It’s summer and for most students it’s the chance to get away from the monotony of taking classes and being told what to learn to earn a degree. Over the next 12 weeks, four Daily Bruin columnists will take the time to explore the bigger problems of our day that exist beyond campus boundaries and often beyond students’ purview during the regular academic year. First, columnist Ara Shirinian confronts the future of government regulation in technology and what it means to be an employee in the age of technology-facilitated ride-sharing.
For Uber, everything seems to be about sharing. Except for its profits.
But soon, it might not have much of a choice.
Earlier this month, the California Labor Commission ruled that one of Uber’s drivers is an employee, not an independent contractor. The case is being appealed by Uber and, depending on how high the case goes, it could set a precedent that would apply to all Uber drivers.
According to the L.A. Times, if all drivers in California were named employees, the company would have to reimburse employees for gas, road tolls and insurance. Additionally, Uber would be responsible for unemployment insurance, workers’ compensation and Social Security among other benefits.
If sharing companies like Uber think that labor laws need to be updated to work better with new business models, that’s understandable; but that’s a fight they should have with the state, and under no circumstances should California allow them to avoid giving their drivers the protections that exist under the law.
The fact is that, despite being hailed as revolutionary from the perspective of riders, Uber essentially operates like a modern taxi company that takes advantage of smartphones. While the approach to transportation is certainly an advancement over the current taxi system, much of the advantage comes simply from the fact that there is almost no regulation over Uber’s drivers.
Since drivers receive almost no protections, Uber is able to pay drivers more per hour than similar jobs. This allows the company to shift liability to drivers and maintain a steady stream of profit.
This is how Uber gets away with calling its drivers contractors: they only use their own equipment and work on their own schedule. It also means that all expenses, including gas, road tolls and damage to drivers’ cars, are the responsibility of the driver. It’s easily a win-win situation for Uber, and the reasoning behind calling drivers contractors is clearly faulty.
Moreover, calling drivers contractors makes no sense even just looking at the business model. Contrary to what it may claim, Uber is much more than just an app that connects drivers with riders. It has complete control over the rates riders pay and takes a significant portion of the fees. It has a substantial amount of control over every aspect of the service, including the transactions, so there are few grounds on which to consider their drivers anything but employees.
The abusive nature of this relationship helps explain why the company is so popular with investors; there is almost nothing that can affect the company’s margins. Anytime something goes wrong, drivers bear the entire burden.
Uber is not an anomaly; other companies that offer sharing-based services include Lyft, Airbnb and Instacart. Because of these companies, thousands of jobs are being held by people that do not count as employees and cannot get protection under the law.
Business models have grown and transformed as quickly as the technologies that made them possible, which has made them notoriously difficult to regulate. This means there is going to be somewhat of a learning curve when it comes to finding the balance necessary for effective regulations. However, that does not mean there isn’t an important future for the businesses we consider a part of the sharing economy.
How we view sharing businesses might change, but there’s nothing fundamental about them that needs to go. The only major thing we need to do is ensure that companies like Uber provide a reasonable amount of protections for the people making the service possible, no matter what they are called.
No matter what Uber thinks the laws should be, it can’t be allowed to avoid all regulation by simply changing the label on what are clearly just employees.
Technology is difficult to regulate because it’s always new. When music distribution first became digital, there was a plethora of problems – including, but not limited to, piracy – that took years to properly address; but now, the vast majority of music is sold this way.
The point is, you can’t fight technology, but you can find ways to make it work better, and that is what regulation should be doing for the businesses in our new sharing economy. Companies will still be profitable, and we will be protecting everyone else along the way as well.
If the law sticks, your next ride might cost a few extra dollars, but that’s a small price to pay to ensure that Uber drivers don’t get left in the dust of their own cars.