How an Inexplicable New York Court Decision Threatens Uber and Lyft

The evidence says gig-economy workers differ from traditional employees. A New York court inexplicably decided otherwise.

Imagine a job where you only need to show up for work when you feel like it, and when you do show up, you can refuse to do any task you don’t feel like doing, and even abruptly change your mind and back out on one you’ve agreed to. A job where nobody would ever penalize you for this behavior. Would you consider this arrangement an example of a traditional employer-employee relationship or something different?

That was the question before a tribunal of judges for the New York appellate division last week. You might be surprised to know they decided it was the former, upholding an earlier ruling requiring the app-based rideshare company Uber to pay unemployment insurance to its drivers. The judges said the drivers were traditional employees, not independent contractors as the company claims. It is a potentially serious blow to Uber and any other “gig-economy” company, whose business model depends on contract labor.

The judges acknowledged in their own ruling that an Uber driver “has no set schedule and may log on [to the company app] as often or as little as the driver chooses.” They noted that drivers can refuse to pick up passengers and “are not penalized for refusing a customer’s request.” Drivers can even “cancel the trip without penalty at any time.”

Nonetheless, the judges ruled that the rideshare company exerts enough control over other aspects of the work to count as the drivers’ employer. They noted, among other points, that drivers “may choose the route to take in transporting customers, but Uber provides a navigation system.” Well, there you go.

Such is the tortured logic used by the courts, politicians, regulators, and labor unions seeking to bring gig economy companies to heel rather than acknowledge that they represent a new form of enterprise. At the forefront of this struggle is Uber and its fellow the app-based rideshare company, Lyft. They had a major win in November in California when voters rolled back the main part of the state’s anti-gig economy law AB5. Things haven’t gone as well for them in New York.

The New York ruling is significant because all state and federal laws regarding unemployment, overtime, health insurance, and so on only apply to employees, not contractors. Legally speaking, a contractor — basically, anyone who does freelance work — is an independent business. Politicians such as California governor Gavin Newsom and New York City mayor Bill de Blasio claim that classifying workers as contractors is just a way for businesses to dodge their responsibilities, such as providing health and retirement benefits. But the relationship between Uber and its drivers is fundamentally different from those between traditional employers and their employees for the reasons stated at the top.

Labor leaders hate gig-economy companies because they compete with unionized businesses but aren’t legally required to collectively bargain themselves. The New York Taxi Workers Alliance was behind the case against Uber in New York.

Read the full article at National Review.