Instead, those drivers were Uber employees while logged into the app.
If they were employees, it’s a strange sort of employment relationship.
Drivers who sign up with Uber can work as many or as few hours as they like, at the times of their choosing, without any prior negotiation about it with Uber. They can log into the app when they want to drive, and log out again when they want to stop driving.
While logged into the Uber app, drivers can have other apps open. If a driver sees an opportunity come up with another app, it’s simple. Log out of the Uber app while accepting the ride with the other platform. Then log back in afterwards if you want to, or don’t if you don’t want to.
I like Oliver, my boss at the Initiative. But I suspect that I would not be able to negotiate anything like those arrangements in my employment contract.
Just imagine the conversation with your own employer:
“I would like to be able to show up to work whenever I want, without telling you in advance when or whether I will be in. When I do show up, I reserve the right to flip to doing spot work for one of our competitors whenever I feel like it. If I do, I might or might not return to your tasks later on. I won’t tell you either way. I’ll just show up, or not.
It’s totally fine if you take my attendance into account when thinking about pay raises and promotion. I just want to be able to show up whenever I want , leave whenever I want, work for anyone else whenever I want without having to notify anybody ahead of time.”
Employment just does not work like that. Or at least in normal, non-Supreme-Court understandings of the term.
I am an economist not a lawyer. The Supreme Court is far more likely to be right about the law than I am. But if this is the legal understanding of employment, the law needs to change to reflect evolution in labour markets.
The Court’s decision seemed to hang on a few elements.
The Court viewed drivers as having too little practical control over their own businesses to count as contractors. It viewed Uber as effectively having control over those drivers.
Drivers who maintain a high rating from their passengers, who accept at least 85% of the rides they’re offered, and who maintain a low cancellation rate on rides, get more information about offered rides – like the duration and direction of the requested trip.
The Court was sceptical about drivers’ ability to pick jobs across different apps. It worried that drivers taking rides for other platforms would be penalised by Uber’s algorithm. If a driver refused more than 15% of Uber’s offered rides to choose other app’s trips instead, the driver could lose access to information about the direction and duration of future Uber trips. And a driver providing a trip for another app would not be able to accept trips offered by Uber.
The Court saw this as amounting to control – one of the factors weighed when deciding whether someone is a contractor or employee. It viewed ‘multi-apping’ as too difficult in practice, given penalties for failing to accept offered trips.
But a driver wanting to accept a trip for a different platform and fearing penalty for refusing Uber rides while on that trip has a simple option. That driver can log out of the Uber app while taking a better job with Didi or Ola or Zoomy. Trip requests are not offered to drivers who are not logged in. The driver will forgo the opportunity to earn points and ratings on the Uber app while driving for someone else, but they will not be penalised for refusing an offered ride.
The Court did not discuss this rather obvious practical option that would avoid penalties for refusing Uber-offered trips – despite its obvious implications for the feasibility of using multiple apps at the same time. It is hard to say how heavily it affected the Court’s view about multi-apping.
If drivers are really employees while logged into a ride-sharing app, it will be impossible for those apps to maintain flexibility for drivers to come and go as they like or to be logged into many apps simultaneously.
Part-time drivers can currently log into the app from home in the evening, in case a passenger turns up in the neighbourhood. If minimum wage requirements apply while a driver is logged in, platforms will not be able to afford to let drivers log in unless there are a lot of rides around.
Drivers are currently able to keep several apps open and accept trips as they come from whichever app riders choose – remembering that they can log out of other apps while accepting a ride on one app. They cannot logically be the employees of all of those apps at the same time. And none of those apps would wish to be paying an hourly wage while the driver is on ‘standby’, only to see the driver pick a job for a competitor’s app when it comes up.
Rostered shifts will replace current flexibility. Being on-shift for one would mean not simultaneously being on-shift for another. And that will have implications for competition in the overall market.
And that will require a little bit of up-front explanation.
One big challenge in setting up a platform app like Uber’s is simultaneously convincing drivers that there will be enough passengers and passengers that there will be enough drivers. If nobody expects that drivers will quickly be available to provide a ride, nobody will request rides through the app. And if drivers expect no passengers, they will not sign on. Both sides need to expect the other side will turn up.
