Ride sharing companies Uber and Lyft must re-classify their US drivers as employees under a preliminary injunction granted by a California court this week. But in Australia similar radical changes appear unlikely, despite evidence platform companies are deliberately framing their arrangements with local workers to avoid regulation.
A landmark Victorian “gig economy” inquiry that concluded last month, found other businesses are carrying the costs of complying with workplace laws while platform companies like Uber and Deliveroo are deliberately avoiding them. The final report by former Fair Work ombudsman Natalie James, who led the two year long investigation into the on-demand economy, recommends a new code of practice or standards, improved remedies for non-employee workers, and enhanced enforcement.
But James says “revisionist” rather than “revolutionary” changes are needed for the on-demand economy in Australia, and there is still a clear need for genuine self employed workers.
She says the proposed changes would be best led at the federal level. Although she also suggested state level reforms could be possible if not.
According to the report, Australia could resolve the “inherent uncertainty” of work status of on demand workers by implementing an “entrepreneurship” approach to classifying workers. This would allow genuine self employed, autonomous business people to continue to operate under commercial arrangements as contractors.
But James says the workers who don’t have much leverage in negotiations or a genuine choice about the work arrangement – like ride sharing drivers or delivery riders – aren’t involved in “genuine independent contracting”.
In “borderline cases” entitlements should be extended for workers rather than limited and the onus would be on platform companies to prove a worker is not an employee. An independent body should be setup to deliver binding determinations on work status.
“The test should require the party seeking to rely on non-employee status to prove this to be the case, rather than a worker having to demonstrate they are an employee,” the report recommends.
In contrast, Californian officials have taken legal action to force Uber and Lyft to classify their drivers as employees immediately.
On Tuesday California Superior Court Judge Ethan Schulman granted a preliminary injunction forcing the companies to do so within 10 days.
“The Court is under no illusion that implementation of its injunction will be costly,” Judge Schulman wrote in the order. “There can be no question that in order for Defendants to comply with [code] A.B. 5, they will have to change the nature of their business practices in significant ways, such as by hiring human resources staff to hire and manage their driver workforces.”
Applicants in the case are arguing Uber and Lyft gain an unfair and anti competitive advantage by relying on independent contractors, by depriving drivers of entitlements like a minimum wage, sick leave and insurance.
Uber is appealing the latest injunction, saying the decision will cost jobs during a global pandemic and most of its drivers prefer the “flexibility” of independent contractor status.