In the June issue, I penned a commentary about the labor model of app-based concierge services, especially those with a delivery component. (See “Will Uber be the next Teamsters target?”)
Most of these start-up businesses in the sharing economy rely on people acting as independent contractors, who provide their own vehicles and take care of their health care, retirement and taxes on their own.
I noted the parallels between companies like Uber and drayage trucking drivers, who contract with non-asset-based fleets to haul cargo. They own and operate their trucks and are responsible for all the expenses. The movement to classify these drivers as employees because of the control exerted over them by motor carriers could carry over to Uber, Lyft and other service-on-demand companies if workers feel they are not getting a fair share of the revenue, I said.
I guess I didn’t realize how quickly the worm was turning.
In June, the California Labor Commission sided with an Uber driver, Barbara Ann Berwick, who won the right to be treated as an employee. The California agency ordered Uber to reimburse the driver more than $4,000 in expenses and other costs incurred over a two-month period last year while working for the service, saying Uber often acted more like an employer.
The ruling does not apply beyond Berwick and could be altered if Uber’s appeal succeeds. Uber has prevailed in at least five other states in keeping its definition of drivers as independent contractors.
But the decision could be used as the basis for class-action lawsuits against the company, according to the N.Y. Times. California law expressly requires employers to reimburse employees for business expenses and several suits proceeding against Uber are based on that state law. One class-action suit has already been filed by Uber drivers who claim they are misclassified as freelancers.
One example of the control Uber exerts over its drivers is a clause in the work contract that says the automobile used must be a model approved by the company and is no more than 10 years old.
The California Labor Commission is the same agency that has ruled in favor of several truck drivers who filed complaints against port trucking companies in Southern California in the past couple years, saying they had no choice in routes or hours, and couldn’t make a living wage because they were forced to pay most of their revenue back to the company for fuel, parking, insurance and other expenses.
Meanwhile, in late June, Instacart, the service through which you can have someone pick up groceries at your favorite store and deliver them to your house, announced it will treat some of its workers—the in-store shoppers—as part-time employees.
San Francisco-based Instacart is also splitting the duties of shoppers, who pick and prepare orders, and drivers because it improves the efficiency of both tasks, not because it fears getting sued.
The company made the move after conducting a pilot program in Boston and is now also giving contractors embedded in Chicago stores the option to become part-time employees.
“When you look at the difficulty of shopping, picking and delivering items such as fruit or eggs that need to be carefully selected, you realize that grocery shopping can be complicated. For this reason, we want to provide supervision and training, which can only be done with employees,” Apoorva Mehta, chief executive officer and founder, said in a statement.
Instacart said it sometimes can make deliveries in as little as an hour and that it saves grocers from having to invest in inventory, warehouses and trucks to provide delivery services of their own.
Instacart is now available in 16 cities and has partnered with national retail chains such as Whole Foods Market, Costco and Petco, as well as local and regional grocers such as Bi-Rite.
This commentary was published in the August 2015 issue of American Shipper.