Digital Labor and Digital Economy of Uber Drive: Unionization of Workforce

Abstract

The aim of this research paper is to investigate the unionization process of the digital labor force working for on-demand digital platforms by analyzing the current efforts of Uber drivers to form a national union in the United States. One of the most successful rideshare driver organizations in the United States, Rideshare Drivers United was especially investigated to determine the overall issues of Uber drivers and their past and current activities. This study is based on an extensive academic research compiled from various reputable academic studies, books, journal articles, and the official views of Uber driver organizations and government authorities. The results of this research paper show that, contrary to the company’s claim, the specific labor model established by Uber through its algorithmic management, does not provide full freedom, flexibility and independence to the drivers during their work. Therefore, Uber drivers should be officially recognized as standard employees rather than independent contractors so that they can legitimately form a nation union to be able to collectively bargain with Uber to improve their working conditions and labor rights. It was also concluded that ride-share driver associations can only achieve their ultimate goals by increasing their numbers and representing the majority of the driver population.

Introduction

In parallel to the rapid developments in digital technologies, digital media platforms like Uber have drastically changed our world by shortening the distances between borders. Today, we can reach out wherever we want just in one click on our mobile phones. Since the first introduction of Uber as a ride-hailing company in 2009, it has become one of the most popular transportation methods around the world with its unique mobile application system where people can submit a simple trip request automatically directed to the closest Uber driver in the vicinity by alerting the driver to the user’s location. Uber like many other digital technology companies has created a significant change in the labor market and has become a major player in the gig economy where jobs are more flexible and temporary, and companies prefer hiring independent contractors instead of full-time employees. Uber drivers are typical gig workers signing formal agreements with Uber to provide services to the company's clients. At first glance, this arrangement seems very beneficial for people who seek out flexible and part-time jobs, but at the same time, being an Uber driver just as many other online platform jobs constitutes serious uncertainties in terms of basic labor protection and benefits.

Even though Uber refers its drivers as “partners and entrepreneurs” whose work is characterized by independence, freedom, and flexibility; in reality, these drivers are simply the part of a digital labor force of Uber. The legal labor classification of Uber drivers, whether they are independent contractors or employees, directly affects their working conditions, basic labor protections and benefits. A part-time contract offers a beneficial freedom for some drivers, but many others feel financially insecure. Since the first introduction of this system, the drivers have encountered many issues and problems with Uber including low pay and benefits, lack of bargaining power, and the complicated algorithm that strictly controls their working behavior . Until recent years, the nature of their labor and the conditions stipulated in their individual contracts prevented them to establish an organized movement to find concrete solutions to these vital issues. The first time in August 2017, the Uber drivers in California got together and organized two strikes at Los Angeles International Airport to raise public awareness to their problems. After a long journey and struggle, they have finally convinced the state of California to pass a new legislation called “California Assembly Bill 5” in 2019 to secure their basic labor protections and benefits.But they are still far away from their ultimate goal of passing a new legislation called the Rideshare Drivers’ Bill of Rights first in the state of California and then in other parts of the United States.

The aim of this research paper is to analyze the current efforts of Uber drivers in California to form a national union in the United States to collectively bargain with Uber to improve their working conditions and labor rights. Therefore, the predominant question that will be answered in this research paper is “How are California Uber drivers organizing themselves to advocate for better protection and benefits?” In order to answer this question, first, the organization formed by the Uber drivers in California, Rideshare Drivers United, will be introduced in terms of their history, mission, and activities. Then, their major argument related to the legal status of their digital labor will be analyzed in connection with the critical achievement of the organization passing the new legislation called “California Assembly Bill 5. Finally, their proposed Rideshare Drivers’ Bill of Rights for the state of California will be discussed in detail to determine their actual demands and future expectations. This research paper was prepared based on an extensive academic research consisting of detailed information gathered from various books, academic studies, and journal articles. In addition, the official websites of Uber, driver organizations, and state & federal institutions were meticulously reviewed to understand the point of views of each related party.

