AI Implications in GIG Economy (Uber Scenario and not only)

I would like to start a discussion considering the AI implications in the current economy especially considering the uplifting importance of the "GIG economy" model. 

I think it would be interesting considering the development of AI platforms in general and the consequences of the workers. Also, I would like to explore how far the responsibility of a companies goes and if, in your opinion, the company itself should regulate and clarify labour law issue or if the public law itself should constrain the companies. 

I faced this reflection while trying to understand the role of the drivers in Uber and I found the UK and the US approaches really interesting. For who is not familiar with that jurisprudence, I will try to summarize it here:

- UK Jurisprudence 

The United Kingdom approach, among the other common law jurisdictions, seems so far the clearest: in a suit brought by Uber drivers before the Employment tribunal, one of the claimants asserted that each time he switched on the Uber App, he would fall within the core definition of "worker" in the Employment Rights Act 1996 §230(3)(b).

Before moving on, it is important to stress that in U.K. labour law there are three main classes of workers: independent contractors, workers and employees. The latter category enjoys of the most stability in the market by being subject of the business risk only indirectly. Moving to the second category, the worker shall enjoy fewer benefits, but still more than a self-employed that is left alone against the company, especially in the new economies in which - like Uber - individual do not have direct contact with the central agency.

Even though Uber contracts state that drivers are self-employed and that they are not required to work any minimum hours, drivers must perform personally and are subject to constant scrutiny of Uber, like customers review. In the above-mentioned case, two Uber drivers argued that they should be classed as the company’s “workers”, and therefore entitled to a minimum wage, statutory sick, and vacation pay, though they are not “employees”, so they shall not enjoy further rights such as parental leave.  

Both the Employment Tribunal and the Appeal Tribunal held in favor of the drivers, stating that the Uber App was only a mean to access to the work and that as long as they were able and willing to accept assignments they were "workers" within §230(3)(b). Uber had fancifully argued that the city of London was a mosaic of 30,000 businesses and that it offered a service to the drivers, leading to the unlikely conclusion that Uber itself was working for the drivers and not the other way round.

The strongest claim was indeed the one for the minimum wage, to which the defendants tried to reply arguing that such a recognition would allow a driver to log on to multiple platforms and therefore be eligible for several minimum wages; the Court was adamant in rejecting this argument, asserting that not only most of the drivers are in good faith, but that the matter should be addressed as a disciplinary issue. Uber’s allegation that abuse would come from the weak part of the contractual relationship is confuted both by the Court and by anecdotal evidence; on the contrary what stems from them is that safeguards for the workers are inadequate: Uber self-declares itself a platform that works as an intermediary to reach customers, and shifts all the risks, but not the profits, on the drivers, which seem to barter flexibility and some autonomy for a less secure occupation. Moreover, it is blatant that the third party of this triangular structure, the customers, cannot be rendered accountable for granting benefits or any sort of protection to the drivers, other than those compelled by social norms and Uber’s Community Guidelines.

Notwithstanding Uber’s predictable attempt to define itself an agency and to enforce the language of self-employment used in the contracts, the Employment Appeal Tribunal upheld that the characterization of the relationship with the drivers did not properly reflect the reality and that no contractual relationship was built with every single passenger.

In nice, the UK Courts approach seems to favor prima facie drivers, and so the public purse: if Uber drivers are included among “workers” employer national insurance contributions will grow and the government might levy a windfall tax.

(My Colleague Laura Camardelli provided this analysis and I tried to summarize it)

- US Jurisprudence

On the Atlantic side, the United States currently follow a different approach shaped in 2018 by first Dynamex Operations West, Inc. v. Superior Court of Los Angeles and then almost reverted in O’Connor v. Uber decision.  In fact, on April 30, the California Supreme Court made more difficult for employers in the state to deal with workers as independent contractors. Even if the company involved in the trial was the courier service Dynamex, this company was employing all its delivery drivers as independent contractors since 2004.

In the United States,  the classification of the workers was mainly based on S. G. Borello & Sons, Inc. v. Department of Industrial Relations case. Here, the court established a test hinged on roughly 10 factors, considering different characteristics but especially the amount of supervision that a worker has. It also announced that the most important characteristic of which was the employer’s “right to control” the manner and means by which the worker performed his/her duties.