If drivers can be logged into multiple apps at the same time, and passengers know that drivers can do that, one large barrier to entry is eased. A driver can sign up with a new platform without resigning from an existing one, in case interesting rides turn up there. And because riders expect drivers can do that, they can expect to find drivers if they try a new app.
So if the Chair of the Commerce Commission encourages people to consider their options and Didi or Bolt experience a surge in ride requests, drivers can quickly flip to taking rides on whichever platform has passengers. That would be much harder if each platform had to hire employees instead.
Fortunately, Parliament is already considering the Employment Relations Amendment Bill; Select Committee is due to report back to Parliament just before Christmas. The Bill changes the legal test that decides whether someone is an employee or a contractor. If a driver can accept jobs across multiple platforms as they come, it would be harder for that driver to be deemed an employee.
If the Supreme Court has gotten the law right here, then the law needs to be changed.
While logged into the Uber app, drivers can have other apps open. If a driver sees an opportunity come up with another app, it’s simple. Log out of the Uber app while accepting the ride with the other platform. Then log back in afterwards if you want to, or don’t if you don’t want to.
I like Oliver, my boss at the Initiative. But I suspect that I would not be able to negotiate anything like those arrangements in my employment contract.
Just imagine the conversation with your own employer:
“I would like to be able to show up to work whenever I want, without telling you in advance when or whether I will be in. When I do show up, I reserve the right to flip to doing spot work for one of our competitors whenever I feel like it. If I do, I might or might not return to your tasks later on. I won’t tell you either way. I’ll just show up, or not.
It’s totally fine if you take my attendance into account when thinking about pay raises and promotion. I just want to be able to show up whenever I want , leave whenever I want, work for anyone else whenever I want without having to notify anybody ahead of time.”
Employment just does not work like that. Or at least in normal, non-Supreme-Court understandings of the term.
I am an economist not a lawyer. The Supreme Court is far more likely to be right about the law than I am. But if this is the legal understanding of employment, the law needs to change to reflect evolution in labour markets.
The Court’s decision seemed to hang on a few elements.
The Court viewed drivers as having too little practical control over their own businesses to count as contractors. It viewed Uber as effectively having control over those drivers.
Drivers who maintain a high rating from their passengers, who accept at least 85% of the rides they’re offered, and who maintain a low cancellation rate on rides, get more information about offered rides – like the duration and direction of the requested trip.
The Court was sceptical about drivers’ ability to pick jobs across different apps. It worried that drivers taking rides for other platforms would be penalised by Uber’s algorithm. If a driver refused more than 15% of Uber’s offered rides to choose other app’s trips instead, the driver could lose access to information about the direction and duration of future Uber trips. And a driver providing a trip for another app would not be able to accept trips offered by Uber.
The Court saw this as amounting to control – one of the factors weighed when deciding whether someone is a contractor or employee. It viewed ‘multi-apping’ as too difficult in practice, given penalties for failing to accept offered trips.
But a driver wanting to accept a trip for a different platform and fearing penalty for refusing Uber rides while on that trip has a simple option. That driver can log out of the Uber app while taking a better job with Didi or Ola or Zoomy. Trip requests are not offered to drivers who are not logged in. The driver will forgo the opportunity to earn points and ratings on the Uber app while driving for someone else, but they will not be penalised for refusing an offered ride.
The Court did not discuss this rather obvious practical option that would avoid penalties for refusing Uber-offered trips – despite its obvious implications for the feasibility of using multiple apps at the same time. It is hard to say how heavily it affected the Court’s view about multi-apping.
If drivers are really employees while logged into a ride-sharing app, it will be impossible for those apps to maintain flexibility for drivers to come and go as they like or to be logged into many apps simultaneously.
Part-time drivers can currently log into the app from home in the evening, in case a passenger turns up in the neighbourhood. If minimum wage requirements apply while a driver is logged in, platforms will not be able to afford to let drivers log in unless there are a lot of rides around.
Drivers are currently able to keep several apps open and accept trips as they come from whichever app riders choose – remembering that they can log out of other apps while accepting a ride on one app. They cannot logically be the employees of all of those apps at the same time. And none of those apps would wish to be paying an hourly wage while the driver is on ‘standby’, only to see the driver pick a job for a competitor’s app when it comes up.