Section I: Rideshare Drivers United

In recent years, frustrated ride-share drivers due to their unresolved issues with Uber and other ride- hailing companies have tried to form associations both in California and other parts of the United States. But they had encountered with two serious challenges in organizing the fellow drivers: geographically diffuse workforce that has no formal connection with each other and high turnover rates among ride-share drivers. Their attempts have always been limited to forming loose connections through social media outlets such as Facebook. The first time in 2017, Rideshare Drivers United was founded in Los Angeles as an independent association of the United States rideshare drivers by the efforts of only two people: Ivan Pardo, a software developer, and Nicole Moore, a part-time ride-share driver and former union organizer. Their mission consists of three major elements. First, they aim to transform their work and the overall rideshare industry by organizing ride-share driver around the country to create an effective power. Second, they want to reshape and transform the current dynamics of gig economy by cooperating with other organizations representing digital labor in various industries. Finally, they want legal recognition of their rightful organization by the ride-hailing companies and state and federal government authorities. They state their principles as dignity, democracy, unity and diversity, equity and solidarity.

Based on their performance and achievements in the last a couple of years, Rideshare Drivers United clearly distinguished itself from the previous attempts of organizing ride-share drivers. What made them any different from the other attempts was to use of a digital technology developed by their co-founder, Ivan Pardo. He developed a new mobile phone application to connect drivers with each other and organize them effectively towards common goals. They reach out to ride-share drivers through their website and Facebook account, and arrange an initial phone call to determine the views and standing of the driver. Once the application was downloaded, the driver becomes the member of the organization and easily gets in touch with the organizers and fellow drivers in real time. By using this application, Rideshare Drivers United simply overcame the difficulties of organizing geographically diffuse work force. They effectively used this application in 2019. First, they organized a very successful trip to Sacramento to demonstrate for the up-coming labor bill, and then they greatly contributed to the global strike of Uber drivers two days before Uber’s initial public offering to protest the company for low pay and lack of worker protections. In order to develop a broad and democratically created platform, they are constantly sending surveys to their members to determine the current issues of the drivers. They collect, evaluate and share the survey results in each month by giving opportunity to each member for new suggestions. But their biggest challenge is to increase their numbers to achieve their goals. Even though around 300,000 rideshare drivers currently working in California, Rideshare Drivers United currently represents only 12,000 of them. They are currently working on increasing their numbers not only in California, but all around the country, and they are working on developing new strategies by consulting elected officials, lawyers, and experienced organizers.

Section II: The legal status of Uber drivers and the new legislation called “California Assembly Bill 5

One of the most critical arguments of Uber drives is directly related to the technical content of their work in this digital platform. This argument eventually defines the legal status of their digital labor and becomes a major obstacle on their efforts to form a nationwide union. Rideshare Drivers United is not a legally recognized union simply because of this legal status. Uber strictly claims that the drivers operate in relative freedom, flexibility and independence during their work. Based on this premises, they purely consider the drivers as independent contractors. Most of the states and federal institutions around the United States also support this claim, other than some exceptions such as the state of California with its recent ruling, and they officially deny the Uber drivers’ recognition as standard employees. To be able to make a firm judgment on this argument, the technical aspects of the Uber digital algorithm and daily operational interactions between the drivers and the system should be scientifically analyzed.

Some academic studies have explored and analyzed the algorithmic management of Uber, which can be defined as a diverse set of technological tools and techniques to remotely manage workforces. Alex Rosenblat and Luke Stark went even further with their study in 2016 and investigated the effects of this particular algorithmic management on the behaviors and daily practices of Uber drivers. A nine-month empirical study of Uber driver experiences clearly revealed that Uber has a significant indirect control over how drivers do their jobs. The driving habits and preferences of Uber drivers are directly connected to the specific algorithmic management of Uber. The system basically works with the official approval of a driver by Uber. Once the active driver logs into Uber’s system via a smartphone application, he or she receives ride requests from passengers. The payment for each ride is made by a passenger via credit card directly to Uber, and then Uber issues payments on to drivers after deducting a commission, booking fee and any additional fees based on local jurisdiction. Uber’s strict control over the drivers starts with the company’s policies, requiring drivers to maintain a low cancellation rate (e.g. 5% in San Francisco) and a high acceptance rate (80% to 90%).

