For years, Uber has deployed lobbyists to world capitals to protect its business model. Its lawyers have argued that Uber drivers are independent contractors, using a service that connects them with people who need rides. Uber? It’s just a tech company matching customers with business people.
For a long time, that argument worked. Now, following a UK Supreme Court decision, Uber has shifted, saying it will treat its UK drivers as workers. That unusual employment category—used in the UK—entitles drivers to minimum wage guarantees after expenses, paid holidays, and pension contributions, but drivers will not be employees. Just a few weeks ago, Uber had insisted that the case only applied to a handful of workers. The new policy will not apply to workers for Uber Eats, the company’s growing delivery service.
“It’s a pretty significant U-turn, not only on Uber’s stance in the past decade but its stance since the Supreme Court judgment,” says Paul Jennings, an employment and discrimination lawyer with the firm Bates Wells, which represented a group of Uber drivers in the case that made it to the Supreme Court. The UK is responsible for 6.4 percent of the company’s ride-hailing business. Following the news, Uber shares were down by 4 percent on Wednesday afternoon.
But Uber’s announcement is far from a clean win for drivers, and will likely prompt more legal wrangling, in the UK and elsewhere. It also shows how Uber increasingly is pushing for recognition of a “third category” of work, providing gig workers with some traditional employment protections, but falling well below those provided to employees.
As UK workers—but not employees—drivers will not have access to sick pay, parental leave, or time off for emergencies, and they’ll have fewer protections against unfair dismissal. In the US, where workers are either employees or independent contractors, those who aren’t employees don’t have access to employer-paid health insurance or to business expense compensation, like vehicle maintenance and gas.
In the UK, Uber’s new policy comes with an additional big caveat: The minimum wage applies only to the time drivers spend picking up or driving passengers, but not the time they spend signed into the app and looking for rides. That time accounts for a sizable chunk of drivers’ working hours. Drivers involved in the Supreme Court case estimate UK Uber drivers spend 40 to 50 percent of their time looking for new fares; a recent study of ride-hail drivers in Seattle found that drivers spend 36 percent of their time waiting for rides.
As a result, Uber’s minimum wage is porous, argues Mark Graham, a professor of internet geography at the Oxford Internet Institute and the director of the Fairwork Foundation, a research and advocacy organization focused on gig work. “You wouldn’t go to a restaurant and expect a waiter to only be paid when bringing you food, or workers in a store to only be paid when there are customers in the store,” he says. “It’s without a doubt a good thing that now Uber is thinking about minimum wages. But they’re thinking about them in a limited way that will allow workers to fall below” the standard.
It’s also unclear how Uber will compensate its UK drivers for expenses. A spokesperson for the company didn’t immediately respond to questions.
Uber’s approach to paying drivers in the UK echoes Proposition 22, the California ballot measure that Uber and other gig companies spent more than $200 million to promote last year—and which voters approved soundly. That law requires gig companies to pay transportation and delivery workers 120 percent of the local minimum wage, but only for the time they spend on a trip. Proposition 22 also requires gig companies to contribute to accident insurance, workers’ compensation, and a health care subsidy, but only for drivers who drive a certain number of hours each week.