In a development that no doubt will cause much wailing and gnashing of teeth among the technobratacy, a labor lawyer has the crazy idea that, if the ‘on-demand’ economy treats supposed contractors like employees, then they should receive employee-level compensation (boldface mine):
…her sights are set on the so-called “on-demand economy”—the constellation of tech start-ups that provide transportation and delivery services at the tap of an app.
In recent months, Liss-Riordan has filed lawsuits against Uber, Lyft, Homejoy, Postmates, and Caviar—five of the largest on-demand start-ups in the world. These suits all boil down to a rather simple allegation: these companies pay the people who supply the equipment and manpower that power their businesses like independent contractors, while burdening them with the work expectations of employees….
Harold Lichten, Liss-Riordan’s law firm partner, describes her as “a pit bull with a chihuahua in her mouth” when it comes to suing on-demand start-ups. “She will make life as difficult as possible for these companies,” he said. “Here’s Uber — this business model with $40 billion behind it, that is seen as the future — but if she’s correct about their needing to classify all of these drivers as employees, it destroys that model. And it means all these venture capital investors who have poured millions of dollars into the company have bought a pig in a poke.”
He says that as if it were a bad thing. Moving along…
Liss-Riordan smelled blood. She realized that if Uber’s drivers were reclassified as normal W-2 employees, rather than 1099 independent contractors, Uber would be required to pay payroll taxes for them, and provide them with benefits like workers’ compensation insurance and unemployment. In some states, such as California, Uber would also be required to reimburse drivers for the costs of the job, including gas, wear-and-tear on their cars, and car insurance. If Uber had indeed misclassified its drivers, the company’s entire business model was built on a legal mistake.
“Just because your services are dispatched through a smartphone doesn’t make you a technology company,” she said in a recent telephone interview. “You’re a car service, and you have the responsibilities of being an employer of the people driving the cars.”
…Liss-Riordan thinks Uber did “a great thing for the world in terms of convenience for customers.” But she contends that the company’s insanely high valuation is based on its skirting employment responsibilities and having drivers bear the costs of its business operations. She also thinks the on-demand economy’s existential fears about the oncoming wave of class-action lawsuits are overblown.
Before we get all gloomy and doomy, it’s worth remembering this (boldface mine):
Deep-pocketed companies like Uber, which has raised nearly $5 billion in venture capital since launching, could surely afford the additional expense of putting drivers on its payroll. And several on-demand companies, such as the house cleaning start-up MyClean and the food delivery service Munchery, already treat their workers as W-2 employees. These companies’ labor costs are higher than their 1099-dependent rivals, but they get additional benefits, such as being able to train their workers and hold them to consistent schedules.
Because this is where we’re heading, and it doesn’t seem to be a good place (boldface mine):
But as India’s economy has begun to surge and the country to modernize, send-your-man culture has foundered. As new possibilities open to those who might have been peons, the tiresome complaint at rich-people parties in New Delhi and Mumbai is how hard it is to find a servant. Well, they should come to America, because that, evidently, is where all the servants have gone.
Uber’s chauffeurs and couriers, Instacart’s grocery deliverers, Handy’s home cleaners, Zeel’s on-demand masseurs, Seamless’s bicycle warriors of takeout, Alfred’s butlers, Amazon Home Services’ electricians and plumbers — all of this is the slick, mobile-enabled, venture-capital-backed servitude of our time. As Lauren Smiley wrote in the online magazine Matter recently, “In the new world of on-demand everything, you’re either pampered, isolated royalty — or you’re a 21st-century servant.” Now in America, too, you can have yourself a man.
To those of us who have lived in extremely rich and extremely poor countries, these developments in America may be especially worrying. What if all this convenience, of which I avail as much as the next person, is microgood and macrobad, reflecting the coming of a society where, as in the developing world, large numbers of people have no better opportunities than to wait on the fortunate?
…Now Americans are learning to play this game: savoring the convenience and trying to forget where it comes from.
The group that will squeal the loudest will be the gentry class, as the wealthy and the rich typically pay their outsourced (or live-in) servants relatively decent wages. But the gentry will end up paying more for the same services, and that, despite regional and cultural variations among the gentry, is not in their class interest.
Let the self-righteous squealing begin.