Tag Archives: work

The Independent Contractor vs. Employee Issue Gets Kinky

Although some think whether an individual is an independent contractor or an employee is a new legal question brought about by the gig economy digital platforms like Uber, the truth of the matter is the issue has been around for decades. As I say in my new book, Thriving in the Gig Economy  due out in May , when the news of the Uber lawsuit first broke, my former CFO called me from Toronto just to reminisce about old times in the compliance wars.  It was remarkable to us, that so many people and the media for sure seemed to view the Uber situation as a new development.

Of course the employment lawyers in the crowd also appreciate how pervasive this problem has been.  In its recent blog post, Littler chose to honor April Fool's Day by recounting some of the more bizarre employment cases that occurred this year.  http://www.jdsupra.com/legalnews/these-foolish-things-the-oddest-56353/,  My favorite was the case of a strip club in Ohio, where an exotic dancer sued the bar on the grounds that she should have been classified as an employee rather than as an independent contractor.

Credit J.D.S. from Shutterstock.com

There were several considerations arguing for independent contractor status.  Dancers were not paid by The Brass Pole, but rather by its patrons for individuals dances.  Dancers also made their own schedules and provided their own materials/costumes.  The bar offered no training; only experienced dancers were engaged.  Whether they were able to work for other establishments was a bit murky, but there was no explicit prohibition.  The Brass Pole did have a number of rules  the dancers needed to abide by including no chewing gum on stage, never refusing a drink and no boyfriends/spouses in the bar during the performances. http://www.lazzarolawfirm.com/Lester-opinion.pdf These rules were not meant to impose direction or control, but rather to ensure the efficient operation of the establishment.

The definition of an independent contractor, or for that matter, an employee, is never simple.  The Sixth Circuit court in Ohio used what they refer to as an "Economic Realities" test.  The six factor test, as outlined in the legal opinion in the case is based on:  "1) the permanency of the relationship between the parties; 2) the degree of skill required for the rendering of the services; 3) the worker’s investment in equipment or materials for the task; 4) the worker’s opportunity for profit or loss, depending upon his skill; ... 5) the degree of the alleged employer's right to control the manner in which the work is performed[; and] ... [6)] whether the service rendered is an integral part of the alleged employer’s business."

The first five items seemed to indicate that the dancers could be valid independent contractors. The dancers were regular, experienced and supplied their own costumes.  They determined when and how long they performed, which determined their income, and little to no control was exerted over them.  The problem, however, was whether the dancers were an integral part of the business.  Apparently the proprietor did attempt to claim that they were a bar which happened to have exotic dancers, rather than an exotic dancing locale that served drinks.  The judge didn't buy that argument and ordered a summary judgement for the plaintiffs, saying, "“[n]o reasonable juror could conclude that customers primarily came to the club for its other offerings, which included beer, liquor, and frozen burgers from Sam’s Club.”http://www.jdsupra.com/legalnews/these-foolish-things-the-oddest-56353/

At least the Brass Pole case was resolved.  The larger Uber lawsuit still has yet to be fully argued.  I for one am hopeful that it will be put to the test, because it could be this high profile case which finally puts some clarity on this very ambiguous area of the law.

The Gig Economy and the Office

Harvard Business Review published an interesting article by Professor Diane Mulcahey last week called, "Will the Gig Economy Make the Office Obsolete?" https://hbr.org/2017/03/will-the-gig-economy-make-the-office-obsolete .  The point Mulcahey makes is that when companies use independent workers  for key projects, these gig workers  are being  judged by their results; their presence or absence in a certain physical location is not germane to their performance.

What is interesting to note is the historical pattern of work locations.  Prior to the industrial revolution, work of most types  tended to be done at home.  Fishermen and soldiers are key exceptions here.  The work was not separate from life, but rather an embedded part of it.  As Alice Kessler Harris, a History Professor at Columbia put it, " the workplace was an extension of the household." http://gender.stanford.edu/news/2014/historical-view-american-workplace Professions which did have offices, i.e. doctors, were typically co-located at home. Although certain work was gender related, women tended the farm just as much as men helped with the weaving.  It was all just a part of life.

