Uber’s long battle to avoid labor regulations suffered a major setback as the Great Britain’s Supreme Court ruled that drivers working for ride-hailing companies should be classified as employees rather than independent contractors.
The status of the ride-hailing drivers has been a point of contention for months between Uber and British authorities, who sided with labor activists. The activists argued Uber drivers are entitled to a minimum wage and vacation time under British law and, for a time, forced Uber off the streets in Great Britain.
Britain’s Supreme Court sided with the drivers, raising new questions about the future of the business model of Uber, Lyft and even food delivery services such as Door Dash across the British Isles, which has been accused of exploiting so-called gig workers.
Services battling to keep model alive
Uber and its allies in the ride-hailing and delivery business are fighting similar battles in other countries, regions and cities. Unions and political activists are challenging the business model, which allows users get a ride or food delivered by using a smart phone app.
Last fall in California, Uber, Lyft and their allies spent an estimated $200 million to win passage of an initiative that exempted ride-sharing drivers from the state’s labor laws. Uber and Lyft argued to the state’s restrictions compromised the driver’s flexibility and independence.
The also claimed 71% of their drivers actually favored the current system rather than being classified as employees, which contributed to voter approval of Proposition 22 in the November election. The measure garnered 58% of the votes last November, giving Uber a major victory.
Unions going to court in California
Voter initiatives in California can be undone in court and unions doing just that, hoping to get the Uber exemption set aside. The California Supreme Court declined to hear an emergency appeal but the Service Employees Union or SEIU, one of the union’s pushing to organize Uber drivers, started a new lawsuit earlier this month to have Proposition 22 overturned. The case is still pending in Alameda County.
Meanwhile, the ruling in Great Britain has no legal force in California or anywhere else in the United States. However, the language and rationale could be used to shape the views of American courts on the rights of gig workers.
Companies like Uber, which has never made a profit, also are facing new critiques of the gig economy that argue their business model contributes to widespread economic inequality, a charge they deny but find hard to escape.