Uber and Lyft achieved multi-billion dollar valuations by classifying drivers as independent contractors who are ineligible for benefits. Now the spread of coronavirus may force the gig economy to reform.
Both companies have announced funds to compensate drivers who have been quarantined or diagnosed with Covid-19, in response to pressure from those who say they cannot afford to take time off work even if they are sick.
The two weeks of compensation now being offered represent a concession in the fight gig companies have spent years and millions of dollars waging – that drivers are not full-time employees.
“Sick leave is something generally only provided to employees,” said Eve Wagner, a California-based employment attorney. “If you grant someone paid time off, that implies employee status.”
Companies including Uber, Lyft, DoorDash, and Instacart intensified their battle to classify workers as contractors after a landmark California labor bill known as AB5 went into effect in January. The legislation implements a three-part standard for determining whether workers are properly classified as independent contractors, requiring: that they are free from the company’s control; that they are doing work that isn’t central to the company’s business; and that they have an independent business in that industry.
Uber, Lyft, DoorDash, and Instacart have joined forces to exempt their workforce from AB5 by backing a state ballot measure, to be voted on in November, that would entitle workers to some employment benefits such as a guarantee of at least 120% of minimum wage while on the job, and a healthcare stipend, but not the same benefits as full-time employees. Instacart is also offering funds to some workers in response to coronavirus, the company said on Tuesday.
But the fact that companies are offering paid time off even as they argue their workers are not full-time employees shows they can no longer ignore the importance of sick leave, said Veena Dubal, a labor law professor at the University of California-Hastings.
“This is true all the time: it’s true when workers have the flu or the common cold, or when they are sick in any capacity, but it is being very well highlighted by fears around coronavirus,” she said.
Organizers at Gig Workers Rising, a collective of gig economy workers advocating for better protections and rights, said applying a fund only to those who are actively infected or quarantined is not enough.
“This does nothing for the thousands of drivers who may show symptoms but chose not to stay home for fear of missing a paycheck and falling behind on rent,” the group said in a statement. “Drivers do not need healthcare and paid time off only during a pandemic – they deserve these rights at all times, in order to ensure that their health is not dependent on a company’s whim.”
Gaining employee status also does not guarantee health care protections, said Kristen Anderson, founder and chief executive at Catch, a company that offers benefits such as healthcare to contractors, freelancers, and other non-traditional workers.
“Changing the tax classification of these employees does not necessarily translate to financial stability and wellbeing,” she said. “A lot of people when faced with the vague and ambiguous chance they might get sick versus the very real consequences of not being able to pay rent or health insurance premiums will choose to work.”