The study shows that there are two specific features of Uber digital platform which eliminates the flexibility of the drivers: the blind passenger acceptance with low minimum fares and the algorithmic determination of surge pricing. When a driver receives a ride request, he or she cannot see either the destination or the fare information before accepting the ride, and the decision of accepting or rejecting a ride must be made in 15 seconds. The surge pricing system was developed by Uber, showing the temporarily raise fares for a particular geographic location to the drivers, based on the Uber algorithmic assessment of supply and demand. But the drivers are generally confused by the ambiguities surrounding the calculation of surge pricing. They spend considerable time in the surge pricing zones without receiving any ride requests and lose other ride requests in adjacent areas. The communication between Uber and its drivers other than the daily routine operation through Uber digital application is extremely limited. Most of their inquiries related to their issues and difficulties about their work are simply responded by Uber with standard templates. Based on these facts, it is possible to conclude that the algorithmic management of Uber is based on strict rules, regulations and policies which are contradictory to what the company claims for its drivers: “Flexible Employment”. Uber’s digital platform directly shapes and affects their drivers’ behavior by using algorithmic labor logistics, electronic surveillance, and strict performance policies.

Rideshare Drivers United specifically used this point of view to convince the State of California to reconsider the legal status of the Uber drivers and fully supported the legislation of the California Assembly Bill 5. The bill was first introduced to the California State Legislature in December 2018. After 10 months of persistent lobbying activities of Rideshare Drivers United and other organization dealing with gig workers, the California Assembly Bill 5 was signed into law in September 2019. The law basically codifies the ABC test to determine actual labor classification of a worker. The test includes three specific assessments (A, B and C). The first assessment determines if a worker is free from direction and control under his or her contract with the employer. The second assessment determines if the service is performed outside the usual course of business of the employer, and the final assessment clarifies if an individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed. When these assessments were applied to an Uber driver, the California Assembly Bill 5 clearly classifies Uber drivers as employees rather than independent contractors. Eventually, the bill provides the basic labor protections and benefits to the Uber drivers. Since the new law allows businesses to apply for exemption, Uber immediately applied but was denied exemption. It seems that Uber like other ride-hailing companies along with numerous gig economy employers are determined to fight this new law by pledging to spend $30 million on a 2020 ballot initiative to reverse the California Assembly Bill 5.

Section III: Rideshare Drivers’ Bill of Rights proposed by Rideshare Drivers United

Rideshare Drivers United is aware that the California Assembly Bill 5 was the first step in achieving their ultimate goal of passing a new legislation called the Rideshare Drivers’ Bill of Rights first in the State of California, and then in other parts of the United States. This proposed bill was prepared based on the views and demands of the active members of the association, and consists of four essential parts: Fair pay, transparency on the job, community standards and a voice on the job. The first part of the bill, fair pay, is directly addressing the financial difficulties of the drivers and unfair commission arrangement stipulated by Uber. The main idea behind this section is to create an arrangement that can ensure minimum wage for each driver. According to the Rideshare Drivers United, Uber is currently taking more than 50% of the fares into its own account and this is not a fair business practice. They suggest that the payments to the drivers must be directly linked to what the passengers are actually paying to Uber, and they believe that the fair and acceptable method should be setting 10 or 15% cap on commission. In addition, they suggest three additional payments to drivers. The drivers must be paid per mile & per minute rate during their transfer to the passengers. Uber must set hourly minimum pay to drivers before expenses, and a gas-price indexed surcharge must be included in fares. They believe that a fair payment and commission mechanism must be established to secure the basic labor protections of the drivers.

The second part of the bill, transparency on the job, is related to the uncertainties of various Uber business processes and the lack of transparency in the system. Uber is deactivating any drivers on their system at any time they wish without giving a chance to appeal. What Rideshare Drivers United is asking is a transparent, speedy, and independent deactivation appeals process to determine if there is a valid reasoning behind deactivations. To achieve full transparency, Uber system must show the drivers the complete fare breakdown on the passenger receipts to see both the driver’s and Uber’s commissions. The system should also inform drivers the estimated fare payment and the trip destination before accepting a trip. One of the most critical requirements of the bill related to transparency is about the sudden changings the drivers are encountering with the Uber procedures. For instance, all of a sudden, Uber reduced the driver commissions on the mileage rates on March 11th, 2019 by 25% without having the consent of the drivers.

The third part of the bill, community standards, is addressing the issues related to the environmental concerns as well as improving the standards of the system for the benefit of community. The carbon emission is serious environmental problem especially in the big and crowded cities. Rideshare Drivers United believes that ride-hailing companies and the drivers must contribute to the environmental protection and public health by improving the emission standards of the existing vehicle portfolio providing ridesharing services. In addition, there must be a certain rideshare vehicle cap to eliminate unnecessary traffic and carbon emissions in the communities. They believe that ride-hailing companies must closely cooperate with the municipalities to contribute to the efforts related to local traffic management. In order to achieve this goal, ride-hailing companies must share all vehicle data with local authorities.

