The Collaborative economy and the transformation of labour, by Vassilis Hatzopoulos

Version française ICI

Mircro-entrepreneurs, on-demand workers, gig-workers, freelancers, contractors … It is difficult to measure the part of the active population working in the collaborative economy. Estimates vary between 0,3 to 9% in the US, and much lesser (0,05%) in the EU.

In my first post (HERE) the positive effects that the collaborative economy can deliver to individuals have been discussed: the use of idle capacity, spare time and skills; the toping up of revenues; flexibility; the joy of participating in socially and environmentally friendly activities etc. However, as the collaborative economy grows by the day and replaces standard work, it is worth inquiring into the labour implications of this new economy and the way law deals with them.

Collaborative working conditions

Wages in the collaborative economy vary depending on whether the service performed is fully digitalised (such as text editing, translation, coding etc, also called Online Labour Markets, OLMs) and is subject to world-wide competition; or on the contrary requires human interaction and its performance is located in a specific geographic area (such as driving, hosting etc, also called Mobile Labour Markets, MLMs). In the former case wages tend to be lower than offline, while in the latter they tend to be higher. But even then, suppliers of MLMs have to compete for every single hour of their work, bear the cost of infrastructure, maintenance, insurance and have no health coverage or other benefits. Therefore, in order to cobble together a decent income, people depending on the gig economy have to work more than 12 hours a day, hours which are neither fixed nor conveniently spread, and any other occupation or family engagement may suffer accordingly.

The transformation of employment

Gig-workers clearly enter the category of Non-Standard Work (NSW), since they perform their duties on a temporary and/or part-time basis. They push this category even further since they operate in an environment which is characterized by:

Breaking down of work – Taylorism revamped: ‘if the digital era broke schedules down into part-time or project-based shifts, crowdwork breaks those schedules down even further into the micro-level. It moves from “project” based work (with coherent aims and stages) occurring over a duration of weeks, months or years, into “task” based work (the purpose of which may not ever be explained to workers) occurring in just hours, minutes or seconds. Micro labor is described as “taking the division of labor to once unthinkable extremes”’ – in a way that Taylor would envy.[1] Therefore, not only the firm has no reason to invest into the micro-workers, but these are completely cut from the purpose of their work and, of course, from any guidance, team-working, or else human interaction.

Algocracy: technology and algorithms often operate as substitutes to direct managerial control and perform a series of managerial and/or supervisory tasks such assigning work, fixing prices, determining the timing and length of breaks, monitoring quality and ranking employee. Platforms, such as Upwork, are able to control their on-demand workers by measuring their productivity in terms of keystrokes, while other platforms use even more intrusive virtual office applications, such as regular screen shots and activity logs.

Information asymmetries – Insecurity – Precarity: While Uber knows a lot about its drivers, the latter do not know when/on what basis a ride will be assigned to them, its destination, their pay and, worse, when/whether they shall be “terminated” by the platform. Similar information asymmetries characterize the relationships between most platforms and their suppliers.

Health issues: On top of health risks connected with online work, such as stress, visual fatigue, musculoskeletal problems, and the risks connected with the specific physical activity performed, collaborative workers run a host of psychosocial risks unknown to date, connected to the factors already discussed.

Fundamental rights: especially for OLMs, platforms have no incentive – and no means – to guard against i.a. forced or child labour.

A solution to all the above issues would be to recognize to gig-workers the status of employees. This, however, would run counter to the logic of the collaborative economy, and, indeed, of labour laws.

Independent contractors vs Employees: judicial indeterminacy

In the absence of any special legal category, specifically corresponding to the characteristics of the collaborative economy, courts, on both sides of the Atlantic, have struggled to apply old rules to new realities.

US: In the California Uber (Berwick) case[2] the LA County Court held Uber drivers to be employees, while the complete opposite conclusion was reached by the Florida Court of Appeal in the Uber (McGillis) case.[3] While actions have been brought before other jurisdictions, under different pieces of state or federal legislation (labour, tax etc) – thus accounting for even more divergent solutions – Uber has chosen to settle all its employment court cases, therefore precluding guidance from the US Supreme Court. Other platforms, however, such as Grubhub (food delivery), after the favourable decision of the California District Court,[4] could find their way to the Supreme Court.

