Uber wants more protection for drivers, but it still doesn’t want them as employees

Speaking out.
Speaking out.
Image: REUTERS/Carlos Barria
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Uber CEO Dara Khosrowshahi sent a letter to US president Donald Trump today, asking him to ensure that Uber’s drivers are included in the economic stimulus plans in response to coronavirus.

“My goal in writing to you is not to ask for a bailout for Uber,” wrote Khosrowshahi, “but rather for support for the independent workers on our platform and, once we move past the immediate crisis, the opportunity to legally provide them with a real safety net going forward.”

The plea included a promise that the ride-hailing giant “know[s] we need to do more.” But it hardly concedes the point that Uber has been making to judges, regulators, and legislators around the world for years: that Uber drivers are not Uber employees. If anything, Khosrowshahi is doubling down now on that argument, requesting in his letter that the US president help lawmakers find a “third way,” to give contractors more of a safety net while preserving their independent status.

“The current binary system of employment classification means that either a worker is an employee who is provided significant social benefits or an independent worker who is provided relatively few,” the Uber CEO wrote.

Over the weekend, Khosrowshahi spoke with Senate minority leader Chuck Schumer of New York, who is pushing for language that would expand unemployment insurance to freelancers and gig workers.

Uber is facing a sharp decline in ridership due to the pandemic. It has suspended its carpooling service UberPOOL to help slow the spread of coronavirus. In a call last week with investors, Khosrowshahi said the company’s gross bookings in Seattle are down between 60% and 70%, with similar declines seen in San Francisco, Los Angeles, and New York City.

The crisis underscores the dilemma of having a labor model that depends heavily on independent contractors who don’t receive benefits like health insurance and paid time off. Uber already has announced plans to offer 14 days of financial assistance for drivers who are diagnosed with Covid-19 or quarantined, and it’s providing drivers with free disinfectant supplies. But classifying its workers as independent contractors prohibits Uber from exercising much control over drivers.

Uber has long maintained that its workers should remain independent to retain flexibility. But the company has been facing increasing pressure in places like California, which passed a law in 2019 making it harder for gig-economy companies like Uber, Lyft, DoorDash, and Grubhub to classify workers as independent contractors. 

Uber has argued before that drivers are not core to its business. It’s one way of making the case that the ride-hailing giant shouldn’t have to treat drivers as employees. But the coronavirus has laid bare how dependent Uber’s business is on the humans at the wheel; Uber drivers and delivery workers have been on the front lines providing essential services, from food delivery to medical transportation. 

And with the economic challenges ahead, Khosrowshahi wrote in his letter to Trump, more American workers will likely turn to gig work for extra income in the near future.