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Gig Workers’/Drivers’ Rights & Employment Status Evolve, Business and Industry Trends Analysis

One of the perks for independent workers is choosing how often, when and where to work.  In its “2023 Economic Impact Report,” Lyft found that 68% of its drivers have a job or are looking for a job outside of their app-based work, and 19% own a business in addition to driving for Lyft.
There is a significant debate underway in many nations as to whether or not people working as Uber drivers, Instacart shoppers and similar agents are actually employees, rather than contract workers.  Legislative reform may well be attempted on large scale in this regard.   In some cases, class action lawsuits have been filed by the contract workers.  If governments rule that such workers are employees, it would have a massive effect on the business models of sharing economy firms.  In the U.S., for example, it would mean that firms were subject to paying payroll taxes such as Social Security, and were subject to very high levels of labor, safety, health and anti-discrimination laws.  This debate will likely continue for many years to come and may well lead to legal reform in some nations.  Another outcome may be the formation of contractor workers’ unions or union-like organizations that might demand better pay or working conditions.  The “Independent Drivers Guild” now exists in New York City, representing tens of thousands of local Uber drivers, but not quite acting as a true labor union.
In September 2019, the state of California passed landmark legislation, California Assembly Bill 5 (AB5), that requires firms that rely on gig (contract) workers to consider these workers to be classified as employees.  Legislation of this type can create massive changes within gig-based companies of all types.  Multiple laws and regulations that protect employees and regulate the ways in which firms must treat them is coming into play, such as minimum wage, unemployment coverage, employer’s liability, OSHA, EEOC and a long list of additional rules.  Unions are extremely excited at the prospect of unionizing the gig industry’s hundreds of thousands of California workers. In late 2019, the Competitive Enterprise Institute released the results of a study in which it estimated that reclassifying Uber drivers as employees would cost the firm in excess of $21,000 per worker and increase fares between 30% and 50%.  A California court ruled in early 2020 that the law does not apply to trucking companies.  (Many other industries had successfully lobbied for an exemption from the law.)
Shortly after AB5 was signed, companies directly affected by it, such as Uber, Lyft, Instacart and Postmates, helped to raise what was the largest voter referendum funding campaign in California to-date, totaling $204 million dollars.  The money was used to pay for massive petition signature drives, in order to get proposed legislation begun that would modify AB5, as well as advertising campaigns to encourage voters to support the new proposition.
The result, Proposition 22, was placed on the California ballot and approved by California voters, in November 2020.  While Proposition 22 enables sharing and gig companies to continue to classify their people as contract workers, it also provides those workers with new levels of protection.  For example, the proposition provides workers with minimum compensation levels, health insurance subsidies (to drivers who meet certain qualifications), medical costs for on-the-job injuries and a prohibition to keep drivers from working more than 12 hours in a 24-hour period for a single company.  It also requires companies to develop sexual harassment policies, conduct criminal background checks and require safety training for drivers.  Proposition 22 was challenged in 2021 when a superior court judge in California ruled it was “unenforceable.”  However, in March 2023, a California appeals court ruled that the proposition should remain state law.  Legal wrangling continues, as The Service Employees International Union lawsuit that challenges the proposition continues as of early 2024.  Proposition 22 is having widely felt effects on the gig economy as a whole.
It can be very interesting to compare the rights of gig workers in other nations to those in the U.S.  In the U.K., an officially commissioned review for the British government recommended stronger protection for gig economy workers.  In March 2021, Uber was ruled against in its efforts to fight court decisions that require the firm to reclassify its U.K. drivers as workers, not as independent contractors.  This “workers” status grants significant rights to drivers but is a peg below the rights of true employees.  Uber announced that it would grant minimum wages to these drivers, and the ruling will likely make Uber responsible for paid time-off and pensions.  (Uber currently pays health insurance costs in many of its markets, as well.)
In China, the Beijing Jiaotong University and ecommerce giant Alibaba conducted a survey of gig economy workers and found that couriers for ecommerce deliveries number more than 1.2 million.  As many as 25% of them work more than 12 hours per day, seven days per week, while a majority work eight hours per day each day of the week.  Some work directly for retailers such as JD.com or for delivery services such as SF Express.  Others work for a group of delivery companies, including ZTO Express, Best Express and STO Express.  The Jiaotong survey further found that most couriers make between $300 and $600 per month, or about the same earned by migrant factory workers in China.  The going rate for couriers is about 15 cents per package.
In late 2021, the Chinese government established new rules to protect ride-hailing drivers.  The rules include time off, benefits such as insurance and guidelines for ride hailing companies to publicly disclose fees charged per fare.


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