A rose by any other name may smell as sweet, but a rideshare company referred to by any other term could spark a bitter battle.
In the most recent dustup over the issue, which played out in Europe late last year, Uber lost the name game, as a panel of judges deemed the company a cab firm.
The difference may seem petty, but it goes far deeper than vocabulary preference. How their business models are officially defined impacts nearly everything about rideshare companies, and perhaps nowhere more prominently than the options afforded to their drivers.
Taxi dispatchers must still play by rules Uber and fellow rideshare giant Lyft have gleefully avoided—including those dictating that drivers are full employees, and as such, must receive certain benefits, like healthcare, vacation pay, and sick days.
But the “cab company” designation comes with some strings attached, including stricter schedule enforcements—a non-starter for many rideshare drivers who are attracted to the flexibility of the job’s hours above all else. Legally considered contractors—at least in the United States, and at least for now—they’re free to work, or not, as they please, and many treat the rides simply as a way to scratch up some additional cash, rather than as a permanent gig.
Still, the classification has been challenged by a number of groups hoping to rein in that freewheeling arrangement—and hold the app companies responsible for their drivers.
Results have so far been mixed, but the Europe decision represents the biggest blow yet against the current model. And with a global economy increasingly reliant upon such casual business contracts, any legal precedents on the matter could cause a seismic shift in the way the world works.
What’s Lexicon Got to Do With It?
Rideshare drivers aren’t the only ones split on how to feel about their contractor status. The U.S. courts have proven equally as torn on the matter.
More than half-a-dozen suits have tested Uber’s independent mettle, brought by drivers from all corners of the country, including New York, Texas, Georgia, Florida, Massachusetts, and California.
While the legal grievances were leveled at different aspects of the contractual arrangement—covering everything from how background checks are performed to reimbursed work expenses—all shared the general goal of changing business as usual at the rideshare company. But the outcomes of the cases have been as varied as the states they were filed in.
Exemplifying the level of confusion over the company’s classification is the idea of unemployment benefits—and whether former Uber drivers have the right to claim them.
The payments are typically available only for ex-employees, a viewpoint a Florida appeals court upheld in a 2017 decision. The court argued that the freelance nature of the contracts makes it impossible for Uber to technically fire a driver, rendering the workers ineligible for the benefits. But faced with the same legal challenge last year, a New York judge disagreed, siding instead with the contractors, who were deemed official employees when it came to unemployment.
Fueling the piecemeal problem is the lingering question of whether drivers can challenge the company en masse. The National Labor Relations Board is currently arguing a case in California over a “collective action waiver” included in Uber contracts which forces signees to go through arbitration when taking any legal action against their employer.
And as the $70 billion enterprise has grown, so has its courtroom troubles, with drivers across the pond starting to get in on the class action.
More Than Words
American laws come in 50 shades of grey, but many places in Europe still rule by the bloc, making the recent legal decision against Uber especially far-reaching.
The official name change of the company’s business model was ordered by the European Court of Justice, the European Union’s top judicial authority, in late December after a Barcelona cab company sued the ride-hail giant for failing to follow local taxi laws.
For its part, Uber’s lawyers argued that it shouldn’t be burdened with transportation regulations since it was actually an “information society service,” merely offering a platform to help people connect electronically. The court countered that those connections were fostered between “non-professional drivers using their own vehicle with persons who wish to make urban journeys,” making Uber, in fact, a taxi firm.
(The loss came on the heels of a similar legal defeat where a British tribunal declared Uber drivers full employees in the U.K., entitled to benefits like regular breaks and guaranteed minimum wage. In that case, Uber had argued that it was simply an agent acting on behalf of the drivers.)
The ruling would make little difference in the way Uber’s European operations are carried out, company officials said—citing changes the business made previously to more closely adopt the continent’s laws—but the case could yet have an impact reaching far beyond the transportation world.
Uber’s failed attempt to define itself as nothing more than a button on a phone sets legal precedent for any future cases against similar businesses—and business is booming.
From app-based food delivery to à la carte property rentals, the rapid emergence of on-demand services has fostered the swift growth of the per diem workforce—and the slow corrosion of the employer-employee relationship.
The phenomenon has been coined the “gig economy” and heralded as the future of labor, yet it resembles a period already traversed by history: the Gilded Age of the 19th century, when absolute power was clung to so tightly by the captains of industry and shared so infrequently with common workers that the era spawned the birth of the union movement.
By forcing new-age corporations to be held accountable for more than the mere tech platforms their apps run on, the Europe decision not only redefines Uber’s business model but could bring a whole new meaning to the company’s favorite word: “Disruption.”