EU: the Central London Employment Tribunal,[5] upheld by the Appeals Tribunal,[6] in case Aslam, Farrar et al v Uber found that Uber drivers are workers (an intermediate category between independent contractors and employees). The Paris Prud’hommes in Le Cab[7] (Uber’s competitor) held drivers to be employees, but more recently, in Menard[8] it held Uber drivers to be independent; a conclusion shared by the Paris Commercial Tribunal in Viacab.[9] The Madrid Commercial Tribunal found that Blablacar drivers – enjoying a much larger degree of autonomy than those of Uber’s – are not employees either.[10] Unfortunately, a preliminary question concerning the status of Uber drivers has been rejected as inadmissible by the CJEU,[11] thus shedding the opportunity of delivering solid guidance. In Uber Spain,[12] however, a case concerning market access conditions and not employment – the Court did establish that the platform exercises ‘decisive influence’ over the drivers. Should this be seen as pointing towards there being an employment relationship?

Contradictory criteria: Most judgments finding in favour of the gig-workers are based on the strong dependency of the drivers from the platform. They use arguments very similar to those followed by the CJEU in Uber Spain to establish the ‘decisive influence’ ie that the platform not only makes it possible at the first place for drivers to reach the market (the gatekeeper’s criterion), but also that a) it organizes the characteristics and functions of this new service; b) it selects the providers (drivers) according to its own criteria; c) it fixes the conditions of service delivery, d) most importantly the price, e) which it receives directly from the users before returning a part to the providers; f) it (indirectly) controls the quality of the service (vehicles, drivers, conduct) through a rating application; and g) it reserves to itself the right to ultimately exclude those providers which it does not deem fit.[13]

However, other arguments, may be pointing to the opposite direction, such as eg that gig-workers: a) determine freely their working times, days, weeks etc, b) are not obliged to undertake any tasks nor penalized for not doing so, c) do not have to invest on any specific infrastructure, use specific gear or wear specific outfit, d) do not have to comply with specific conduct rules nor to follow a specific itinerary, e) have not received any substantial training by, and did not report to any hierarchy in, the platform, and, most importantly f) have the right to ‘multi-home’ ie to also work for other platforms. This last element seems to be crucial, as it also stands for the opposing outcomes in the two Prud’homme judgments previously discussed.

Policy options

In view of the great uncertainty reigning in the area of labour relations in the collaborative economy, different policy options are being put forward. These include a) the creation of a new intermediary category of ‘dependent contractors’ (as opposed to independent contractors) who would benefit from some basic social rights,[14] b) the portability of welfare rights from one platform to the other (eg through the creation of a fund for gig-workers where a small contribution would be paid by platforms for each task performed),[15] c) assimilating gig-workers with self-employed people and encourage platforms to develop their own benefits policies in competition with other insurance options otherwise available,[16] and d) set a time-constrained ‘safe harbour’ for platforms to develop their own protective policies before submitting them to any rules.[17]

Next week: Dispute resolution in the collaborative economy

[1] MA Cherry, ‘Beyond Misclassification: The Digital Transformation of Work’ (2016) 37:3 Comparative Labor Law and Policy Journal 544; Saint Louis U Legal Studies Research Paper No 2016-2; available at https://ssrn.com/abstract=2734288, 24-25.

[2] Uber Technologies Inc v Barbara Berwick Case No. 11-46739 EK California Labor Commissioner, 2015 (Berwick), available at cdn.arstechnica.net/wp-content/uploads/2015/06/04954780-Page0-20.pdf.

[3] Darrin McGillis v Department of Economic Opportunity and Rasier/Uber Florida DC Appeal, 3d, N. 3D15-2758, delivered in February 2017.

