Quartz Just Published A New Piece About Uber — And It’s Almost Entirely Wrong
Of the myriad digital-only news sites established in recent years, Quartz has been widely hailed as one of the best. It’s certainly one of the most financially successful: last year a Japanese startup acquired it from Atlantic Media for a price north of $75 million — this during a period when many of its digital brethren (e.g. Vox, Mic, BuzzFeed, Gizmodo) either laid off staff, offered broad-scale buyouts or effectively shuttered operations in advance of being sold for scrap. It’s also one of the few legitimately multinational digital media outlets: Quartz has dedicated sites for India and Africa, as well as a significant presence on four continents and a staff fluent in 47 languages.
It also just published an extraordinarily misguided piece about Uber that has literally nothing to do with Uber, even indirectly. In addition, Quartz published two clickbait headlines for the article that further distorted the story by attempting to connect it to Donald Trump. For a news site as broadly acclaimed as Quartz, the publication of an article consisting almost entirely of fallacies and falsehoods is equal parts bizarre and baffling. Worse still, it isn’t the product of some rookie’s folly: the story was written by Alison Griswold, a seasoned reporter and Yale grad who’s been covering the sharing economy for much of its duration, first at Slate before later joining Quartz’s reporting team. How, then, did Quartz end up publishing an article misguided and/or flat-out wrong in nearly every facet?
I’ve been working on a broader project covering the inherent difficulties in writing about Uber as well as Lyft and Airbnb — which I think few would dispute are the three highest-profile “sharing economy” startups — and plan to publish it in advance of Uber’s and Lyft’s planned IPOs. That said, the Quartz piece is so off-the-charts wrong that I decided it merited a separate response.
The article’s two headlines are “The Trump presidency is paying off bigly for Uber” and “Uber wins big in SuperShuttle ruling made by Trump-appointed NLRB.” Both are false. (And bigly so.)
The article’s lede reads as follows:
Buried by news of the US federal shutdown ending was a government decision that has staggering implications for Uber and companies like it.
The subsequent description of the decision in question was accurate:
On Jan. 25, the Republican-majority National Labor Relations Board (NLRB) ruled in a 3–1, party-line vote that shuttle van drivers for SuperShuttle are independent contractors, not employees.
…except it doesn’t have “staggering implications for Uber.” In fact, it has zero implications for Uber, let alone a “bigly payoff.”
Here’s a breakdown of the article’s broader problems:
1. Griswold cherry-picked a single sentence from a 29-page ruling and centered her entire article around it.
Page 4 of the NLRB’s ruling states that SuperShuttle’s franchisees “have complete control over their schedules.” Griswold took that statement and ran with it:
There it is! Complete control over their schedules! These are the magic words with which the Trump-appointed NLRB waves away all other concerns.
This interpretation is, well, ridiculous. At the beginning of its ruling, the Board notes that it has broadly adhered to what’s known as the common-law agency test — as outlined in the Restatement (Second) of Agency, last modified in 1958 — to determine whether a given worker should be classified for employment purposes as an employee or contractor. The test includes ten distinct factors, each of which is quoted in full in the bullets below. While in general I try to avoid wading into thickets of legalese in writing for lay readers, I think it’s necessary to explain them here — partially for a reason I’ll explain in conclusion.
All bracketed comments are my own (and they’re my opinions based on extensive knowledge of both the applicable law and how it relates to Uber):
- The extent of control which, by the agreement, the master may exercise over the details of the work. [Yep: it’s 2019, and American labor law still routinely employs the terms “master” and “servant” to describe some varieties of employer / employee relationships. With respect to Uber, the putative “master” in this equation, let’s just say one can argue “the extent of control” over its drivers’ work both ways.]
- Whether or not the one employed is engaged in a distinct occupation or business. [Considering a large majority of American adults have a driver’s license, ride-hail driving doesn’t reasonably qualify as a “distinct occupation.”]
- The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision. [Likely stating the obvious, but Uber drivers have essentially no supervision.]
- The skill required in the particular occupation. [See second bullet.]
- Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work. [All supplied by drivers.]
- The length of time for which the person is employed. [The general presumption here is that people hired on a long-term basis more likely qualify as employees than those who work on a short-term or temporary basis. Considering Uber doesn’t even have “terms” per se — drivers can almost literally start and stop at any time — this factor works against the notion that its drivers qualify as employees.]
- The method of payment, whether by the time or by the job. [The latter in Uber’s case, and again, this factor is suggestive of a contractor relationship. Working “by the job” is essentially synonymous with working “gigs.” (Hence the term “gig economy.”)]
- Whether or not the work is part of the regular business of the employer. [The short explanation here is that definitions of this particular factor vary, um, bigly depending on the adjudicating party.]
- Whether or not the parties believe they are creating the relation of master and servant. [See first bullet.]
- Whether the principal is or is not in business. [Yes, this is as vague as it sounds.]
In sum, almost none of these factors reasonably describes the employment circumstances of any given Uber driver, and as such I fail to see even a tenuous connection between Uber and an unrelated case heard before the NLRB — even if Uber did have some sort of connection to the agency, which it doesn’t. The Board further noted:
In applying these factors, the Court noted that there is no “shorthand formula” and held that “all the incidents of the relationship must be assessed and weighed with no one factor being decisive. What is important is that the total factual context is assessed in light of the pertinent common-law agency principles.”
Even after digesting this bit — that no single factor is determinate — astute readers may have noticed what’s missing on this list: any mention of scheduling or flexible job hours. While yes, it’s obviously one of Uber’s biggest incentives for drivers, its relevance to the SuperShuttle case is plainly minimal at best. As such, its absence only bolsters the lack of any rational connection between the two companies’ situations.
2. The case doesn’t “connect” Uber and Donald Trump in any way.
I get it: Trump + Uber = guaranteed page views. Both are widely loathed — for a host of excellent reasons — and the mere mention of either is guaranteed to elicit a cornucopia of visceral emotions in the minds of everyone who reads Quartz (and one can safely speculate that its readership overlap with the likes of Breitbart or Infowars borders on the nonexistent). But still: if there’s no reasonable connection between Uber and the SuperShuttle case, by extension there’s not one between Trump and Uber, either. (Actually, I suppose there’s an indirect one between Trump’s journalist-murdering buddies in Saudi Arabia and its sovereign wealth fund’s $3.5 billion investment in Uber — still “the largest single investment from a foreign government to a venture-backed startup ever,” to quote Bloomberg — but that’s a whole other hot mess.)
In any event, the Trump presidency “isn’t paying off bigly for Uber,” nor did Uber “win big” through a “ruling made by the Trump-appointed NLRB,” nor is it likely Uber will ever have any involvement with a union-regulating agency, considering the employment contracts its drivers sign preclude them from unionizing or engaging in class-action litigation against the company. (This last bit is one of two reasons Uber’s drivers were forced into settling their class-action suit against the company for a pittance, by the way: the judge in the case ruled that the contracts’ mandatory-arbitration provision was legally binding, thus disqualifying the vast majority of the proposed legal class.)
3. The article is rooted in multiple false equivalencies between SuperShuttle and Uber, each of which operates in vastly different ways.
Although the first part of the article correctly recites the facts of the case, Griswold subsequently draws wildly off-base conclusions from them. As stated in it: “SuperShuttle drivers were employees with hourly wages, scheduled shifts, and company-owned vans until 2005. That year SuperShuttle switched to a ‘franchise’ model that cast drivers as independent business owners. As franchisees, drivers pay the company an initial franchise fee (for drivers in Dallas-Fort Worth, $500), a flat weekly fee to use the SuperShuttle brand and its dispatch system ($575), and a decal fee ($250). The drivers are required to supply their own shuttle van (average cost: $30,000), for a total investment of up to $40,000.”
