- Peer-to-peer transportation pioneer Uber Technologies has found its global brand increasingly embattled during the COVID-19 pandemic amid declining ridership and increasing regulatory hurdles to its independent contractor payment model
- Seattle recently passed legislation imposing a sliding scale payment model on such companies to ensure drivers receive the equivalent of minimum wage, even if they are spending some down time between ride services.
- The law is based on a New York City decision imposed in 2018, which has shored up drivers’ sense of security but has reduced the number of drivers in use, increasing fare costs and wait times
- Uber is also battling a law in California that would require the company to classify its drivers as employees, pinning its hopes on a November election referendum that could overturn the law
- Uber gained a victory in London, where its business license had been suspended until officials ruled Sept. 28 that the company is performing in a responsible manner
Seattle has joined the list of municipalities requiring multinational peer transportation company Uber Technologies (NYSE: UBER) to pay independent contractor-status “gig” drivers in a way that more closely resembles what a company would pay its committed stable of employees.
The developments in the state of Washington underscore the transformation of the U.S. economy and its impact worldwide as companies such as Uber and its chief competitor, Lyft, seek to advance a brand built on worker freedoms while governments raise alarms about the need for worker rights and equal expectations of civic responsibility.
Seattle’s law follows the example set by New York City in 2018, requiring that ride-hail drivers receive minimum compensation for each trip on a sliding scale that accounts for how much time per hour Uber drivers have passengers in their cars in order to ensure the drivers are paid just under $30 before expenses (https://nnw.fm/p1OXq).
The law, which will take effect in January, seeks to establish a standard that would make ride-share driver pay roughly equivalent to the $16.39 per hour minimum wage once work-related expenses are paid out of drivers’ own pockets, but also requires Uber and similarly situated companies to pay for personal protective equipment the drivers can use during the ongoing COVID-19 pandemic and to let drivers keep all tips, which do not count toward the minimum pay standard.
The sliding scale accounts for the amount of down time per hour in which drivers are not engaged with passengers. An expected result of the legislation, as seen already in New York, is that the companies will hire fewer drivers and raise passenger rates in order to sustain those drivers who are on the road working, rather than spreading out work between a high number of drivers in order to provide faster response times.
The drivers have expressed divided sentiments over the laws. Members of a Seattle drivers union support the new measures, for example, while members of an organization entitled Drive Forward oppose the changes, fearing they might actually earn less pay or receive less work as a result.
The changes are occurring during a business-altering pandemic in which ridership has plunged independently of the driver pay controversies, as fears of COVID-19 infection have led large numbers of people to shun services with uncertain risks of exposure in proximity to strangers.
At one point during the summer, Uber reported ride-hailing business had plummeted 73 percent with a nearly $2 billion loss, leading the company to shift its attention to other services such as food and package deliveries (https://nnw.fm/MuKoX). However, there have been signs in recent weeks that ridership is beginning to rebound slowly as people become accustomed to pandemic-related inconveniences (https://nnw.fm/TJCC5).
And the company is aggressively battling a new statewide law in California that would require ride-share businesses to classify their independent contractors as employees because of concerns similar to those addressed by New York City’s and Seattle’s laws. Uber and Lyft are urging voters to reject the law’s strictures in a referendum that will appear on the ballot in November (https://nnw.fm/MG2In).
Uber recently scored a victory in London, where it has spent months appealing to have its business license restored after the world-class city’s transit regulator chose not to renew it. Uber was granted an 18-month extension Sept. 28 after an official declared the company’s operation is “fit and proper” (https://nnw.fm/hZNEU).
For more information, visit the company’s website at www.Uber.com.
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