Uber Technologies Inc. is an American technology company headquartered in San Francisco. The company was founded in 2009; it operates a cab-hailing service worldwide in more than 900 metropolitan areas globally (Cornelissen and Cholakova). It is estimated that Uber has more than 93 million users every month worldwide (Hotfelder et al.). In the US, Uber enjoys a 71% market share, while its competitors include Lyft, Curb, DidiChixing and Grab (Brodeur and Nield 2). Uber no longer operates just the cab-hailing service, having diversified into other on-demand services such as Uber Eats (Brodeur and Nield 2). This essay will cover the cab-hailing service and the moral question of treating its drivers as subcontractors rather than employees.
Uber’s business model is to develop applications that connect passengers to drivers. Passengers provide the demand while drivers provide the supply; on the other hand, Uber acts as the facilitator by providing a mobile platform for this to happen. The morality question concerning Uber treating its drivers as subcontractors instead of employees arises because when the drivers are treated as subcontractors, they are not entitled to benefits such as holiday and sick leave. This system leaves the gig workers vulnerable and operating under unfavorable working conditions. Uber and its peers have argued that they are not hiring companies and have no control over its drivers.
The issue has become so political that it was put under a referendum in California. As recently as March 2021, a court in the UK ruled that Uber should classify its drivers as employees and provide them with benefits such as minimum wage (Hotfelder et al.). In California, Governor Newsom signed into law the AB 5 legislation that contained a test on whether a gig worker should be classified as a subcontractor or not. The test required that the hiring entity meets three conditions for its subcontractors: the workers are free from the company’s control and they should perform duties outside the hiring entity’s core business (Hotfelder et al.). The other requirement was that the worker is engaged in an independent trade of the exact nature of the work they were hired for.
In the UK, Uber drivers launched a legal complaint that Uber collects data that it uses in favoritism. The drivers alleged that they are indeed not independent since Uber collected data on parameters such as late arrivals, canceled trips, and customer complaints that it then used to influence the on-demand system (Cornelissen and Cholakova). The Union alleged that Uber was exercising power over the drivers by collecting data to check for performance and quality.
It matters that companies classify those who work for them as workers because of benefits and entitlements such as minimum wage, insurance, leave days, anti-discrimination laws, payroll withholdings, and unemployment benefits. When cab-hailing services companies classify their workers as sub-contractors, they are doing so not because they do not want to control them but they want to have it both ways (Cornelissen and Cholakova). The companies would like to continue exercising control over the drivers while at the same time offering the minimum in protections and benefits.
While the cab-hailing services have been great to customers, the same cannot be said about cab-drivers who would prefer a different model that does not push the limits so much. Cab-hailing services companies have threatened to quit jurisdictions that passed laws requiring them to classify drivers as employees (Cornelissen and Cholakova). However, as evidence shows, they have done the opposite in the UK and have agreed to comply. The reason why the companies cannot do this until the law pushes them is because they are immoral.
Brodeur, Abel, and Kerry Nield. “An Empirical Analysis of Taxi, Lyft and Uber Rides: Evidence from Weather Shocks in NYC.” Journal of Economic Behavior & Organization, vol. 152, Aug. 2018, pp. 1–16. DOI.org (Crossref), Web.
Cornelissen, Joep, and Magdalena Cholakova. “Profits Uber Everything? The Gig Economy and the Morality of Category Work.” Strategic Organization, 2019.
Hotfelder, Aaron, et al. “Are Uber Drivers Employees or Independent Contractors in California?” Www.Nolo.Com, Web.