Uber admits company can afford labor protections for drivers

Dara Khosrowshahi, CEO of Uber reassured investors concerned about new European Union regulations in December, telling a group of bankers that his business could continue to thrive even under rules that would require it to hire drivers as employees.

“We can make any model work,” Khosrowshahi said when asked about potential EU legislation that would require Uber to designate drivers as employees or provide additional rights such as vacation and pension. .

Speaking by video during a ‘fireside chat’ on December 14 hosted by Swiss bank UBS, Khosrowshahi told investors that recent decisions in Spain and the UK have not seriously damaged the company. ‘business. In the past year, both countries have enacted rules requiring concert companies to offer more protections to drivers.

“Business in Spain grew almost 40% year-on-year, and Spain’s EBITDA margins are also very close to our overall long-term margins,” noted Khosrowshahi, referring to the cash flow of the business before taxes and interest.

“There is a lot of demand for our technology, our service, our brand, our safety, our reliability. So any model can work economically for us, ”he added.

The nonchalant words of the CEO of Uber seem to contradict the position of the company in the United States.

The classification of the drivers of the concert economy has become one of the most controversial issues in the modern labor industry in the United States, where an estimated 59 million concert workers work without benefits, guaranteed hours, or union protection. . Uber has been a leading force in preserving this concert structure, pouring more than $ 190 million into a California vote measure just to overturn rules that granted most drivers employee status. The regulations, passed by the California State Assembly in 2019 as Bill 5, or AB 5, were intended to make these workers eligible for minimum wage, union membership, and health care benefits. health.

In 2020, as concert companies fought the law in California courts, Khosrowshahi raised the possibility of temporarily suspending services statewide. The law has now been partially repealed, keeping the delivery drivers and the delivery drivers it was designed to convert classified as independent contractors.

Uber has focused on maintaining this classification in all of the markets in which it operates. The company is currently spending millions of dollars on advocacy to enact independent contractor status laws for drivers in Illinois, Massachusetts, New York and other states that have considered work-from-home reform. .

Employer costs for employee benefits tend to be higher in the US than in Europe, given the US system of employer-provided health coverage. In many European states, the government provides health benefits and directly limits health care costs.

But the political environment is different across the Atlantic in many other respects. Despite a streak of lobbying victories in the United States around the issue of driver classification, the tide has recently turned in Europe, where courts and elected officials are more aligned with the interests of workers.

Last August, Spain enacted the “Riders Law,” which requires food delivery companies to classify drivers as employees. Uber responded by saying that such rules “directly harm thousands of couriers who use food delivery apps for much-needed flexible earning opportunities and have made it clear that they don’t want to be classified as employees.”

As in the United States, independent contractors in Spain do not enjoy a number of employer-provided benefits, such as paid time off, and are excluded from joining unions or collective agreements. Under the new law, Just Eat, the largest food delivery platform for the concert economy in Europe, has signed a contract with the Spanish unions CCOO and UGT for a higher hourly rate, extended vacations , a maximum working day of nine hours and other protections. Uber Eats, however, has responded by hiring a fleet of drivers through third-party employment agencies, an arrangement that helps the California-based company avoid direct management of its drivers while still complying with Spanish labor laws.

In the UK, courts ruled last year that Uber should classify 70,000 drivers as ‘workers’. The Worker Classification, a technical distinction between an independent contractor or an employee under UK labor law, allows drivers to receive minimum wages, vacation and access to a pension scheme.

Following the UK ruling, Khosrowshahi published an opinion piece pledging to respect the ruling and to treat drivers like workers. “Following the UK Supreme Court ruling last month, we could have continued to challenge drivers’ rights to any of these protections in court. Instead, we decided to turn the page. From today Uber drivers in UK will be treated like workers, ”Khosrowshahi wrote.

By revealing Uber’s continued business success in Spain despite tighter protections for workers, last month’s appeal to investors belies the company’s plea.

Uber’s management losing streak could lead to a much bigger setback, as the EU now plans to pass federation-wide Spain’s concert economy law. The European Trade Union Confederation said the EU “must” follow Spain’s lead and pass similar law, a push that is developing in the European Parliament.

While admitting defeat in the UK, Uber continued to oppose Spain’s rider law and employed lobbyists in Brussels to prevent a similar law from being passed across the EU. By revealing Uber’s continued business success in Spain despite tighter protections for workers, last month’s appeal to investors belies the company’s plea.

When asked to comment on Khosrowshahi’s apparent turnaround, Uber stressed that it focused on treating drivers as independent contractors.

“Poll after poll, drivers overwhelmingly want to remain independent contractors and work where and when they want, but they also deserve more protections,” Uber spokesman Noah Edwardsen wrote in an email to The Intercept.

“In Europe, Accenture, Good Work, Oxford Economics and the latest studies from Copenhagen Economics (based on a survey of 16,000 European couriers) as well as Compass Lexecon clearly indicate that the main reason people access work on the platform -form is the flexibility to earn money while balancing other commitments, and would prefer to remain independent. That’s why we believe the best answer is to offer new benefits, while ensuring that drivers and couriers retain the flexibility they value, ”continued Edwardsen.

But labor rights advocates see a company that is simply forced to obey the rules and will stop at nothing to maximize profits for executives and shareholders.

“Uber has always said it couldn’t adapt to an employee model that offered its drivers basic legal protections like minimum wages and the right to form a union,” wrote Steve Smith, spokesperson. of the California Labor Federation, in a statement. on interception.

“Dara Khosrowshahi’s recognition that the company can – and has – adapted to treat workers like employees in other countries is a slap in the face for every driver in the United States that Uber continues to operate,” said added Smith. “It comes down to the sheer greed of the wealthy executives who will do everything in their power to prevent workers from having a share of the profits created by their labor.”

Edward K. Thompson