Uber CEO Promises Workers Scraps While Fighting Their Basic Rights

Facing new laws and legal challenges, Uber CEO Dara Khosrowshahi wrote in the New York Times that Uber would create a benefits fund to preserve drivers' status as 'independent contractors'—but only with a law that forces other companies to do the same.
August 10, 2020, 7:46pm
On Monday, Uber's chief executive Dara Khosrowshahi wrote an op-ed in the New York Times defending the company's core business model—misclassifying app-based workers as independent contractors—and calling for new laws to preserve it.  Khosrowshahi’s state

On Monday, Uber's chief executive Dara Khosrowshahi wrote an op-ed in the New York Times defending the company's core business model—misclassifying app-based workers as independent contractors—and calling for new laws to preserve it.

Khosrowshahi’s statements in the NYT’s op-ed section, which has allowed the most powerful people in the country to breezily air their bad and dangerous ideas, come as Uber’s ride hailing business is cratering during the pandemic. At the same time, the company is attempting to fend off legislation and lawsuits in California and Massachusetts that would reclassify Uber’s drivers as employees, not independent contractors.

Saying that employees have “less flexibility,” while admitting that independent contractors (Uber’s workforce) have “almost no safety net,” Khosrowshahi wrote that Uber is ready and willing pay into a fund for contractors’ benefits—but only if forced to by a new and hypothetical law that would also force other companies to do the same.

“Uber is ready, right now, to pay more to give drivers new benefits and protections. But America needs to change the status quo to protect all workers, not just one type of work,” Khosrowshahi wrote.

Uber drivers would be able to “take money out for every hour of work they put in,” and “all gig companies would be required to participate, so that workers can build up benefits even if they switch between apps” in any state that passes a law,  Khosrowshahi wrote.

Notably, the plan here is just to put money in drivers’ pockets to cover time off or medical bills, not give them the kind of benefits packages that employees typically can expect. Moreover, it would mean that Uber drivers would not need to be classified as employees under laws such as California’s AB5, saving Uber from paying new expenses in the form of a minimum wage, health insurance, paid sick leave, and other benefits.

The argument backing this up is one that Uber reliably returns to. Khosrowshahi warns that reclassifying Uber's drivers would mean "full-time jobs for a small fraction of our current drivers" and drastically cut the number of cities Uber operates in. He also insists rides would become more expensive, meaning Uber "would not be as widely available to riders, and drivers would lose the flexibility they have today if they became employees." The op-ed goes on to highlight surveys that have found "the vast majority of drivers" don't want to be employees, and cites a survey that Uber commissioned which found "two out of three app drivers would stop driving if their flexibility was compromised."

Here, Uber conflates independent contractor status with flexibility. The reality is more complex. Last year, UC Hastings Professor of Law Veena Dubal reviewed past survey research of Uber drivers and wrote that "drivers both wanted employee benefits and feared how the companies might behave as an employer" leading to an "attitudinal ambivalence of drivers towards employment." As a result, app-based ride-hail gig workers "uniformly desire the benefits traditionally associated with employment, but the subjection associated with employee status has produced anxieties."

As far as flexibility goes, Motherboard reported earlier this year on how Uber and Lyft introduced a system that forced drivers to sign up for shifts to meet unrealistic quotas. As a result, drivers lived in their cars to avoid getting “locked out” of the app. Marshall Steinbaum, an economics professor at the University of Utah, wrote a paper last year that extensively laid out the ways in which Uber's business model violated antitrust law by using its unregulated power to unilaterally set contractual terms for drivers (wages, fees, pay structures, etc.) and to tightly surveil and further subordinate drivers.

Uber’s benefit funds proposal also distracts from what it already owes.

Such a law implemented nationwide would have cost Uber alone $655 million last year, Khosrowshahi wrote. Uber already owes almost that much to New Jersey for unpaid unemployment insurance taxes from 2014 to 2018. Additionally, more than 5000 Uber and Lyft drivers in California have collectively filed over $1.3 billion in wage claims (each company burns through hundreds of thousands of drivers each year). Uber and Lyft are also estimated to owe California $413 million in unpaid state unemployment insurance taxes from 2014 to 2019.

Uncritical media treatments are partly to blame for the massive influence that gig economy companies enjoy. As Adrian Chen noted in his review of Uberland, an in-depth ethnography of Uber and Lyft drivers by Data & Society research lead Alex Rosenblat, early coverage of Uber shared a "quasi-religious faith that technology could miraculously make driving a taxi into a comfortable and lucrative middle-class career." In the book, Rosenblat also explores how Uber has managed to spread narratives of driving as "glamorous labor," Uber as an "altruistic" technology company, and driving on its platform as "a type of communion."

Funding and commissioning research that flatters the company is another vector of Uber’s influence. In response to the latest example of this—when Uber commissioned its own study of ride-hailing in Seattle to help beat back a minimum wage law—gig economy researchers published an open letter calling for adherence to basic ethical principles that would prevent corporate influence and avoid the laundering of tech PR as objective academic research.

Perhaps a similar set of ethics should apply to media access for companies with business models that rely on exploiting largely black and brown workers—like the gig economy. As KEQD reporter Sam Harnett wrote in a new academic paper, right now such companies “set the terms of debate and the language with which to engage in that debate; they managed to influence academics, politicians, and regulatory actors in a way that most of these individuals would not recognize; and they didn't even have to do most of the work."

When Motherboard reached out to Uber for comment on the op-ed or if it is taking any lobbying actions to implement the reforms that Khosrowshahi describes, Uber pointed to a document on its website titled "A First Step Toward A New Model For Independent Platform Work.”

Meanwhile, a $110 million campaign called Yes on Proposition 22, led by gig economy companies including Uber—which has contributed $30 million to the campaign—along with Lyft, DoorDash, Postmates, and Instacart, is seeking to overturn AB5, a California law that promised to overturn misclassification of independent contractors (including ride-hail drivers).

Currently, the Yes on Proposition 22 campaign is suing California’s Attorney General over a summary of the campaign he wrote that it maintains is "infected with the contagion of bias and hostility." So far, the campaign’s legal challenges have been rejected by judges.

Update: An earlier version of this article stated that over 2000 Uber and Lyft drivers have filed over $600 million in wage claims in California. It has been updated with most recent figures: 5000 drivers and over $1.3 billion in wage claims.