Uber’s major settlement last month illustrates the pressing need for regulatory action in the emerging “gig economy.” And a recent speech by Senator Elizabeth Warren last week shows us the direction that regulatory action should take.
Cases brought by Uber drivers to district courts in California and Massachusetts throughout the past year have shed light on the problems that accompany the flexibility and autonomy of working in the on-demand economy. Many companies like Uber have been challenged on whether drivers are legally classified as employees of the company or as 1099 independent contractors.
This classification has far-reaching implications, since contractors are not covered by basic employee protections like minimum wage, workers compensation, health and safety rules, and collective bargaining. In particular, the ability to bring class action suits against an employer and bargain as a group has been completely eliminated by mandatory arbitration clauses in Uber drivers’ contracts. Read more