[4] Lawson v Grubhub, Northern California DC, N 15-cv-05128-JSC, https://www.courthousenews.com/wp-content/uploads/2018/02/grubhub-ruling.pdf

[5] See Case Nos 2202551/2015 & Others, Aslam, Farrar and Others v Uber, Judgment of 28 October 2016, available at http://www.judiciary.gov.uk/judgments/mr-y-aslam-mr-j-farrar-and-others-v-uber.

[6] Employment Appeal Tribunal Uber BV ea v Aslam, Farrar ea, 0056/17/DA, available at https://assets.publishing.service.gov.uk/media/5a046b06e5274a0ee5a1f171/Uber_B.V._and_Others_v_Mr_Y_Aslam_and_Others_UKEAT_0056_17_DA.pdf .

[7] Judgment of 20/12/16 [je n’ai pas pu trouver les références de sa publication – peut être quelqu’un en France serait mieux placé pour le faire]

[8] arrêt du 29 janvier 2018, (F 16/11460), Menard c Uber [idem]

[9] Tribunal de Commerce de Paris, dans un arrêt du 30 janvier 2017, Viacab c Uber, RG 2014054740 [idem]

[10] Confebus v BlablaCar SJM M 6/2017 (2 february 2017) ES:JMM:2017:6.

[11] C-526/15, EU:C:2016:830.

[12] C-434/15, Asociacion Profesional Elite Taxi v Uber Systems Spain, SL, EU:C:2017:981, briefly commented HERE.

[13] See para 39 of the judgment.

[14] SD Harris and AB Krueger, ‘A Proposal for Modernizing Labor Laws for Twenty-First Century Work: The “Independent Worker”’ (2015) The Hamilton Project Discussion Paper 2015-10, available at http://www.hamiltonproject.org/assets/files/modernizing_labor_laws_for_twenty_first_century_work_krueger_harris.pdf; A Hagiu and R Biederman, ‘Companies Need an Option Between Contractor and Employee’ Harvard Business Review (21 August 2015), available at https://hbr.org/2015/08/companies-need-an-option-between-contractor-and-employee; M Carboni, ‘A New Class of Worker for the Sharing Economy’ (2016) 22:4 Richmond Journal of Law and Technology (2016) 1; A Bolton, ‘Regulating Ride-Share Apps: A Study on Tailored Reregulation Regarding Transportation Network Companies, Benefiting Both Consumers and Drivers’ (2015) 46:1 Cumberland Law Rev 101, 141-142;

[15] (OECD), ‘New Forms of Work in the Digital Economy’ (2016) OECD Digital Economy Papers, No 260, 9-10, available at http://www.oecd-ilibrary.org/science-and-technology/new-forms-of-work-in-the-digital-economy_5jlwnklt820x-en; EU Commission JRC, see Codagnore, Abadie and Biagi, ‘The Future of Work in the “Sharing Economy”: Market Efficiency and Equitable Opportunities or Unfair Precarisation?’ (2016); J Berg, ‘Income Security in the On-Demand Economy: Findings and Policy Lessons from a Survey of Crowdworkers’ (2016) 37:3 Comparative Law and Labor Law and Policy Journal; Harris and Krueger, ‘A Proposal for Modernizing Labor Laws for Twenty-First Century Work: The “Independent Worker”’ (2015).

[16] P Goudin, ‘The Cost of Non-Europe in the Sharing Economy: Economic, Social and Legal Challenges and Opportunities’ (2016) European Parliament, European Parliamentary Research Service, available at http://www.europarl.europa.eu/RegData/etudes/STUD/2016/558777/EPRS_STU(2016)558777_EN.pdf.

[17] A Sundararajan, The Sharing Economy, The End of Employment and the Rise of Crowd-Based Capitalism (Cambridge MA, The MIT Press, 2016).

Vassilis Hatzopoulos, est professeur de droit et politiques de l’UE à l’Université Panteion d’Athènes, Professeur visiteur au Collège d’Europe, Bruges et Professeur visiteur honoraire à l’Université de Nottingham, Avocat au Barreau d’Athènes. Grand spécialiste de droit européen, il est notamment l’auteur du premier ouvrage de référence sur l’économie collaborative, The Collaborative Economy and EU Law, Oxford, Hart, 2018.

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