The problem? Uber has never operated in even a vaguely similar fashion. Its drivers weren’t previously employees who drove company-supplied vehicles. It doesn’t operate under a franchise model (or even a comparable analogue to it), nor does it require drivers to pay any types of fees (either upfront or weekly). While Uber drivers obviously use their own vehicles for ride-hail driving, they aren’t required to purchase and retro-convert any sort of purpose-specific commercial vehicle replete with explicitly detailed “trade dress” — basically a style sheet that describes the precise shade of blue their vans must be painted, along with the size, color, font and positioning of its exterior lettering, etc. Further, “purpose-specific” vehicles are exactly that — intended for a single purpose, in this case shared-van ride services — and in most cases cannot be driven, period, except while on the clock.
Further still, SuperShuttle drivers reasonably fit the definition of the term “entrepreneur,” whereas Uber drivers do not. They’re required to come up with the seed funding for their operations on their own, and can’t become a franchisee unless and until they do so. They invest up to $40,000 in their venture prior to generating a single nickel in revenue, much of which would likely be impossible to recover if they opted to quickly quit (e.g. any and all trade dress outlays). In order to make their investment pay off, SuperShuttle franchisees invariably have to spend years working to recover their initial outlays alone, on top of paying for ongoing usage and maintenance expenses.
Put another way, becoming a SuperShuttle franchisee is about as far removed from the concept of “gig work” as it gets. Driving for Uber, however, remains the quintessential example of it. If anything, working for SuperShuttle most closely parallels working for a taxi franchise — a topic discussed at several points in the NLRB ruling, but inapposite to the present subject.
4. The crux of the NLRB’s mandate relates to unions, not worker classification — meaning it has no bearing on Uber one way or the other.
The NLRB is a federal agency first established during the Depression era that’s tasked with two duties: regulating the collective-bargaining rights of private-sector labor unions, and policing unfair labor practices specific to those unions. The latter includes jurisdiction over the question of whether the workers at a given employer can unionize in the first place.
In the SuperShuttle case, its Dallas-Fort Worth area franchisees petitioned the NLRB for the right to establish a “bargaining unit.” (In other words, a union.) Before the Board could make a determination in this instance, however, it first had to settle the threshold issue of whether the franchisee petitioners should be classified as employees or independent contractors as a matter of law. In terms of labor unions, this question is a make-or-break one: it’s unequivocally illegal for independent contractors to engage in collective bargaining. Under the auspices of the Sherman (Antitrust) Act, such activity is considered to be a form of price-fixing, and thus categorically barred by law — and to be clear, this has been settled law at the federal level for well over a century. (The Sherman Act was passed in 1890.) After looking at the facts specific to SuperShuttle’s case, the Board concluded that its franchisees more closely fit the criteria for classification as independent contractors, not employees, and were thus precluded from forming any sort of bargaining unit.
What does any of this have to do with Uber? Almost nothing, aside from both its drivers and SuperShuttle’s being classified as contractors — and if you’ll recall, a group of Uber drivers already instigated (and lost) a class-action suit against the company seeking reclassification as employees. The plaintiffs (drivers) ended up agreeing to settle the case for a fraction of the amount originally sought after it became clear they had virtually no chance of prevailing in court. As part of their settlement agreements, the drivers agreed that they were not, in fact, employees, and would not pursue any future legal redress on the matter. (They can’t refile the suit, in other words.) As such, it would be effectively impossible — under current law, at least— for them to file an NLRB claim seeking to create a bargaining unit; as stated, contractors can’t legally do so in a federal forum.
That said, you may be aware that in 2015 the city of Seattle passed an ordinance allowing ride-hail drivers to unionize. That said, city officials have argued their legal right to do so is rooted in state, not federal, labor law. The U.S. Chamber of Commerce took significant issue with this claim — it argued that the National Labor Relations Act (which established the NLRB) preempts state-level regulation of unions — and ended up suing the city over the ordinance. The case is still winding its way through the courts, but considering the Ninth U.S. Circuit Court of Appeals sided with the Chamber in a ruling last May — along with the fact that the Ninth Circuit is widely viewed as the nation’s most liberal appellate court, plus it’s earned repeated heaps of scorn from President Trump for its liberalism — it’s unlikely at best that the Seattle ordinance will stand.
