Uber, having prevailed in passing an expensive ballot measure that exempts it from California labor laws, wants to take its new model and message around the world with a brand that sounds like it was stolen from a streaming service: “IC+” — as in “independent contractor-plus.”
“Over the long term, the IC+ model is going to win,” Uber Technologies Inc. UBER, -1.63% Chief Executive Dara Khosrowshahi said last week in a conference call.
The push will use California’s Proposition 22 as its guide, offering more benefits than current gig work does but avoiding basic protections of employment, such as unemployment insurance. Prop. 22 promises gig workers an earnings guarantee and access to health-care subsidies that depends on the number of hours they work.
Khosrowshahi said he intends to advocate for the IC+ model not only around the nation but also the world. He said it is the best compromise that allows flexibility for gig workers while providing them with better pay and benefits without classifying them as employees.
The approach will face opposition, as it did in California, and the branding risks backfiring on Uber, according to Gerry Corbett, founder of public relations company Redphlagg in Foster City, Calif.
“The drivers will still struggle not having employee status, and Uber benefits financially” despite the messaging by Uber, Corbett said.
“Prop. 22 is not, in any way, an ‘independent contractor-plus’ model,” said Veena Dubal, a labor law professor at UC Berkeley’s Hastings College of the Law. “Like Prop. 22’s political advertising, Khosrowshahi’s framing is inaccurate, misleading and dangerous.”
Dubal added that “independent contractors are small-business people who set their own prices, develop their own clientele, and can grow their business through entrepreneurial acumen. Uber drivers cannot do any of those things.”
While Uber seems to be the only one pushing the “IC+” name, other gig companies such as Lyft Inc. LYFT, +0.99%, DoorDash Inc., Instacart and Postmates Inc., which spent a combined $205 million to pass the initiative, also intend to continue to try to carve out their own labor laws in other states, as well as federally.
“We’re looking ahead and across the country, ready to champion new benefits structures that are portable, proportional and flexible,” Tony Xu, chief executive of DoorDash, said in a statement.
Lyft co-founder and Chief Executive Logan Green said on the company’s earnings call Tuesday that the company intends to “engage with legislators” around the nation, and that he hoped Prop. 22 would become “a model for other states.”
Besides portable benefits, the companies are amenable to working with unions through sectoral bargaining, in which unions negotiate with multiple companies in the same industry instead of with individual companies.
Anthony Foxx, chief policy officer for Lyft, said in a statement that “Lyft stands ready to work with all interested parties, including drivers, labor unions and policymakers, to build a stronger safety net for gig workers in the U.S.”
William Gould, emeritus law professor at Stanford University and a former chairman of the National Labor Relations Board, questions whether sectoral bargaining could bring meaningful changes for drivers. The benefits that drivers secure could be “artificial, self-defeating and simply imposed from above,” he said.
But a report released by the Labor and Worklife Program at Harvard University earlier this year — to which unions, labor lawyers, academics and others contributed — recommends sectoral bargaining in part because it says it could be more effective for gig workers: “Among its many virtues, sectoral bargaining addresses the problems of fissuring: It matters not whether someone is employed directly, is employed by a subcontractor or by a franchisee, or is an independent contractor.”
Erica Mighetto, a driver and worker organizer with Los Angeles-based Rideshare Drivers United, is skeptical about the push.
“I’m very concerned about whether drivers will be included in any conversations between unions and employers,” Mighetto said. “You have to be a driver to really understand the day-to-day challenges that we face.”
The Independent Drivers Guild has had some success with bargaining with more than one company. The group, which is affiliated with the Machinists Union and was started with funding from Uber (that ends this year), negotiates with Lyft and Juno, too. The IDG helped secure a minimum wage and other benefits for drivers in New York City and represents 200,000 ride-hailing drivers in New York, New Jersey and Connecticut.
Brendan Sexton, executive director of the Independent Drivers Guild, said that with Prop. 22, “California consumers ended up dictating drivers’ working conditions. On the East Coast, we definitely do not want to be in that position. We want collective bargaining rights.”
Katie Wells, a postdoctoral research fellow at Georgetown University whose research centers on the Washington, D.C., gig economy, is convinced the fledgling effort to organize gig workers will continue. She said there is a move under way to “shift the onus back onto employers to prove that workers are not really employees.”
Gould said he is concerned the result in California will make other states hesitant to move forward in seeking stronger protections for gig workers.
“Plaintiffs were winning against Uber under the pre-ABC standard,” he added. “What [Prop. 22 has] done is render this group of workers completely outside under any independent examination of their status. It’s preposterous.”
New Jersey, Pennsylvania, Massachusetts and Washington, D.C., have been considering measures similar to California’s Assembly Bill 5, which codified a 2018 state Supreme Court decision that adopted a standard for when a worker should be considered an employee or independent contractor. It is this law that the gig companies will no longer need to follow in California because of their victory, which requires them to offer some concessions to drivers and delivery workers but continues to set them apart from other employers that have to pay into Social Security, Medicare and unemployment insurance benefits for their workers.
“Uber and Lyft have built their billion-dollar businesses while denying their drivers basic employee protections and benefits for years,” Massachusetts Attorney General Maura Healey said in a lawsuit she filed against Uber and Lyft in July, which seeks to classify workers as employees under Massachusetts Wage and Hour Laws. “This business model is unfair and exploitative. We are seeking this determination from the court because these drivers have a right to be treated fairly.”
And the fight in California may not be over. Mighetto, the worker organizer for the Los Angeles drivers group, said she and many others remain committed to fighting in California, including by challenging the seven-eighths provision in the measure and more.
“We want to challenge the fact that they had unfair access to voters,” she added, referring to the gig companies sending pro-Prop. 22 messages to their drivers and customers via their mobile apps.
As they look to expand their victory, the gig companies are still facing legal challenges in their home state. This includes a court order for Uber and Lyft to classify their drivers as employees, which the companies are asking to be thrown out in the wake of their Prop. 22 victory.
“Our office remains committed to vigorously enforcing the law and obtaining relief for workers who have been exploited by companies like Instacart, Uber, and Lyft,” said Hilary Nemchik, spokeswoman for San Diego City Attorney Mara Elliott, whose office joined California Attorney General Xavier Becerra in suing Uber and Lyft to force them to comply with the law. “Proposition 22’s ultimate impact on labor practices is still very much an open question, but it certainly does not make up for past harms.”
San Francisco City Attorney Dennis Herrera also joined that lawsuit. John Cote, a spokesman for Herrera’s office, said: “They can’t change the fact that they have been violating the law for years. Drivers and the public deserve restitution and penalties for Uber and Lyft’s misconduct up until the time Prop. 22 takes effect. We are going to continue with our case until justice is served.”
MarketWatch staff writer Elisabeth Buchwald contributed to this article.