Marion McGovern

A portion of Diego Rivera's murals depicting American industrialization at the Detroit Institute of Art

But life changed with the advent of industrialization,  because the location of work shifted, with many roles requiring an onsite presences, whether at a factory, a warehouse or an office.  Along with that shift, came set hours and shifts which delineated work time. These separate  workplaces were often in conflict with  household schedules and further accelerated the segregation of work from home life.  As more women entered the work force the conflicting demands of work and household became all more acute.

However fast forward to the end of the 20th century. As the knowledge economy grew in importance, supported by technological enhancements, the time and place where work could be done became less important. With increased connectivity and advances in software and security, remote work has become commonplace. Coupling that with hard working employees who want more work life balance, many companies have made moves to reduce their physical office footprint.  Indeed, software company, Citrix, has predicted that by 2020, 70% of people would work away from the office as much as they worked at their office.

Add to this the increasing adoption as a strategic business practice of using independent consultants, high-end gig economy workers, for projects throughout the organization and the question of worker location becomes even more pertinent.  Most of these gig economy workers rate flexibility and control over their lives as key reasons for pursuing the independent career path.  In researching my upcoming book, Thriving in the Gig Economy, I read half a dozen different studies about the reasons independent consultants choose this path and flexibility is chief among them all. Whether they work at a client office, a co-working space or a home office, these professionals want be in charge,  They want the balance in life that comes from control.  They want their work to be an extension of their household just like it was 200 years ago.  As the saying goes, what comes around, goes around.

 

International Women’s Day and the Gig Economy

On this International Women's Day, I thought a good post would be to talk about women in the Gig Economy. In the recent McKinsey Global Institute Report, "Independent Work: Choice Necessity and the Gig Economy", http://www.mckinsey.com/global-themes/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy, they report that women comprise 51% of the alternative work force in the United States.  In fact in the six developed economies profiled in the report, women were  not the majority in only Germany and France, where they represented 48% and 45% respectively.

As someone who was in the gig economy before anyone ever called it that, it has always been clear that women were a major component of the alternative workforce.  When I started M Squared Consulting in 1988 one of my prime observations were that credentialed women were leaving traditional corporate  environments in droves.  Whether it was the management consulting world where I was, advertising, consumer products or financial services,  the need to balance competing demands in life trumped for many women the need to break the glass ceiling.

I am dating myself here, but before the advent of email and the internet, balancing family obligations was much harder. I remember several nights at Booz Allen where I would leave at 5:30 pm to the incredulity of my ( male)  peers, head home to feed and bathe my newborn baby, put her to bed and then drive back to the office at 9 to work until midnight or 1 a.m., and roll into bed an hour later.  I'd get up again at 6a.m. to feed the baby and spend some time with her before heading back to the office that morning.  That grueling schedule was not sustainable and helped awaken my entrepreneurial streak to figure out a better way to work.

Over the years, I discovered that so many people, not just women wanted more control over time.  Whether it was to write the great American novel, support an aging parent, or salsa dance competitively, consultants chose  the independent path to make their entire  life work, not just the career part. Don't get me wrong, many also chose this path because they felt that could make more money on an independent basis and have greater intellectual challenges. But flexibility for many is a key factor.

MBO Partners has done a study on independent workers in America for the past six years and notes, as McKinsey did, the roughly equivalent level of male and female participation.  In  their most recent  study, The State of Independence in America, https://www.mbopartners.com/state-of-independence, MBO Partners noted that men and women have different concerns and goals. For women, flexibility is more important than money.  For men, control by virtue of being your own boss was more important.

