By Jeremy Pilaar*<\/p>\n
Earlier this month, Uber and Lyft drivers across the United States and the world went on strike<\/a>. Despite facing immense barriers <\/a>to organizing, thousands closed their apps and took to the streets to demand fair pay and benefits. The actions were long overdue. The companies are collectively valued <\/a>at over $80 billion. Yet more than half of American Uber and Lyft drivers earn below <\/a>their state\u2019s minimum wage. Only a third <\/a>of what passengers pay ends up in drivers\u2019 pockets.<\/p>\n The unrest was the latest consequence of a growing trend toward precarious work<\/a>. As I explain in a recent article <\/a>in the Journal of Law and Policy<\/em>, the rise of atypical employment has wreaked havoc on labor markets around the globe. Most developed countries\u2019 worker protections were enacted in the mid-twentieth century, when a majority of laborers enjoyed stable jobs with good pay and benefits. Since the 1980s, however, the nature of work has transformed<\/a>. Part-time, temporary, contract, and independent jobs have come to make up a significant proportion of overall employment. As non-standard work has proliferated, it has jeopardized millions of families\u2019 income security.<\/p>\n The gig economy presents a particularly stark challenge to traditional social safeguards. Companies like Uber and Lyft classify their workers as independent contractors rather than employees. This renders gig workers ineligible for a wide range of government protections, including the minimum wage, unemployment insurance<\/a>, and workers\u2019 compensation.<\/p>\n Surprisingly, my research shows that these gaps persist regardless of how hard a country has previously tried to decouple living standards from market participation. While France, for instance, has historically featured some of the world\u2019s most robust labor rights and welfare institutions, the country\u2019s failure to update its laws has left the drivers who ensure Uber\u2019s success almost as insecure as in the laissez-faire <\/em>United States. This indicates that the gig economy embodies a particularly forceful assault on established employment and social policies.<\/p>\n Fortunately, my findings also suggest there is reason for hope. Comparative legal theory has heretofore emphasized <\/a>that the United States is more consumerist <\/em>than it is producerist<\/em>\u2014privileging low consumer prices over producers\u2019 welfare. Yet an unusual pattern has emerged in recent years: against all odds, gig workers and their advocates have been pushing American law in a distinctly producerist <\/em>direction. State labor commissioners have deemed rideshare drivers employees rather than independent contractors; state and local legislators have imposed regulations aimed at fostering competitive parity between Uber and traditional taxi services; and the private bar has mounted an increasingly vigorous challenge to the company\u2019s employment practices.<\/p>\n Why the gig economy has produced a more powerful legal backlash than the ascent of other forms non-standard work is still unclear. The mobile apps that gig economy juggernauts rely on may make their business models uniquely visible. It may also be that gig workers face financial insecurity and safety net exclusions so severe that they have little choice but to aggressively assert their rights before courts and legislatures. Whatever the reason, their efforts are starting to bear fruit.<\/p>\n There is no question that gig workers and their advocates continue to face strong headwinds. Uber and Lyft command armies <\/a>of lobbyists <\/a>that have helped enact laws favorable <\/a>to them throughout the country. The Trump administration has also advanced the companies\u2019 cause. In April, the U.S. Department of Labor issued <\/a>a legally <\/a>flawed <\/a>\u201copinion letter\u201d arguing that workers at an unnamed \u201cvirtual marketplace company\u201d were independent contractors\u2014suggesting the same should be true for ridesharing applications. The National Labor Relations Board published a similar memo <\/a>last week, concluding that Uber drivers are independent contractors exempt from federal protections for union organizing and other collective action.<\/p>\n Nevertheless, courts are beginning to side with non-standard workers. In April 2018, the California Supreme Court issued a landmark ruling<\/a> in Dynamex Operations West, Inc. v. Superior Court<\/em>, which ushered in a more worker-friendly test to determine if a person is an employee or an independent contractor. While the old test looked to a convoluted set of factors to determine whether the employer exerted control over the worker, the new inquiry asks whether the worker performed a job that falls within the \u201cusual course\u201d of the hiring entity\u2019s business. Just as importantly, the Court shifted the burden of proving that a worker should be classified as an independent contractor to the employer.<\/p>\n Dynamex\u00a0<\/em>makes it much more difficult for gig economy companies to claim that their workers are independent contractors for the purpose of minimum wage and benefit laws. The idea that Uber drivers do anything other than forward the platform\u2019s mission of efficient transportation would likely strike most people as ludicrous. Indeed, as the New York Times <\/em>reported <\/a>when Dynamex <\/em>came out, the \u201cdecision could eventually require companies like Uber, many of which are based in California, to follow minimum wage and overtime laws and to pay workers\u2019 compensation and unemployment insurance and payroll taxes, potentially upending their business models.\u201d<\/p>\n Though Dynamex <\/em>has so far spawned relatively few lawsuits\u2014no doubt because the California Legislature has yet to weigh in <\/a>on the decision\u2014its effects are already being felt. Two weeks ago, the Ninth Circuit Court of Appeals entrenched the decision by holding <\/a>that Dynamex <\/em>retroactively subjects employers to liability for misclassifying their employees. As veteran labor and employment lawyer Michael Rubin underscored<\/a>, the cases the court cited in support of its opinion \u201cmake clear that gig economy companies like Uber and Lyft face an uphill battle in asserting that their business is their app, rather than providing rides to customers.\u201d<\/p>\n Public law enforcers have also begun investigating major gig economy players for potential legal violations. For instance, shortly after Dynamex <\/em>came out, San Francisco City Attorney Dennis Herrera subpoenaed Uber and Lyft for driver classification, pay, and benefits records. The accompanying press release<\/a> cited \u201cthe California Supreme Court\u2019s decision that companies must affirmatively prove a worker is an \u2018independent contractor\u2019 before denying that person wages and benefits guaranteed to California employees.\u201d Herrera stressed that \u201c[t]he California Supreme Court has spoken on the definition of \u2018employee\u2019 in a way that directly affects San Francisco\u2019s worker protection laws\u201d and that his office will not \u201cturn a blind eye if companies in San Francisco deny workers their pay and benefits.\u201d<\/p>\n Finally, analysts should not underestimate the progress that this month\u2019s strikes represent in and of themselves. As employment law scholar Veena Dubal eloquently put it<\/a>, the actions were \u201ca huge, unprecedented victory for service workers in the on-demand economy. Politicians (including presidential candidates), consumers (even those in wealthy Silicon Valley suburbs!), civil rights advocates, labor organizers, and drivers around the world stood together in coordinated, organized direct action\u201d\u2014an unimaginable outcome just a few years ago.<\/p>\n Consumers and policymakers have begun to recognize the need to treat the people who power the gig economy with dignity. The laws that could make that vision a reality may be closer at hand than we think.<\/p>\n