The Starting Point and The Bottom Line for The Gig Economy

No competitive advantage should come at the expense of workers

Stowe Boyd
Jul 23, 2019 · 4 min read
source: Victor Xok

In Postmates CEO: Gig workers deserve better than what we have given them, Bastian Lehmann, the CEO of Postmates, acknowledges that gig economy companies — like Postmates — need to make a better deal with their principal workforce: gig workers. As he states,

The gig economy faces challenges today that technology alone cannot fix. On-demand delivery and transportation has provided unprecedented flexibility to millions of workers and turbocharged small businesses and local economies. But recent strikes and calls for better pay and benefits underscore the need for change. So do the conflicting signals from courts, regulators and lawmakers about whether gig workers should be considered traditional employees or independent contractors, or if they should be under a new category.

We need a comprehensive approach that ends this confusion and empowers gig workers without taking away their flexibility or ability to innovate.

Legislators in California are debating a bill, known as AB5, that would reclassify gig workers as employees. My fellow CEOs at Uber and Lyft have offered a different framework, with new benefits and protections for ride-share drivers.

As CEO of the company that pioneered on-demand delivery and has one of the nation’s largest fleets of on-demand delivery workers, I believe we should build on the best of these ideas and go further by including more workers beyond just ride-sharing. Carving out narrow exemptions for specific sectors in AB5 isn’t enough.

Instead, it’s time for a new deal that brings together companies and workers from across the on-demand delivery and transportation industry, and offers a new safety net and far-reaching solutions for the future of work.

However, the gig economy companies don’t want to accept the idea that these workers should be treated as plan vanilla employees: minimum wage, social security, health benefits, and so on.

There could be a new category of worker — some have proposed ‘the dependent contractor’ — which is a hybrid of employee and independent contractor. Other countries that have tried such intermediates have had only limited success (see “Dependent Contractors” In the Gig Economy: A Comparative Approach by Miriam A. Cherry and Antonio Aloisi). But that doesn’t mean the idea can’t be perfected.

Clearly, the gig economy companies don’t want to take on the full employee responsibilities, but it is clear that the workers want basic protections, like minimum wage, labor protections (such as the right to unionize and collective bargaining), some fair treatment of expenses (insurance, leases, etc.), and provision of benefits (health care, etc.). A dependent contractor — who must for all intents and purposes follow the work-related demands of their client — should clearly have an arrangement that has at least some safeguards similar to that of an employee. For example, wages should not be subject to marketing campaigns that involve promotional discounting that reflect on the revenue that the worker makes, where such campaigns are unilaterally determined by the client company. Likewise, dependent contractors should not have to take on financial obligations — such as car leases, insurance, and so on — that exist to allow the gig company to provide its core service to end users. Such expenses should be shared on a proportionate basis by the contractor and the client company. So a driver who leases a car that is used 40 hours a week for Uber purposes should be reimbursed proportionally.

Until companies like Postmates accept a sensible middle course, they will continue to face labor strife and court challenges to aspects of their economics.

Lehmann seems to be making the right noises, coming down on pay transparency, ways to air grievances, and other considerations typically associated with labor rights, and he comes out for fair pay:

Pay at least the minimum wage

Second, all workers deserve decent pay and all companies should meet state minimum wage requirements. Gig workers are paid by the task, not by the hour, but the bottom line should be the same: If you work for a full hour, you should earn at least the minimum wage. We need a sector-wide earnings floor, mandated by the state — a view we’ve shared directly with Governor Newsom. This is further than some companies are willing to go right now, but it’s both the right thing to do and it’s the smart thing for the future of our industry.

We should also take seriously the criticism coming from organizations like Restaurant Opportunities Centers United, which has slammed some gig companies for using workers’ tips as substitutes for decent base pay. The critics are right. This is simply unacceptable. Tips should always be on top and always go 100% into workers’ pockets. No competitive advantage should come at the expense of workers.

That last line — no competitive advantage should come at the expense of workers — is really the bottom line and should be the starting point of any sensible resolution of these issues. Lehmann seems to be pushing the discussion in a productive direction.

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