But women are not just a part of  the gig economy as workers, they are also part of the eco-system that supports the participants. From apps that provide effective time reporting, to platforms for liability insurance, entrepreneurs are seeing that this is a trend that is not going to sunset anytime soon.  One part of the eco system is co-working space.  WeWork, the giant in the segment is now the 4th largest real estate firm in the country.  But in their shadow, some women in The Bay Area decided they wanted to figure out a new way to co-work.  The Hivery, https://www.thehivery.com, a co-working space in Mill Valley,  a suburb of San Francisco, is a specialized networking space just for women. They offer all sorts of events to members, like writer’s workshops, entrepreneur circles and meditation Mondays, all intended to build a sense of community, the kind of community designed for women.

So on this International Women's Day, I salute all the independent women and entrepreneurs who have been able to design their work to support their life and their spirit rather than the other way around.

 

Talent Platforms for the upper end of the Gig Economy

Small Business Trends today had an article entitled  "20 Platforms for Workers in the Gig Economy".https://smallbiztrends.com/2017/02/gig-websites.html It was a good list, but one that was heavily skewed toward driving, leading off with Uber, Lyft and Turo.  The author also include some sites which are not gig economy sites at all, like Air BnB and Etsy.  In my upcoming book, Thriving in the Gig Economy, I differentiate between the sharing and gig economies.  The former involves  a physical asset, like renting your home.  The latter involves work of an uncertain duration performed in any field.  Moreover,  what many people do not appreciate about the Gig Economy,  is that it encompasses a wide variety of fields, not just driving, errands or delivery services.

Thriving in the Gig EconomyAs part of  the research for my book, I learned about a lot of platforms.  Some, like Tongal, https://tongal.com/who hold the Tongie Awards every year to celebrate the creative talents on their platform, I first discovered in a great book, Lead the Work. ( You can see this year's nominees on their website now. )  In many cases I met with the founders or leadership teams  of over a dozen talent platforms to  better understand the business model. These included  Experfy,  a talent platform for data scientists,  https://www.experfy.com and UpCounsel  a platform for certain types of legal expertise. https://www.upcounsel.com .  I mention these two in particular, because these were sites for which, I as a gig worker myself, would not be qualified.   However, if there was a remote chance that I was qualified, I not only tried to interview the founder, I also joined the platform.  I wanted to get a sense of the "user experience". All told, I am a participant in over a dozen high-end talent platforms right now.

It continues to be an interesting education. No site turned me down, which surprised me.  If you check out my LinkedIn page,https://www.linkedin.com/in/marionmcgovern/ I do not represent myself as a consultant, but that didn't seem to matter.  In the sites touting "experts",  I wasn't sure what qualified me, though I do know quite a bit now about the Gig Economy. Some sites, used only my LinkedIn info and asked for little else, while others tried to be far more expansive in their vetting. A few put me through additional screens; one had a requirement that I complete a confidentiality course, while another required a human on-boarding session to review the inner workings of the technology.

Two site  ignored me once I signed up, oblivious to my  lack of engagement with their platforms. Most sent some sort of newsletter, although in one case it was more of a holiday missive; I am not sure I will hear from them until Christmas Carols start again.  Several send regular project listings, and a few, a very few, send targeted projects that might appear to be meant for me - might being the operative word.

The matching process  for the high-end talent platforms is not a passive one; it requires effort on the part of the worker to make it effective.  Since virtually every site draws at least in part from a Linked In Profile, the potential matches may result from your background as represented there.  As Chair of a humanitarian NGO, ReSurge International, I lead my LinkedIn profile with that role.  Most of the platforms don't do to well differentiating governance expertise and Board roles.  Consequently, I received a projects involving setting up clean water facilities in Uganda, which is not a skill set I can offer.  But now that the book is largely complete, I can turn a bit more energy to evaluating these platforms as a discriminating user. Perhaps I could start my own Yelp category...

