Uber and Lyft Ramp Up Efforts to Defend Enterprise Mannequin

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After California passed law in 2019 that effectively gave gig workers the legal status of employees, companies like Uber and Lyft spent around $ 200 million on a voting initiative to exempt their drivers.

To avoid such threats in other states, companies have pushed for legislation classifying drivers as contractors, meaning they are not eligible for protections like minimum wages and unemployment benefits.

The most serious initiative in this direction in New York State has stalled while faced opposition from working class groups as the state’s legislature ends this week.

But efforts certainly seem to be revived, and the negotiations – in which companies have offered to give workers bargaining rights and certain benefits, but not all employment protection – have shown what a possible deal might look like in New York and beyond .

Gig companies like Uber and Lyft have long resisted classifying workers as salaried employees, stating in government records that it would force them to change their business model and risk a financial blow. Industry officials have estimated that hiring drivers to employees could increase labor costs by 20 to 30 percent.

When California was considering billing in 2019 that would make gig drivers likely to be classified as workers, the companies met repeatedly with some major unions, including the Service Employees International Union and the Teamsters, to discuss a deal along the lines of their plans in New York proposed. But the talks failed because many in the labor movement refused to make significant concessions while maintaining the legislative upper hand. The law was passed in September of the same year.

However, after the exempt drivers vote initiative was approved last fall, some workers became more willing to a deal. New York, where discussions were already taking place, was a natural place to find one.

Some of the companies had a relationship with unions in the state, mainly the International Association of Machinists, with which Uber founded and funded a drivers’ organization called the Independent Drivers Guild in 2016. In a way, the Drivers Guild hinted at the deal companies are seeking today: providing drivers with a chance to resolve concerns with the company, but agreeing not to contest drivers’ contractor status.

At the same time, the work had a lever. A series of New York rulings granted gig drivers conventional unemployment benefits in the state, potentially creating hundreds of millions of dollars in corporate debt. And there were New York regulations – like a minimum driver wage standard of over $ 17 an hour based on effort – that some gig companies have eased.

A bill drawn up by industry representatives in consultation with worker groups called gig workers “network workers”. That would have essentially made them contractors with some safeguards and the right to join a sectoral work organization, ie all at once with the big companies. The deal would have created more than 150,000 new union members in the state.

The negotiations took place separately for the driver and delivery person and included a minimum wage, “portable benefits” such as pension contributions and a termination procedure.

But the details of the proposed unions raised eyebrows. As stated in the draft, the companies signed an agreement with a single union that gave them access to workers through company email systems. Once the union signed 10 percent of eligible workers in the industry and the state labor commissioner approved the agreement, the union would be the sole representative of all workers in the industry. No other union would have had a chance to represent them.

Critics complained that the gig firms didn’t go far enough beyond some of the unions that benefited – including the machinists, who were likely the first to get email access to the drivers, and the Transport Workers Union of America, who appeared to be first in line to get email access to the delivery staff.

“The companies’ sectoral tariff was drafted without the involvement of workers,” said Ligia Guallpa of the not-for-profit Workers Justice Project, whose group helped delivery workers build an organization with more than 10,000 members. “You cannot determine who you are to represent yourself. It has been agreed. “

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June 9, 2021, 8:34 p.m. ET

Ms. Guallpa, like other union leaders and workers’ organizers, said she did not find out about the proposal until mid-May after Bloomberg reported its existence.

Aziz Bah, the organizing director of the Independent Drivers Guild, said in a statement that “the choice of which union or unions to join rests with the workers.”

Critics also complained that funding for the union – potentially more than $ 20 million a year for the drivers’ union alone – would have been raised by companies through a fee for rides they collect, thereby making workers commit to companies feel. And under the original proposal, workers would have been banned from going on strike while negotiating with companies, depriving them of crucial leverage.

According to Kate Andrias, a professor at the University of Michigan’s Law School, some of these traits contradicted federal labor law, which usually excludes unions that effectively select, fund, or control companies. However, the law does not apply to contractors.

The proposal would also have replaced the traditional unemployment benefit that many drivers are currently entitled to with a new system which could have resulted in lower benefits and which would have been more difficult for workers to obtain in certain situations.

And the proposal would have largely prohibited communities from regulating the work done through ride-hailing or delivery apps and resetting the minimum wage standard for drivers in New York City, even though workers could have negotiated a minimum floor or higher.

The publication of the first draft law in May sparked a backlash against any proposal involving weak unions or unions effectively chosen by the company.

“You’re talking about the right to negotiate, that’s a Trojan horse,” said Bhairavi Desai, executive director of the New York Taxi Workers Alliance, which helped driver service drivers get unemployment benefits in the state. “This union would be complicit in giving them cover as they are really trying to dominate the industry.”

Some of the workers’ groups involved in the discussions, such as the state AFL-CIO, were hesitant in their support. John Samuelsen, President of the Transport Workers Union, backed off the proposal, citing concerns that workers should not go on strike and citing resistance from delivery workers.

An Uber official who was not allowed to speak publicly said the company was open to changes that would make it easier for more than one union to represent workers in the vehicle service or delivery industry. A subsequent draft made it easier to restrict strikes in negotiations with companies.

Uber, Lyft and DoorDash said in statements that they remain interested in working with “stakeholders” on legislation.

But despite all the rejection of the proposal, the episode indicated that some sort of deal remains possible in New York and other states where gig firms or industry groups have been scrutinizing legislation for independent contractors, including Illinois, Massachusetts, and Connecticut, all of them controlled by the Democrats. Some of these states have policies that allow drivers to be considered employees.

State Senator Diane J. Savino, who played a key role in the New York legislative effort, said in an interview Monday that she had recently reached out to a wider group of groups and that the discussion would continue in the coming weeks. “The clock may have run out for the legislature, but it hasn’t run out on that issue,” she said.

It is critical that even many groups of workers who reject the New York proposal no longer insist on all rights and the protection of worker status. “Her priorities are living wages, the right to organize and more security,” said Ms. Guallpa of the Workers Justice Project when asked how important it is for delivery staff to be classified as employees. “Nobody organizes around this topic.”

If the gig firms make more sensible concessions, such as ensuring a more independent union, then a number of unions may be willing to take them over and in return give up employee status.

“When large groups of workers see a way to improve their current economic situation by taking initiatives that enable them to form unions,” said Samuelsen of the Transport Workers Union, “then I am with the workers.”