Another remarkable decision that influenced the way of conceiving employ is Martinez. Ninety-seven years after California passed its Labor Code §1194, the California Supreme Court finally clarify who is an employer subject to §1194 and various other Labor Code provisions. Here, the Court sustained that to “employ” has three alternative definitions: to exercise control over the hours, wages, or workings conditions; to suffer or permit to work; to engage, thereby creating a common law employment relationship. This type of definition goes way beyond the traditional common law conception of employment.  Even if this case only involved a joint employer analysis it surely had influenced the court in deciding Dynamex Operations West’s employee sorts. In fact, in this case, the workers claimed to be considered employees because they worked solely for Dynamex, that have significant control over their assignments, their pay rates, their uniforms and other aspects of the job.

In an 82-page decision, the California Supreme Court innovated from Borello favoring a worker-friendly standard that has been already applied in Massachusetts and New Jersey: the ABC test. This test is composed by three requirement and each need to be met for assuming that a workers is an independent contractor or rather an employee: first, the contractor provides the service free from the company's control; second, the service provided is outside the company's core business; and third, the contractor is an independent professional engaged in providing their service to companies other than the one in question. So, under this easier test, the worker is considered an employee if he or she performs a job that is part of the routine of the company’s business.  A failure to prove any one part of the ABC test will result in the worker being considered as an employee, so subject to the California wage order. By shifting the burden to the business, the Supreme Court created a presumption that workers are employees.

This decision undermined the Uber position, even if the company never claimed to be a transportation company but rather, in the contract they make sign the driver, a “technology company” so they are still able to meet the test, but it is scrutinized more closely.

    The case adds to a long-running legal drama over the question of employee status, which weighs heavily on the future of online labor platforms. Cases alleging worker misclassification have cropped up across the country, with varying outcomes depending on state laws. The economic implication of this decision is that for an employee, the employer has the responsibility of paying Social Security and payroll taxes, unemployment insurance taxes and state employment taxes, and moreover providing workers compensation insurance, other than complying with the federal statutes governing the wages, hours, and working conditions.

So this ruling in favor of the workers’ right and oriented in a more European way of reasoning would lead to believe a win for the gig workers, however, the Ninth US Circuit Court of Appeal reversed the previous holding on September 25, not even six months after. In O’Connor v. Uber, Uber drivers claimed their rights and argued that they should be categorized as employees rather than independent contractors. However, the judges nullified the decision on the ground that Uber’s arbitration clause prohibits class actions. O’Connor has been contested for over five years. In 2016, UBER agreed to pay $100 million to the roughly 385,000 drivers represented in O’Connor and one other case, as long as they continue to be classified as freelancers. However, this settlement was then rejected by a federal judge, arguing that the amount was not enough for compensating but it ended up to a way worst situation for the workers that still live in an ambiguous legal situation.

As previously stated, the candidate needs to sign a contract before becoming a driver with very specific legal terminology. The drivers are defined as “partners”, not employees. What Uber does for them is providing “business opportunities”, and it refers to itself as a “technology company” or a “platform”— it is never stated that they are a transportation company. Moreover, it is stated in capital letters in the Terms of Condition that Uber only allows individual arbitrations and this is why the Ninth Circuit could not finally balance the situation between the two parties.

With this ruling in favor of Uber, all their workers will be considered contractors because the contract they sign fits in the requirement of the ABC test, but this issue is far from settled.

UBER could be considered an employer because it does have more than significant control over how drivers perform their work. Starting from the fares, the driver has no power in negotiating them but needs to follow an algorithm powered by the company. They are also subject to constant evaluation and need to keep their score high, otherwise UBER cannot allow them to use the service. The driver cannot choose which type of ride or which customer he or she wants to take, but needs to accept the ones the app suggests them. Moreover Uber itself “recommends” norms of conduct and does not allow any direct contact with passengers after rides. If a driver decides to deviate from the route decided by the app, Uber sends “tips” to modify this behavior and after some violations, the ban from the service is prescribed as a sanction. Looking at the evidence, several drivers are economically dependent on Uber and this is their only job: and this is a condition shared by drivers on both sides of the Atlantic.

Having a business model based on an independent contractor is key to several sharing economy models because they save money by not providing benefits and rights to which an employee would be entitled. The esteemed saving with this type of gig workers is around 20/30% from the contractors so it is undebatable that blindly converting all the contractors as employees could massively affect a business. However, the current scenario is not balanced, and it negatively affects the American driver too much.

I would love to hear your opinion not only on the Uber dispute but also around the GIG economy in general and  AI Implications. Thank you!