Advice for the Gig Economy on Retirement

Mark Miller, a journalist who writes about financial matters surrounding aging and retirement wrote a nice piece today  called "Retirement in the Gig Economy".http://www.wealthmanagement.com/retirement-planning/retirement-gig-economy  He discussed how Uber has a partnership with Betterment,https://www.betterment.com/why-betterment/ a fintech company that optimizes returns for investors through technology-enabled smart rebalancing and global diversification.  For Betterment it is a lead generation play, for Uber it is a way to deflect attention from the no benefits independent contractor issue, by providing some elective options.

He also mentions Honest Dollar, another fintech player that developed specialized retirement products for clients. One of those enabled  clients who engaged independent contractors to offer those contractors access to retirement products (IRAs, SEP IRAs etc.)  directly through its platform by a deduction from their fee payments. Goldman Sachs bought Honest Dollar in March, because they are "revolutionizing the retirement industry" by appealing to small businesses and gig workers.

Another firm in the space is Ubiquity,  a San Francisco based “fin tech” firm that is focused on providing retirement vehicles for small business and sole proprietorships, or as their website says, the “other 40 million”https://www.myubiquity.com/educate/. The company has their own version of an individual 401K, which they call a “single (k)”.  It has a flat fee and can be set up online. A single(k) enables an independent to make a larger contribution to retirement then would be allowed in a typical IRA or Roth IRA.

These firms are important for gig workers to know about, because they are providing solutions in today's environment.  What is more exciting are the opportunities that may come tomorrow. With very little fanfare, the Senate Finance Committee unanimously recommended Senate Bill 3471, The Retirement Enhancement and Savings Act. (RESA) The bill would enable a pool of employers to contribute to retirement programs.  No action was taken by the 2016 Congress, but given the support for the measure, there is an expectation it will be taken up in 2017.

That would bode well for other efforts that are underway for pooled employer programs.  New legislation  is expected to be introduced in New York state in this year. Handy, a digital platform for handymen and household workers, along with Tech NYC, a New York state trade association, is introducing a portable benefits bill Gig Economy workers. http://www.villagevoice.com/news/uber-but-for-benefits-ny-tech-companies-propose-a-gig-economy-solution-9517993 The proposed voluntary program envisions a 2.5% fee paid by participating companies into a benefits fund. Workers could access the fund to purchase benefits, whether health insurance or pensions.  The catch, according to some, is that the bill defines the workers as independent contractors, effectively cutting these gig workers off from employment benefits like overtime.  The bill’s proponents point to the need for incremental progress toward the goal of improving the social safety net.

Little steps can help.  As the saying goes, a journey of 1000 steps begins with one.

A Merger in the Gig Economy…Or Not

As part of my research for my new book, Thriving in the Gig Economy, which will be coming out next spring, I had the opportunity to interview Stephen DeWitt, the  CEO of WorkMarket. http://www.workmarket.com

Although it sounds banal to say it, Stephen is a visionary about the future of work and how technology will enable on-demand access to skilled workers globally  in a marketplace that many will find hard to _dsc5674imagine or even anticipate.  As I explain in my book, in today's environment, the immediacy of access to resources is highly conditioned by the skill set sought; I want my Uber driver right away, but I may be a bit disconcerted if my interim CFO showed up on my doorstep in 5 minutes.  Our mental models are not quite set at the right speed  now, for the way Stephen sees the future. Stephen sees that CFO, or chemical engineer or strategist arriving seamlessly when a company needs it  thanks to custom talent pools and the algorithms that will continue to evolve and load balance expertise levels.

As he shared with me as well as John Battelle in his great newco piece, A Total Rethink of How Work Should Work  https://shift.newco.co/a-total-rethink-of-how-work-should-work-5dc3980ea52#.76ychzmxi , to imagine the future you need to think of the futures you know.  Think Star Trek, for example, if Captain Kirk is in need of new expertise to make the next voyage, do you think he is just going to list it on LinkedIn?

