Independent couriers’ reaction to employee reclassification: learnings from Geneva
By Alison Stein, Economist at Uber
We’ve written before about the impact of switching from a system where independent contractors can use platforms like Uber to one where they have to be traditional employees. In California, our analysis has shown that such a switch would result in a 76% reduction in work opportunities for drivers, due to increased prices for riders and thus lower demand.
While our analysis might seem theoretical, we can draw real-world lessons from a strikingly similar situation unfolding nearly 6,000 miles away in Geneva, Switzerland. A series of court rulings there have resulted in Uber Eats changing its operating model in the canton (or state) of Geneva while a final appeal is heard in the Swiss Supreme Court.
Until recently, Uber Eats operated in Geneva essentially in the same way it does in places like California: couriers independently signed up to use the Uber Eats app, with no limit on how many could use the app to access work. Couriers could determine when, where, and how they work, with the freedom to choose their hours and to start and stop working at any time. They could also choose to accept or decline any delivery request for any reason.
Under the new model, which went into effect on September 1, couriers are prohibited from using Uber Eats as independent contractors. Instead, anyone working on Uber Eats must be an employee of a “fleet operator” — a delivery company that hires couriers as traditional, scheduled employees.
The immediate effect of this change was to put 77% of couriers, or 1,000 people, out of work. Over the three months before September, around 1,300 couriers worked on Uber Eats in Geneva. Under the new operating model, couriers needed to formally apply for a position with the delivery company. The delivery company has only extended employment offers to 300 couriers. All others have lost the ability to earn money with Uber Eats.
For the small minority of couriers who are now employees, their work has fundamentally changed. They now are assigned to shifts by the fleet, and are told by managers where to be available. Couriers that fail to present themselves for an assigned shift, do not comply with fleet rules while on-shift, or fail to meet performance targets risk being terminated by their new employer. Rather than being able to access earnings immediately through Instant Pay, couriers are now paid out monthly.
A survey was conducted to understand how newly employed couriers felt about the shift from independent work:
- 72% of the couriers hired as employees reported they preferred working independently. Their dissatisfaction stems from the loss of flexibility that has come along with this new model.
- 62% of converted couriers who felt they were worse off due to the change cited no longer being able to choose their own schedules.
- 50% of converted couriers reported that they do not intend to continue working as an employee in the long run after trying it out.
The Geneva example further highlights the simple economic reality that traditional employment will never be as flexible as independent work, even if the law itself doesn’t restrict flexibility. As we’ve written before, “the structure of employment is intentionally rigid because it was designed around how businesses deploy hourly employees within set schedules. Companies aim to match the number of employees on their payroll with the volume of their business.” The 300 couriers now working as employees understand that, and the 1,000 couriers put out of work do, too.