The final and maybe the most critical part of the bill, a voice on the job, deals with the legal standing of the rideshare drive organizations and the efforts of unionization. Unions have always played a crucial role in defending labor rights and organizing workers to be able to create a collective bargaining power. The new employment methods in the gig economy and the digital on-demand platforms have created a challenging environment for the digital labor movement in terms of unionization. Under these conditions, Rideshare Drivers United demands full recognition by Uber and other ride-hailing companies in order to negotiate with them on behalf of drivers as an independent and driver-led organization. They believe that drivers have the right to organize without the fear of retaliation by ride-hailing companies. Uber should appoint an elected driver-representative on its boards of directors so that the drivers can directly express their issues and find mutually beneficial solutions to these issues by both sides. Uber and other ride-hailing companies are still resisting to the idea of driver unions based on their premises that the drivers are independent contractors, not employees. This view was supported by the advice memo issued by the National Labor Relations Board’s Office of the General Counsel on April 29th, 2019. But it seems that this decision will not stop rideshare drivers’ efforts to form a legal union. Rideshare Drivers United states that the National Labor Relations Board is not a place to protect the rights of rideshare drivers. They believe that they must concentrate more on the state level legislations rather than federal regulations. The California Assembly Bill 5 was the first successful step towards achieving their goals. They will continue their efforts by “acting” like a union, rather than “being” a union, and eventually Uber and other ride-hailing companies will have to recognize the drivers’ right to organize and collectively bargain with them.

Conclusion

The new job opportunities have emerged with the digital platforms, but there are also enormous ambiguities regarding the legal status of these jobs as well as basic labor protection of millions of people working for these platforms. Uber and other ride-hailing companies have drastically changed the dynamics of transportation in all over the world, but it is clear that the relationship between Uber and its drivers is not well defined, and there are serious issues. The individual attempts to resolve these issues could not be achieved up to now, and the drivers have started to organize themselves by forming various associations. Rideshare Drivers United in California is one of the most effective and successful associations founded by ride-share drivers, and they have gone a long way to achieve their ultimate goals. As a major gig economy player in the world, the only premise of Uber regarding the digital labor rights of its drivers is purely based on a simple, but crucial claim: Uber drivers are not employees in a traditional sense, but they are indeed independent contractors. Unfortunately, the latest decision of the National Labor Relations Board (NLRB) also supports this claim. This premise strictly labels the overall status of Uber drivers and becomes a major obstacle for them to gain their full labor rights to form a union. The evidence presented in this paper clearly shows that, contrary to the company’s claim, specific labor model established by Uber does not provide full freedom, flexibility, and independence to the drivers during their work. Uber drivers in California won their first battle by the new legislation of the California Assembly Bill 5, which entitled the California rideshare drivers classified as employees rather than independent contractors and provided the basic labor protections and benefits to the drivers. Rideshare Drivers United clearly made a difference by using a digital technology against one of the biggest digital on-demand platforms, Uber, and organized the drivers by using a communication app. This fact clearly indicates that we will all see great changings in the digital platforms and overall gig economy in the coming years. It is also clear that Uber drivers in California and other parts of the United States will continue their efforts to succeed their goals. The author believes that Rideshare Drivers United and other driver associations can only achieve their ultimate goals by increasing their numbers in the organization and representing the majority of the ride-share driver population, and then they can have the power to force the state governments to pass their proposed Rideshare Drivers’ Bill of Rights. Their struggle, current efforts and ultimate success will change the definition of digital labor and will bring a new dimension to the growing gig economy.

References

1. “California Assembly Bill 5 (2019).” Wikipedia. Wikimedia Foundation, May 19, 2020. https://en.wikipedia.org/wiki/California_Assembly_Bill_5_(2019)#On_rideshare_drivers.

2. “NLRB.gov.” NLRB. Accessed March 29, 2020. https://www.nlrb.gov/how-we-work/national-labor-relations-act.

3. “We're Uber & Lyft Drivers Uniting for a Fair, Dignified, and Sustainable Rideshare Industry.” Rideshare Drivers United | Uber & Lyft Drivers Union. Accessed March 28, 2020. https://drivers-united.org/.

4. Berg, Janine, Marianne Furrer, Ellie Harmon, Uma Rani, and M. Six Silberman. “Digital Labour Platforms and the Future of Work: Towards Decent Work in the Online World.” Report: Digital labour platforms and the future of work: Towards decent work in the online world, September 20, 2018.