Which brings me to the point of this post.  A major acquisition was finally approved last week to remarkably little fan fair, especially when compared to the press when the deal was announced. LinkedIn is now officially owned by Microsoft, an organization not known for successfully integrating acquisitions. LinkedIn is of course the largest talent marketplace  in the world, even if it doesn't operate like a digital talent platform. (With apologies, of course, to LinkedIn Profinder, which is trying. )

It has a significant role in the Gig Economy, though, since it is a key element of an independent worker's digital brand. Look at me -- I am posting this on LinkedIn in addition to my own blog as part of my own branding strategy. I even have a section in my book on how to optimize your digital image on LinkedIn. So will this primacy as a venue for independent experts to showcase expertise change in the new Microsoft world?

It is hard to say. An article on this topic by Dina Bass on Bloomberg yesterday https://www.bloomberg.com/news/articles/2016-12-13/how-microsoft-and-linkedin-can-make-this-expensive-deal-work said a key to the deal is to "let LinkedIn be LinkedIn." The public plan is to keep the two companies separate and develop those ever popular "synergies" to enable skilled professionals to be more productive.  As an Apple fan who has always thought apple design far superior to Microsoft and other platforms,  that didn't seem like a natural outcome to me.  (Let's face it the Microsoft stuff never works quite as well on a mac...)

But my bigger concern came from the video conference the day they announced the deal. Microsoft CEO , Satya Nadella, said he wanted to help make the LinkedIn members more successful in their "jobs".  https://www.linkedin.com/pulse/linkedin-microsoft-changing-way-world-works-jeff-weiner In the new world of work, the one that I see and the one Stephen DeWitt sees, it isn't about "jobs" it is about the work and skill sets and managing independent careers. Hopefully the new combined Microsoft and LinkedIn leadership will see that and plan accordingly.

A New Operating System for the Gig Economy

An article in Forbes today suggested the title of this post, that companies need a new operating system for the Gig Economy.  The article entitled, "How Businesses must Adapt to Accommodate the Growing Freelance Workforce",  http://www.forbes.com/sites/under30network/2016/12/05/how-businesses-must-adapt-to-accommodate-the-growing-freelance-workforce/?utm_source=TWITTER#17edc57f42f5 was written by Peter Johnston, the CEO  and Founder of Lystable,  one of the companies that now comprise what I like to call  the Gig Economy EcoSystem.

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These firms and their founders, like Peter, have recognized that the independent work trend in the United States is not going away.  Between workers wanting more flexibility, technology reducing the market frictions of just in time expertise and a highly mobile workforce the usage of independent workers will only increase.  Given this expected growth, there is money to be made in creating enabling mechanisms to make it easy more more companies to jump on the band wagon.

Lystable, https://www.lystable.com  along with others like ShortList https://shortlist.co/about/ promise to eliminate the logistical problems that can make engaging consultants a human supply chain nightmare.  For unlike employment and its sourcing partner, recruiting wherein a centralized corporate solution is offered, securing independent consulting services often tends to be a one-off endeavor in most companies.  Procurement ( and not recruiting typically) may imposes guidelines and rules that may be followed or not; many savvy managers have figured out over the years how to get around those pesky rules in order for the department to bring in their talent of choice. These external workforce platforms capture contract details, engagement letters, Statements of Work (SOWs)and payment details. Many handle on-boarding and post project reviews. Perhaps most importantly though, they provide an overall dashboard for how external expertise is being deployed in the enterprise.

Johnston points out thee business benefits which are real.  Speaking as someone who dealt with the initial forays of procurement in the vendor management world, creating an appropriate environment for independent talent us well overdue. Changing that operating system is key, but so too is changing the mindset.  Efficiently and effectively using independent talent is a competitive advantage.  And now, as deployment methods are becoming more enabled and thereby  making the workers more mobile, those workers have more options.  They can go to their client of choice.  So just as employers want to be the "Employer of Choice", they also need to give some thought to being the "Client of Choice. " For many firms, that will be quite an operating system change.

