Uber says its drivers would lose flexibility if it were forced to reclassify its workers as employees rather than contractors — a claim it recently made in conjunction with a contentious lawsuit that’s now getting under way.
“The way we look at it, the laws governing employers require [them] to exert much more control over their employees, monitor, make sure they’re taking break times,” Ted Boutrous, Uber’s lawyer, said in a press conference last week. “It’s inevitable the flexibility and autonomy that drivers crave would have to be limited.” A spokesperson added that managing overtime would be another reason Uber would have to assign shifts.
They’re stretching the truth. Labor laws don’t prohibit flexible working conditions. If drivers were legally employees, they could still drive one hour one week and 40 the next. In a business like Uber’s, where apps track when workers are logged in, it would be easy for a company to send a push notification to people after four hours of work, requiring them to take a 15 minute break, or for the app to turn off after a 40-hour workweek to prevent overtime. Monitoring drivers would be easy for a company whose algorithms have optimized pricing at all hours.
When I raised that point, Boutrous said, “One of the reasons we think this would create issues is matching supply and demand — making sure there are enough drivers when demand is there. That would require more rigid scheduling and the like.”
At the heart of the issue is whether Uber’s drivers should be classified as independent contractors or employees. If they are considered employees, Uber would have to pay more in taxes, offer benefits like workers’ compensation and cover their expenses like gas. That could cut into its $51 billion valuation, as well as set a precedent for other startups designed around the so-called on-demand economy, where workers aren’t afforded benefits typical at most companies.
“If Uber or Lyft or other ride-hailing services decided they’d like to allow their employees to be completely flexible, there is nothing that would prevent them from doing that,” California labor lawyer Jason Erlich, who represents employees in cases where they’re suing employers, told Re/code. “It’s disingenuous that they would make an argument that they couldn’t figure that out.”
When challenged on the issue at the press conference, Boutrous took a different tack, arguing that workers couldn’t work for multiple companies if they were employees.
He said that working for Lyft and Uber simultaneously “would go away because under California law — duty of loyalty to your employer — you can’t shift back and forth.”
But once again that’s a truth stretcher. It’s actually up to the employers whether or not to activate what’s known as the duty of loyalty clause of the California Labor Code. The law was written to protect employers, not as a mandate, so Uber’s drivers would only have to stop working for Lyft if Uber demanded it. Or, conversely, they’d have to stop working for Uber if Lyft reclassified its drivers as employees and demanded their loyalty.
So why does Uber trot out the flexibility argument if there’s no law preventing flexible employment?
For one thing, it’s aimed at making its workers more amenable to the idea of being contractors. That’s how Uber was able to get 400 drivers on the record in a court case saying they’d rather be contractors than employees. The company hasn’t told its drivers about the possibility they could still work flexible hours and reap the benefits of employee status.
“As independent contractors, drivers have the flexibility and control to design their work as they see fit,” an Uber spokesperson said, reiterating its common refrain. “Seventy-three percent of drivers say they would rather have a job where they choose their own schedule and are their own boss than a steady nine-to-five job with some benefits and a set salary.”
But there’s another more nuanced argument for why Uber might be making the claim. Should Uber lose the lawsuit, the company would face millions in added costs and would likely want to set more stringent requirements for drivers such as mandated work hours — moves that would be entirely up to the company.
Suggesting it would be legally bound to cut flexibility is another way of saying it’s completely out of the company’s hands.
Of course, Uber would take a significant financial hit if it had to reclassify, and it would be completely within its rights to change the terms of work if it loses the case.
“If you have employees as opposed to independent contractors, you have to have an HR office and payroll services, someone there to calculate the hours, ensure there’s compliance with wage and hours laws,” Don Polden, a labor law professor at Santa Clara University, told Re/code. “It’s very difficult to provide all those services if you have someone working one to two hours a week — it just doesn’t scale out.”
Health care is another big cost. Once a company has more than 50 full-time workers, it has to either buy them health insurance or subsidize the insurance they buy themselves. If an employee works 40 hours one week and two the next, a company is on the hook to help with health insurance despite not receiving the benefits of a “real” full-time employee.
To make up the costs, the company would probably start scheduling workers on shifts and banning them from working for other companies.
It makes perfect business sense to eliminate flexibility if Uber were required to incur additional costs in reclassifying its workers. But that’s not what it is arguing in court.
This article originally appeared on Recode.net.