Uber Drivers in England Are No Longer Contractors—Will the US Follow Suit?

U.K. regulators announced on Feb. 23 that Uber drivers and other independent contractors for similar companies must be designated as employees, not independent contractors.

The reason? According to The National Law Review, “This judgment confirms that the Uber drivers in the United Kingdom are entitled to core entitlements such as paid holiday and the national minimum wage.”

U.K. regulators want to protect Uber drivers. To avoid being taken advantage of, they believe Uber drivers who work  part- or full-time hours should receive  benefits to go along. It’s why the initial public offering for Deliveroo (basically the British version of GrubHub) on the London Stock Exchange totally flopped. Their business model can’t handle paying for benefits right now.

The question of whether this will extend to the U.S. is a long and complicated one. Just as similar—but much more far-reaching—regulation has already made its way to a certain state.

The situation in the U.S. goes well beyond Uber drivers

In Sept. 2020—when the U.S. was at a 7.9% unemployment rate—California passed a piece of legislature called the California Assembly Bill 5 (AB5).

It started with the same hopes as the U.K. legislation on Uber drivers’ worker status (protecting their rights). However, AB5 extends to almost all independent contractors. This includes wedding photographers, writers, theater actors, and musicians. And anyone else who chose to work on a freelance or contractual basis. People with LLCs or S Corp’s weren’t immune either. If they wanted to be hired, they’d have to be paid via a W-2, not a 1099. 

This caused a whole mess. A lot of Uber drivers wanted the protections that AB5 delivered, but gig workers across the spectrum suffer. They had chosen their line of work for a reason. Reasons like job flexibility and the chance to charge higher rates were part of the argument against AB5.

Introducing the ABC test

To keep their independent contractor status, a Californian freelancer must now pass the ABC Test. Developed during the Great Depression, the ABC test is a three-question test that asks:

“(A) the individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact; (B) the service is performed outside the usual course of the business of the employer; and (C) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.”

For example, an event photographer couldn’t work independently for a client that dictates their rate (control). They also couldn’t work for a client that requires them to be on duty during business hours (relationship). And they couldn’t work for a magazine, because the magazine’s key business task includes photography (business). 

You can see how this would cause an uproar for the 44 million workers who consider themselves to be independent contractors. This is a whooping 28.2% of the workforce. California has since removed certain trades from the requirement. However, this excludes Uber drivers. Those who are still eligible as freelancers are having difficulty finding work. Subsequently, many employers are nervous to hire them.

Are independent contractors in the U.S. at risk?

AB5 is not immune from nationalization. The PRO Act is currently on the table and on track to become federal legislation. This act also includes the ABC test used in California. It would change a lot for how workers in the U.S. function. While good for unions overall, the inclusion of the ABC test ostracizes freelancers.

What’s good for Uber drivers may not be good for all independent contractors

Today I proudly joined Freelancers Against AB5. Its a great resource for the word on the street regardng how #AB5 has devastated wrkng Californians. Please join me in helping support people on the front line. We aren't going anywhere & won't be ignored.https://t.co/TGLqmkpX3h

— Judah 🗣️📣 Getting into Good Trouble ✊🏾 (@dopeconfections) July 6, 2020

Uber drivers and drivers for other ride-sharing services deserve protection. Especially from employers who have the potential to take advantage of them. At a time when economic stimulation is keeping many Americans and businesses afloat, it’s no wonder these protections are so popular. Historically, unions have delivered amazing results for labor rights in the country.

However, sweeping legislation tends to have some casualties. In the era of the Fiverr millionaire, the PRO Act could redefine what it means to be an independent contractor in America. Adjusting the 90-year-old ABC test for the modern day would drastically improve the act’s relevance and equitability in an intersectional way.