Uber drivers must forget about full time employment and benefits for now.
Uber, Lyft and other similar type companies have done everything possible to avoid employing key enablers of their services such as drivers.
How did a company that earns billions for moving people around manage to do so without hiring full time drivers? More importantly, how will it continue to do so with other gig companies? To understand how this became a reality and why it will continue, you have to go back to the history of gig companies.
In 2012, several ride hailing companies started paying drivers to use their own cars to do taxi work. These companies considered themselves not as taxi companies, but platforms to connect riders to drivers
Using the platform argument, the gig companies classified their workers as contractors, which shielded them from liability and allowed them to avoid paying for protections like overtime and unemployment insurance. US regulators and the government at the state and federal levels did not stop Uber and Lyft, and soon, tech startup companies like Instacart, DoorDash and Postmates began following suit.
The reality, however, is that this contractor model was legally suspect from the start. In California, the US, the determination of whether a worker was a contractor or an employee was made by the Borello test, which is a complex set of 11 factors established by a 1989 California Supreme Court case.
It was arguable that under those parameters, gig workers were not independent entrepreneurs running their own businesses on a platform provided by “tech” companies, but instead, employees of a transportation company in the case of Uber and Lyft.
Lawyers began trying to make the case with big lawsuits against gig companies. Workers also started fighting for protections and benefits. This culminated in a new law to take care of this challenge.
In September 2019, California passed the Assembly Bill 5 (AB5), a law making it harder for tech companies like Uber and Lyft to treat workers as independent contractors and thus avoid giving them benefits tied to employment, like overtime and health insurance.
Gig companies like Uber fought the regulation in court and refused to treat workers as full time employees. They put together a ballot measure, Prop 22, which is a piece of proposed legislation to be approved or rejected by eligible voters. Ballot measures are also known as “propositions” or simply “questions”. This particular ballot measure was designed by gig companies to carve themselves out of the AB5 law.
They boosted the entire process with $200 million (R3.1 billion) to ensure that the proposed legislation is passed. Gig workers also put on a fight with a mere $20m and they lost. This week, California voters approved the most expensive ballot initiative in the state’s history, backed by Uber and Lyft, to undo labour protections for the drivers that fuel their services.
What this means is that gig companies will continue to stick drivers and enablers of their services with expenses that includes fuel, vehicle upkeep and insurance, while denying them ideal compensation and unemployment benefits, the assurance of a living wage.
For now, this development will be felt in California however what happens there will influence how other jurisdictions treat the gig economy.
What happened in California should serve as a wake up call for many regions where these tech companies operate.
This is a beginning of legalising the gig economy in its current form, which does little to compensate gig workers for services rendered.
Africa should be careful of the copy and paste approach of Silicon Valley models that look shiny from the outside, but very ugly at closer introspection.
Uber has brought commendable innovations for transportation in modern society. It is, however, built on a business model that does little to advance the very lives of people who are making those services possible. The African tech ecosystem should build on caring and better business models that ensure the well-being of the key part of economies, the people.
Wesley Diphoko is the Editor-In-Chief of Fast Company (SA) magazine