Uber CEO advocates for 'third way' to classify gig workers while fighting California labor lawsuit

  • Uber CEO Dara Khosrowshahi laid out his argument for a "third way" to classify gig workers in a New York Times op-ed published Monday.
  • The op-ed comes as Uber fights a lawsuit from the California attorney general that claims it denied its drivers benefits by falsely classifying them as contractors.
  • Khosrowshahi suggests companies that rely on gig work should be required by law to create benefits funds that can be used by workers for anything from health insurance to paid time off.

Uber CEO Dara Khosrowshahi laid out his argument for a "third way" to classify gig workers as he fights a lawsuit from the California attorney general that claims the company denied its drivers benefits by falsely classifying them as contractors.

In a New York Times op-ed published Monday, Khosrowshahi elaborated on his vision of a new labor construct which he had previously floated by President Donald Trump ahead of his signing of the CARES Act. Though the bill ultimately provided relief to gig workers along with others impacted by the pandemic, Khosrowshahi had urged Trump and Congress to consider updating labor laws more broadly to support gig workers who cherish the flexibility of contract work but also desire the protection of employee status.

The op-ed comes as Uber awaits a California judge's ruling on a preliminary injunction over its worker classification. California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego and San Francisco filed suit against Uber and its rival Lyft in May, alleging they broke the state's new law which aimed to reclassify gig workers as employees, rather than contractors. Uber, Lyft and other companies that rely on gig work have consistently opposed the law and have backed a ballot initiative seeking to roll back the requirement. 

In the op-ed, Khosrowshahi calls the classification of workers as contractors versus employees a "false choice." By requiring companies work within a binary system, he said, they take on "more uncertainty and risk" when they choose to provide more benefits to independent workers.

Instead, he suggests companies that rely on gig work to be required to create benefits funds that can be used by workers for anything from health insurance to paid time off. The amount of money workers can take out of the fund would be based on the number of hours of work they put in. Since all gig companies would have to contribute to the fund, workers would be able to accumulate benefits even if they switch between the apps they use to make money.

According to Khosrowshahi, Uber would have contributed $655 million to benefits funds last year if such a law had existed in all 50 states, though he does not specify the percent contribution he expects gig companies would be required to set aside. He estimates a driver in Colorado averaging more than 35 hours a week would have made about $1,350 in benefits last year, which he said would cover two weeks of paid time off or a median annual premium payment for a subsidized health insurance plan offered through an Uber partnership.

Khosrowshahi says gig workers should be allowed to choose which benefits they want. He said while policymakers believe health care would be most important to drivers, health care does not even rank in the top five benefits drivers say they want most when polled by Uber.

Gig companies should also be required to provide medical and disability coverage for when workers get hurt on the job, Khosrowshahi said, adding that they cannot currently offer such benefits "without risking their independent status under the law." New laws should also prevent companies from denying opportunities to independent workers on the basis of protected classifications like race and gender, he argued.

Khosrowshahi said Uber would be "more transparent about what drivers make and the realities of the work," starting with a new earnings estimator drivers can use to understand what they can expect to earn in their area. He also committed to surveying all active drivers in the U.S. about what is and isn't working and releasing the results publicly. Uber will also help every driver register to vote, he said.

"During this moment of crisis, I fundamentally believe platforms like Uber can fuel an economic recovery by quickly giving people flexible work to get back on their feet," Khosrowshahi  wrote. "But this opportunity will be lost if we ignore the obvious lessons of the pandemic and fail to ensure independent workers have a stronger safety net."

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