5. Chan, Ngai Keung, and Lee Humphreys. 2018. “Mediatization of Social Space and the Case of Uber Drivers.” Media and Communication 6, no. 2 (2018): 29. https://doi.org/10.17645/mac.v6i2.1316.

6. Editor. “Here's Why the NLRB Ruled Uber Drivers Are Not Employees.” LaborUnionReport.com, May 16, 2019. https://laborunionreport.com/2019/05/16/heres-why-the-nlrb-ruled-uber-drivers-are-not-employees/.

7. Glöss, Mareike, Moira Mcgregor, and Barry Brown. 2016. “Designing for Labour: Uber and the On-Demand Mobile Workforce.” In Proceedings of the 2016 CHI Conference on Human Factors in Computing Systems, 1632–1643. ACM, 2016.

8. Hawkins, Andrew J. “California Just Dropped a Bomb on the Gig Economy - What's next?” The Verge. The Verge, September 11, 2019. https://www.theverge.com/2019/9/11/20860578/california-ab5-bill-passage-uber-lyft-drivers-union-techlash.

9. Irwin, Neil. “Maybe We're Not All Going to Be Gig Economy Workers After All.” The New York Times. The New York Times, September 15, 2019. https://www.nytimes.com/2019/09/15/upshot/gig-economy-limits-labor-market-uber-california.html.

10. Issa, Yulia, Paul Zilly, Paul Zilly, Paul Zilly, Paul Zilly, Paul Zilly, Paul Zilly, Paul Zilly, Paul Zilly, and Joshua Welter. “Get Teamsters News Delivered to Your Inbox.” Teamsters 117. Accessed April 6, 2020. https://www.teamsters117.org/tags/uber.

11. Malin, Brenton J., and Curry Chandler. 2017. “Free to Work Anxiously: Splintering Precarity Among Drivers for Uber and Lyft.” Communication, Culture & Critique 10, no. 2 (June): 382–400.

12. Mateescu, Alexandra, and Aiha Nguyen. “Algorithmic Management in the Workplace.” Algorithmic Management in the Workplace, February 2019, 1–16.

13. Mishel, Lawrence, and Celine McNicholas. “Uber Drivers Are Not Entrepreneurs: NLRB General Counsel Ignores the Realities of Driving for Uber.” Economic Policy Institute. Accessed March 28, 2020. https://www.epi.org/publication/uber-drivers-are-not-entrepreneurs-nlrbgeneral-counsel-ignores-the-realities-of-driving-for-uber/.

14. Pfeffer-Gillett, Alexi. 2016. “When ‘Disruption’ Collides with Accountability: Holding Ridesharing Companies Liable for Acts of Their Drivers,” n.d. Accessed February 2016.

15. Raymond, Robert. “With AB5 Signed, What Is next for Rideshare Drivers?” Shareable, October 21, 2019. https://www.shareable.net/with-ab5-signed-what-is-next-for-rideshare-drivers/.

16. Riley, Tonya. “The Technology 202: Uber, Lyft Drivers Vow to Continue Fight for Unions despite Company Pushback.” The Washington Post. WP Company, September 23, 2019. https://www.washingtonpost.com/news/powerpost/paloma/the-technology-202/2019/09/23/the-technology-202-uber-lyft-drivers-vow-to-continue-fight-for-unions-despite-company-pushback/5d87f26788e0fa0ba8961d09/.

17. Romo, Vanessa. “Uber Drivers Are Not Employees, National Relations Board Rules. Drivers Saw It Coming.” NPR. NPR, May 16, 2019. https://www.npr.org/2019/05/15/723768986/uber-drivers-are-not-employees-national-relations-board-rules-drivers-saw-it-com.

18. Rosenblat, Alex, and Luke Stark. 2015. “Algorithmic Labor and Information Asymmetries: A Case Study of Uber’s Drivers,” October 22, 2015, 1–27.

19. ROSENBLAT, ALEX. UBERLAND: How Algorithms Are Rewriting the Rules of Work. S.l.: UNIV OF CALIFORNIA PRESS, 2019

20. Scheiber, Noam, and Kate Conger. “Uber and Lyft Drivers Gain Labor Clout, With Help From an App.” The New York Times. The New York Times, September 20, 2019. https://www.nytimes.com/2019/09/20/business/uber-lyft-drivers.html.