The Trump Administration and the Gig Economy

The co-founder of WorkMarket, https://www.workmarket.com/about#jeff-wald Jeff Wald, hosted a webinar today on what the new Trump administration will mean for the on-demand economy.  Since I differentiate the Gig Economy from  the On-Demand one in my new book, Thriving in the Gig Economy, which will be coming out next spring, I listened more for the implications for the career gig workers, experts who have chosen to create a careers as  independent workers.

With the disclaimer that no one REALLY knows what may happen, Wald's prediction was two fold - what is likely to happen in 2017 and what may happen in 2018.  Immediately after the inauguration, regulations , especially those resulting from the 2010 Obama task force meant to tackle worker misclassification would be discontinued or not enforced.  The misclassification, of course, refers to the independent contractor vs. employee issue, which I have probably blogged too much about.  ( See my post I am Uber the Uber Lawsuit ) Moreover, he thought the task force would be disbanded immediately. This could bode well for many senior consultants who would like to work independently as an independent contractor but have clients who are wary of the misclassification risk.

Wald did not think the Affordable Care Act (ACA), commonly referred to as ObamaCare would be repealed, rather he thought it would be revised into "DonaldCare", where certain elements would be maintained, like the coverage of children up to 26 on their parents' plans. The ACA has been a key enabler in the gig economy, since the ability to secure health insurance make the decision to go solo a more viable one.  Although I hope Wald is correct on this prognostication, I am withholding judgement until the Labor Secretary is named.

Perhaps the most important action, and the one which will have the least attention, is the appointment of a new Commissioner for the National Labor Relations Board. (NLRB) One of two recent NLRB decisions adversely impacted the staffing industry, by  increasing the risk of co-employment when using temporary staffing/gig workers.  A new NLRB appointee could reverse that decision, which would be a boon for temporary and specialty staffing firms.

And finally, the Supreme Court  appointment could have a major impact on the workplace. Frederick vs. the California Teachers' Association was denied a hearing in a 4 to 4 decision in June. The case involved mandatory union fees.  The tea leaves Wald reads suggests that a rehearing with a new more conservative court would strike down the mandatory fees, which would be a major blow to organized labor. Since many are suggesting the gig economy should become unionized, much like Hollywood back in the day, such an action may alter that thinking.

Looking into his crystal ball for 2018, Wald thought there could be some movement in the chronic problem of worker classification.  Trump likes to simplify complexity, and the rules governing independent contractor compliance are nothing if not complex.  Wald thought there is a chance that certain benefits, like retirement, may be unbundled from employment.  (Again something I just blogged about as well - Work, Jobs and the Gig Economy ).  Finally, tax reform will likely take until 2018, since it is a complex problem.  Again, in the interest of simplification, the new tax regulations could eliminate many of the business deduction provisions that have been a mainstay of the self-employed career consultants. That said, a lot will happen between now and then.  Time to strap on for the ride.

What is gig economy? - Definition from WhatIs.com

A gig economy is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements.
What is gig economy? - Definition from WhatIs.com

A gig economy is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements.

Curt Flood and the Gig Economy

As a San Francisco Giant fan, I am sad to say that the baseball season is over for me.  (And of course, as a Giants fan, I must now root for the Cubs against the Dodgers, But I digress...) But none the less it is October, when the baseball season reaches its inevitable climax.  So as I work on my book about the gig economy, I thought it was fitting to do a shout out to Curt Flood, a man who changed baseball and the world of work in a major league way, pardon the pun.

Curtis Charles Flood played 15 years in major league baseball  from 1956-1971, playing for the Cincinnati Reds ( or Redlegs, as they were known at the time) the St. Louis Cardinals and the Washington Senators.  He had a solid career, with three all star

St. Louis Cardinals outfielder Curt Flood is shown, March 1968. (AP Photo)

St. Louis Cardinals outfielder Curt Flood is shown, March 1968. (AP Photo)

team appearances and seven  golden glove awards. He won two different hitting titles and still today is ranked third behind Willie Mays ( a Giant , of course) and Richie Ashburn for most games played in center field.  However, his impact is not what he did on the field., rather it was what he refused to do off the field, namely accept employment terms that no longer seemed appropriate to him.

