From The New Yorker, James Surowiecki discusses the challenges of classifying Uber drivers as either employees or independent contractors in light of legislation that protects workers. James writes:
Much worker-protection legislation takes the view that, when there’s a tough call like this, we should put workers’ interests above corporate ones. But it’s not clear that most of Uber’s drivers would be better off if we declared them employees. The ones who treat their gig as a full-time job—driving forty hours a week or more—would probably benefit. But Uber would likely recoup its rising labor costs by taking a larger cut of fares and shrinking its workforce. Arun Sundararajan, a business-school professor at N.Y.U. and an expert on the sharing economy, told me, “It’s very unlikely drivers’ take-home pay would rise. There also would be fewer drivers. They would be able to drive more hours, but they’d have less flexibility in how they worked.” Studies suggest that flexibility—no supervisors to answer to, working when you want rather than when the boss wants—is an important part of what attracts workers to companies like Uber.
The real problem here is that Uber drivers don’t quite fit into either of the traditional categories. Declaring them independent contractors or employees, as a California judge presiding over a lawsuit against Lyft commented, means forcing a square peg into one of two round holes. We’d do better to create a third legal category of workers, who would be subject to certain regulations, and whose employers would be responsible for some costs (like, say, reimbursement of expenses and workers’ compensation) but not others (like Social Security and Medicare taxes). Other countries, including Germany, Canada, and France, have rewritten their laws to expand the number of worker categories. There’s no reason we can’t do the same, and give gig-economy workers a better balance of flexibility and security.
The bigger issue here, though, is the outdated nature of our social safety net. It’s still dependent on the idea of the full-time employee, who gets health care, a pension, unemployment insurance, and so on from one company. That worked fine in a world of stable employment, but lots of Americans no longer live in that world and plenty more will be joining them. And, as Sundararajan says, “It makes no sense to have a well-developed safety net for one category of employment and virtually none for other kinds of productive work.” Obamacare was a step in the right direction, and Senator Mark Warner, of Virginia, has suggested that we could use a similar system for benefits like workers’ comp and unemployment insurance. Work is changing. The protection we offer workers should change as well.
Read the full story at Are Uber Drivers Employees?