You hear talk of the “new economy” or the “sharing economy,” often touting the benefits and improvements of new jobs, new industries and new ways of doing old jobs. Companies like Uber are part of that new economy, but sometimes it seems that aside from a few technological changes, the only thing really new about them is that they offer a new way to exploit workers.
Misclassification is enormous problem with in the U.S. economy. Misclassification involves a company characterizing their workers as independent contractors, instead of as employees. While this may seem to some as merely a problem of semantics, for most companies it can create a competitive advantage and millions more in profits.
An administrative body in California has found that such a charade has been going on with Uber, the car sharing company that relies on private parties to provide the equivalent of taxi rides.
The company claims that it merely provides the technology that allows drivers and passengers to connect. What is galling is that the companies often claim, as Uber does, that this is what workers want. Uber claims they want flexibility, but the illusion is the flexibility is really that of the company having the ability to eliminate many costs, such as workers’ compensation insurance and Social Security, associated with having actual employees.
While a few workers may have specialized skills that place them in demand and allow them to negotiate a genuine contractual agreement with an employer, most jobs and most workers are relatively interchangeable and this gives employers an overwhelming advantage.
If the ruling from California were followed in other states, it would greatly complicate Uber’s business model. However, it could improve the existence of thousands of drivers if they were found to be employees.
Source: npr.com, “California Labor Commission Rules Uber Driver Is An Employee, Not A Contractor,” Sam Sanders, June 17, 2015