to strip back to being more of an intermediary party as they claimed to be, the Supreme Court would likely have to reassess their decision, but such changes would likely change the service entirely. As of right now, the decision will only apply to the 25 drivers who originally brought the case in 2016. Even if this case is just the first of many, there’s no saying what different angles or opportunities might arise out of future cases of the same situation. Uber has promised it will consult with all drivers in the U.K. to better understand what changes they would like to see, but cases continue to accumulate. 

California regulators experienced a similar legal battle between drivers and ride-hail services (primarily Uber and Lyft) last year where drivers wished to be reclassified as employees to assure more employment protections. Despite the case made by Uber drivers, voters sent through Proposition 22, exempting gig economy platforms from reclassifying drivers as employees. It’s certainly interesting to see how people, rather than Uber, have argued and voted against this sort of move in America—and in a blue state as well. This decision likely stems from a lasting culture against worker’s rights and unions in the US. Much of this is rooted in the historical tendency where whenever the rate of unionization in America has risen (in the past hundred years), the top one per cent’s portion of the national income has tended to shrink. Despite the fact that big cities—typically composed of a liberal-leaning population—are often dependent on these gig drivers, Americans remain unwilling to pay their drivers more for equitable rights. The “pick-and-choose” attitude of modern Americans on who deserves equal rights should not be (although often is) based on an arbitrary calculation of personal budget allowances. 

The difference in the result of these cases, however, isn’t between the culture of the U.S. versus the U.K. Instead, the difference comes from who was allowed to make the decision. In the U.S., the democratic decision rejected workers’ requests for better rights, and in the U.K. the justice system’s decision approved those same requests.

 Although it would be ideal to see U.S. Uber drivers enjoy the same benefits as U.K. drivers/employees while working at the same subordinate position stipulated by the UK Supreme Court, Uber is calling for a middle ground solution. Their “third way” would still classify drivers as gig workers while ensuring protections and allowing for flexible working. Proposals for this model were shared with the EU on Monday

Labor rights activists celebrate this win as a step in the right direction for job stability in the gig economy. Uber, on the other hand, worries about its sinking share percentages and additional tax payments in addition to concerns about increased ride fares. Some scholars argue that this decision will have echoing effects on national gig economies such as private hire drivers, couriers, and delivery drivers. The gig economy in the U.K. is estimated to carry a workforce of almost 5.5 million people. While the volatility of these labor markets has been under a microscope during the pandemic, the new platform for criticism of companies’ control over labor, conditions, and well-being will be in the spotlight for years to come. 

 

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