5. Griswold grossly misstates the legal definition of “entrepreneurial opportunity” — which also sums up the article’s problems on whole.
In the article’s penultimate paragraph, Griswold writes:
Uber drivers have decidedly more “entrepreneurial opportunity” than SuperShuttle drivers. They can wear what they want, drive a variety of cars, and decorate those cars as they like. There is no required training or explicit prohibition on “boisterous conduct.” They can work for a competitor like Lyft.
Uber drivers may have more “entrepreneurial opportunity” than SuperShuttle drivers as a general matter. That, however, has nothing whatsoever to do with “entrepreneurial opportunity” as a legal matter involving the NLRB. Griswold uses the term casually — and in doing so seemingly misses the fact that the entire case turned on how, precisely, the NLRB should use the term. The tl;dr explanation is that the NLRB held that its Obama-era predecessors impermissibly limited the importance of the term vis-a-vis the ten common-law agency tenets used by the Board to determine employment statuses in dozens, if not hundreds, of cases since the 1958 Restatement of Agency was issued. In response, it reversed the earlier reversal.
If this seems nitpicky, that’s because it is: I don’t think I can overstate the importance of absolute precision in legal writing. Even as a general matter, consider how many pivotal U.S. Supreme Court cases boil down to how its justices divine the meaning and intent of words contained in the Constitution. Sometimes they boil down to its absence of certain words.
I recently saw “On the Basis of Sex,” the biographical film about Justice Ruth Bader Ginsburg’s early years as a law professor and ACLU lawyer. At the film’s climax —depicting the future justice arguing her first case, about a gender discrimination matter, before a federal appellate court — a judge dismissively informs Ginsburg from the bench that “the word ‘woman’ does not appear even once in the U.S. Constitution.” To which the Notorious RBG replies: “Nor does the word ‘freedom,’ your honor.”
My (broader) point: the phrase “entrepreneurial opportunity” — as defined and used by the NLRB — doesn’t apply to the employment circumstances of an Uber driver on any reasonable basis. And in this case, the Ivy League-educated woman who used it did so in a fashion that wholly misleads the reader into drawing a false inference of a connection between Donald Trump, a federal labor board and Uber where none exists.
The article has quite a few additional problems as well, including a plain-old error that Griswold’s editor — assuming Quartz uses them for content-editing purposes — should’ve caught. Near its end, the article states that “a nationwide class-action lawsuit failed to get Uber drivers classified as employees.” (Link from original article; emphasis added.) This is false: there’s never been a nationwide class-action lawsuit filed against Uber — a fact that, bizarrely, is plainly evident in the first sentence of the Quartz article (written by a different reporter) to which the statement is linked:
Uber’s proposed $100 million settlement with drivers in California and Massachusetts who claimed they should be classified as employees, instead of independent contractors, was rejected by a US judge on Thursday (Aug. 18).
In other words, the Uber class-action suit included plaintiffs from two states, not 50 — a fact Griswold should’ve reasonably known. As for the article’s conclusion:
If SuperShuttle drivers, with all their restrictions and prohibitions, aren’t employees in the eyes of a Republican NLRB, then Uber’s case before that same board is no longer a question mark. It’s a slam dunk.
It’s not a question mark or a slam dunk; it’s an impossible hypothetical. Uber hasn’t had a case before that same board, nor will it. Which brings me to my conclusion, stemming from the portion of the article below:
The employment status of Uber’s drivers is one of the company’s lingering question marks as it contemplates a 2019 initial public offering.
Actually, it’s not: Uber and Lyft drivers in the U.S. are, in all certainty, correctly classified as independent contractors. This fact, and the reasons behind it, have somehow — for reasons that elude me to this day — been overlooked or erroneously analyzed by virtually everyone in American journalism. Further, the enormous class-action suits filed against Uber and Lyft a few years back were doomed from the get-go — which I knew from the get-go, but kept waiting in vain for the media to figure out.
To be continued…