Rostered shifts will replace current flexibility. Being on-shift for one would mean not simultaneously being on-shift for another. And that will have implications for competition in the overall market.
And that will require a little bit of up-front explanation.
One big challenge in setting up a platform app like Uber’s is simultaneously convincing drivers that there will be enough passengers and passengers that there will be enough drivers. If nobody expects that drivers will quickly be available to provide a ride, nobody will request rides through the app. And if drivers expect no passengers, they will not sign on. Both sides need to expect the other side will turn up.
If drivers can be logged into multiple apps at the same time, and passengers know that drivers can do that, one large barrier to entry is eased. A driver can sign up with a new platform without resigning from an existing one, in case interesting rides turn up there. And because riders expect drivers can do that, they can expect to find drivers if they try a new app.
So if the Chair of the Commerce Commission encourages people to consider their options and Didi or Bolt experience a surge in ride requests, drivers can quickly flip to taking rides on whichever platform has passengers. That would be much harder if each platform had to hire employees instead.
Fortunately, Parliament is already considering the Employment Relations Amendment Bill; Select Committee is due to report back to Parliament just before Christmas. The Bill changes the legal test that decides whether someone is an employee or a contractor. If a driver can accept jobs across multiple platforms as they come, it would be harder for that driver to be deemed an employee.
If the Supreme Court has gotten the law right here, then the law needs to be changed.
The Initiative’s submission on the Employment Relations Amendment Bill is available at the Initiative’s website. Uber is one of the Initiative’s approximately 90 members; Eric’s views on the court decision and proposed legislative amendments are his own.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
2 comments:
You’re missing the other side of the coin there Eric, but I guess you wouldn’t have a job at the Institute if you were that kind of person.
While gig work offers flexibility and the ability to set schedules, this comes at the cost of income instability, lack of traditional employment benefits, and increased stress. Many gig workers face fluctuating incomes, job insecurity, lack of health insurance, paid leave, and retirement plans, leading to financial anxiety and unstable living conditions. The blurring of work and personal life can extend working hours, reduce personal time, and adversely affect mental health. Physically demanding tasks in gig jobs contribute to exhaustion and injury, often without access to occupational health support. Moreover, safety risks such as assaults and harassment contribute to deterioration in overall well-being in this sector. Recent legal decisions recognizing gig workers as employees rather than contractors could reshape this landscape but also threaten the viability of the current gig economy model. Overall, while flexibility is valued, the quality of life for many gig workers is often compromised due to instability, lack of protections, and significant mental and physical health burdens, indicating a need for policy reforms addressing these gaps.
An alternative view would suggest that because driving for Uber and other apps is a choice, there is evidence that most drivers, given their personal circumstances, want to do so, as a trade-off against other possible jobs and unemployment. I have of course talked to Uber drivers. Many are immigrants whose poor English and lack of Kiwi job experience unfortunately make it hard for them to get 'conventional' jobs. We have a poorly run immigration system and bias in employment attitudes - too few get a chance. Others driving for Uber consider their income vs alternatives, and lifestyle (eg, driving at night for more household money when kids and partner are home, etc) and hold down another job, or do Uber so well it's plenty. One chap has a home in Karori, family, just drives Uber and does very well - it suits him.
I think there's too much effort made to use the outlier problems raised by Anonymous to bag a system like this Uber, Bolt etc one. It has great social strengths for many drivers and for consumers - people know they can afford Uber to solve an otherwise time-consuming and expensive transport problem, restaurants get customers who don't drive home with too much alcohol on board etc.
What I would consider important to get from Apps like Uber is clear advice on how to be a contractor. Many will not realise they are 'eating their car'. The suggestion by Anonymous that there's no paid leave, retirement plans, applies to all contractors, the upper echelons of which find it easy to think about these issues and save accordingly. Uber could run advice and illustrations on how to consider affording time off for leave, reinforce all the other societal urging to save for retirement etc. There is financial anxiety about one's income in a great many lower income jobs, not just in the gig economy - being employed does not solve that problem.
I do hope the law changes to give the Supreme Court better guidance and leave them time to focus on other far more consequential problems than this one.
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