Before 1969, players were bound by the reserve clause in baseball, which made players beholden to the first team with whom they signed.  The had no say about their  futures once the contracts were signed.  Team management could make the decision to trade or release a player without so much as a "how do you do" to the athlete.

When the team wanted to trade him after 12 years to Philadelphia, Flood refused, saying,"I do not regard myself as a piece of property to be bought or sold."

Floods case went all the way to the Supreme Court, and due to the fact that Justice Powell had to recuse himself because of his ties to the Busch family, the owners of the Cardinals, he did not win.  However his action and the attention it garnered paved the way for change and ultimately led to free agency in baseball.

So what does this have to do with the gig economy?

What Flood wanted was control over his professional life.  After all that time in the league, he felt he was owed that. Various studies have shown that when professionals decide to start consulting independently it is for that same motive -- control over their life. MBO Partners  2016 State of Independence in America Report says that over 60% of consultants cited control of their time as a key factor in going out on their own. Similarly, the McKinsey Global Institute's  recent report entitled Independent Work: Choice Necessity and the Gig Economy noted that the independent workforce is larger than previously thought and that most participants choose independent work for its flexibility and autonomy.

What Flood did, by challenging the reserve clause, was to create a new notion of how employment relationships can work, a mental model that could be extrapolated to other businesses. Many people may only think about the free agency in sports, but it has its analogues in all sorts of other professional fields now as well.   In fact, in the aforementioned McKinsey report, they cite different categories of gig workers, and the high end consultants who pursue the independent work option by choice are dubbed in the study as free agents.  So thank you Curtis Flood for making your stand so that you could get the gig you wanted.  The gig economy is in your debt.

 

The Gig Economy – A Class Act…or not…

gig economy

Since I am working on my book, Thriving in the Gig Economy, I have been paying particular attention to the various Uber  employment lawsuits.  Even though  I am focusing on the high end of the gig economy where independent consultants sell their services and intellectual capital, the commodity end of Uber drivers can't be ignored, since it seems to garner all of the headlines.

This week a rather important ruling occurred that seemed to receive very little attention, which is surprising, since it suggests Uber's independent contractor lawsuits may lose class action status.

Last week,  a Ninth Circuit panel effectively reversed a decision from 2015 . A year ago, a judge had said that that the arbitration agreement in Uber's contract with its drivers was unenforceable.  The contract was designed to say if you have any dispute with us, Uber, you need to resolve it through arbitration rather than through the courts.  In this particular case, three drivers had sued Uber for saying they violated the Fair Credit Reporting Act (FCRA) when the company ran background checks on their driving records.  The FCRA, as all recruiting managers know, is the law that requires candidates for employment authorize any  background checks.   The decision said that Uber's arbitration clauses were fair, valid and enforceable.

By asserting that the arbitration clauses are valid in this case will have implications in the attempts of some drivers to create a class action.  As an outside observer, I applaud this.  Since I have the gig economy on the brain  and am an avid Uber customer, I have taken to quizzing all of my drivers about there thoughts on the lawsuit.  I wish I had thought to jot down the results, since my sample size is now in statistically valid territory.  That said, my recollections of the results are these:

  • Only one of about 25 wanted to be an employee
  • 2-3 did not know about the lawsuit at all
  • The majority did it part time to fit their schedule , as one said to me last Sunday, "why watch a football game when I can earn some extra cash for 2 hours?"
  • Most had other jobs including teacher, masseuss, contractors, programmers, hairdressers etc.
  • A large minority also worked for the other driving services

My very unscientific conclusion then is that it is a very diverse driver pool.  A key attribute of a class action lawsuit is that the participants in the class are largely similar.  I don't know that this is the case.  It is time for the independent contractor laws to be brought into the current century in a time when the gig economy of indepndent workers of all sorts is growing.  Potentially these lawsuits facing Uber will help make that happen. .

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