As we’ve all seen and heard, Uber, Lyft, DoorDash, Postmates, Grubhub, and other rideshare and delivery companies have been adamant about fighting driver reclassification. As they argue through lawsuits and put forth their campaign for a voter proposition on the California ballot, they insist that drivers wouldn’t want to be classified as employees.
The main reason they give, which we rarely hear contrarian opinions about, is that drivers like flexibility.
Many surveys, including one of our own, show that drivers want to hold on to the ability to work when they want and for as long as they are able.
But we’re being told that drivers would have to give up flexibility should they be reclassified as employees.
It does seem plausible that, if drivers are classified as employees, companies would try to keep minimum hours, and dictate the timing drivers can work.
But … is this really the case? We at Gridwise always want to investigate these types of situations so we can share the latest and most complete information with you. With that in mind, let’s look at what’s covered in this post:
- What do the companies say about driver classification and flexibility?
- How do drivers feel about flexibility?
- What do labor laws say about the rules for employee flexibility?
- Would drivers, if classified as employees, be limited to working for only one platform?
- How likely are the companies to allow flexibility and multiple platforms for employee drivers?
What do the companies say about driver classification and flexibility?
Companies tout working for the gig economy as a way for ordinary people to earn extra money, as well as a potential full-time opportunity to establish a driving business.
They also imply that, if forced to make all drivers employees, drivers will lose some of the things they love most about the gig.
As stated in the intro, companies put a lot of emphasis on flexibility. In this report, which was commissioned by Uber, the company presents its case for keeping independent contractor status. The report states: “73% of driver-partners would rather have a job where you choose your own schedule and are your own boss, than a steady 9-to-5 job with some benefits and a set salary.”
This verbiage implies that if drivers become Uber employees, they will have a steady 9-to-5 job with some benefits and a set salary.
Maybe that’s what the rest of us have been thinking too. But does that necessarily have to be the case?
How do drivers feel about flexibility?
One thing we know for sure: Our data show that drivers believe they will lose flexibility if they become employees. That could be why 64.9 percent of drivers we surveyed say they would prefer to remain as independent contractors.
Also notice that a full 9 percent of drivers we surveyed don’t know the difference between being an employee and being an independent contractor.
What does that mean? It means we can be really sure that not everyone knows or understands that if drivers become employees, they’ll lose their flexibility.
Because companies have so widely promoted flexibility as a key advantage to being an independent contractor, it’s likely that many drivers just assumed they would lose flexibility if their employment status changed. But is this truly the case?
In order to find out, we have to investigate a little further.
What do labor laws say about the rules for employee flexibility?
Labor laws are complicated, largely because they’re so comprehensive.
They often make accommodations for companies and employees to create flexible relationships, rather than necessarily fitting into one of two specific categories: ironclad, 40-hour per-week arrangements; or independent contractor agreements.
According to labor law experts, there is plenty of leeway for companies to allow for flexibility while also providing the benefits of being an employee.
When presented with the companies’ position that making drivers employees would remove flexibility from their arrangement, Benjamin Sachs, a Harvard professor of labor law, doesn’t hold back. “That is just untrue,” he says. “You can be an employee and have an entirely flexible work arrangement.”
One needn’t look very far to see how this model is in play already, in the form of the COVID-induced shift in office hours. Arun Sundararajan, a New York University business professor, points at all the full-time employees who have reconstructed their work arrangements as they grapple with the need to work away from their offices. While they work independently, they remain tethered to their companies. “The crisis that we’re going through now has wiped the slate clean,” he says.
Obviously, there are no labor laws that prevent this sort of arrangement. In fact, Sachs expands on his view of the company-employee relationship in the rideshare world in this article in the OnLabor blog. He sees the relationship in reverse; i.e., the more control a company exerts over a worker, the more the worker fits the defining factors that would earn “employee” designation.
If a company classifies drivers as employees, it can then exert as much or as little control over their work hours (within the law) as it wishes. However, there’s no law that says a company must exert this control. It can give drivers as much or as little flexibility as company officials deem acceptable, and of course, profitable.
Now that we’ve discussed the flexibility issue, let’s take a look at another important aspect of the gig driver’s life, and how it could change (or not) with reclassification.
Would drivers, if classified as employees, be limited to working for only one platform?
Just as companies have more discretion with flexibility than they often admit to in public statements, they would be the ones to decide the driver exclusivity issue. There are many cases where a worker must sign a non-compete clause in his or her employment contract.
Consider, for example, salespeople for a software firm. Let’s say they decide the corporate grass looks greener at the outfit across the street. Would the company they’re already working for want them to take their proprietary information, not to mention their clients and leads, with them? Obviously, the answer to that is a definite “no.”
That’s why the salespeople have to agree, in writing, to not work for a competing company within a certain period of time; usually around a year, sometimes longer.
In the case of rideshare and delivery companies, there might be some room for them to insert a non-compete clause into the employee agreement, meaning drivers could only work for one platform at a time.
Yet, there’s no law that says they have to do that, nor could drivers stop them from doing that. It would be totally up to the individual company.
Before we judge whether this might or might not be fair to drivers, let’s consider what the companies have to win and/or lose by changing their policies on flexibility and non-compete requirements.
How likely are the companies to allow flexibility and multiple platforms for employee drivers?
In a blog post from earlier this month, we covered how much it might cost for companies to classify their drivers as employees. If Uber, Lyft, et al. have to pay a lot of money for insurance, time off, and other benefits, they’ll want to see a return on their investment.
A law professor at Duquesne University, Seth Oranburg, has a very straightforward way of expressing how the companies might view part-time or flexible employee drivers. In an August 2020 article on Minnesota Public Radio’s Marketplace blog, Oranburg says: “An employee that brings in $500 a month and costs $1,500 a month just for health care doesn’t add up economically.”
Well. Since it’s hard to argue against that point, it’s easy to see why the companies aren’t going to be quick to allow drivers to pick and choose the work hours that would be convenient for them. Still, it’s possible they could still allow at least some flexibility.
For instance, they might let drivers select the number of hours of work, and then allow them to work the hours into their independent schedules. It would be very similar to the way many corporate employees are working from home these days.
In terms of multiple platforms, companies may view that with an eye toward taking more control. If, for instance, the company is paying for the benefits enumerated above, what would happen if a driver became an employee of another company at the same time?
Would it be possible, or even safe, for a driver to work a full 40 hours per week for two companies, adding up to a total of 80 hours on the road in seven days? Yeesh.
Although the rideshare and delivery companies may not be too worried about drivers working for more than one company, they surely could become concerned about drivers doubling up on hours, and “double dipping” with benefits. This could create the need for further expenses for the companies to implement performance standards.
The same could also be true under the independent contractor arrangement. But let’s also remember that with drivers working as independent contractors, the companies have far less liability than they would if drivers were employees.
The bottom line
That’s what companies, just like drivers, are always eyeing—the bottom line. But when it comes to settling the argument about whether drivers are better off as independent drivers or employees, we don’t yet know what the bottom line is.
What do you think? Now that we’ve delved into the story behind the flexibility argument that the companies are using to renounce reclassification, is it for real? We’ve got a long way to go before we’ll know for sure how this and other issues will affect driver reclassification.
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