Not all employment relationships are created equal. Nearly every legal system in the world provides multiple frameworks for individuals and businesses to structure their economic relations, each governed by tailored regulations and safeguards. Different options generally entail different tradeoffs between flexibility and protection. In the United States, for example, individuals working as “employees” benefit from crucial protections like the federal minimum wage and anti-discrimination laws but must follow a schedule set by their employer and obey a supervisor on the job. “Independent contractors,” on the other hand, are generally excluded from such protections but enjoy greater freedom to decide how to do their work and who to do it for.
Classifying particular relationships has always been a murky and fact-specific exercise, but gig-economy firms, which have sought to maintain the control associated with “employee” status while avoiding its attendant costs, have posed distinct challenges. For the past decade, gig workers across the globe have fought their employers’ efforts to shunt them into their countries’ least protected legal classifications. Last month, they notched an important victory when the U.K. Supreme Court held in Uber BV v. Aslam that Uber drivers were properly classified as “workers”—an intermediate status in between employees and “self-employed” individuals—under English law. Aslam presents an occasion to compare the intermediate regime that will now govern those drivers with the one created in California last fall through the passage of the Proposition 22 (Prop. 22) ballot initiative, which cemented app-based drivers’ status as contractors while also affording them limited protections. In so doing, the decision highlights the stakes of the ongoing battles over whether and how to define a “third way” of classifying gig workers.
U.K. law recognizes three types of employment relationships. At one end of the spectrum, “employees” work under bona fide employment contracts and are roughly analogous to employees in the American context. At the other end, “self-employed” individuals are “in business for themselves, responsible for the success or failure of their business, and [able to] to make a loss or a profit,” much like American “independent contractors.” But U.K. law also recognizes the intermediate category of “workers,” individuals who are self-employed yet work as an integrated part of someone else’s business. While some statutory rights, such as protection from unfair discharges, extend only to employees, other ones, like the minimum wage and annual paid leave, are guaranteed to both employees and workers. Seeking to avoid these costs, Uber maintained for years that its U.K. drivers were “self-employed” and drafted its contracts with them with an eye toward triggering that classification—including, crucially, by describing the company’s role as that of an agent tasked only with facilitating bilateral contracts between riders and supposedly independent drivers.
In 2016, drivers James Farrar and Yaseen Aslam sued Uber in a London employment tribunal, arguing that they were “workers” under the law and that the company had denied them the rights and wages associated with that status. The drivers won. In a biting opinion describing Uber’s portrayal of its driver relationships as “faintly ridiculous” and “pure fiction,” the tribunal held that all 40,000 drivers then employed by Uber in the U.K. were indeed “workers.” The tribunal also concluded that the proper calculation of the drivers’ hourly wages should include the time spent waiting for rides, not solely the time spent completing them. Uber then lost two subsequent appeals, and the case reached the U.K. Supreme Court in the summer of 2020.
The Supreme Court affirmed. Writing for a unanimous Court, Lord Leggatt first explained that the drivers’ contracts, which Uber alone drafted and imposed on the drivers as a condition of their employment, could not decide the question of their status. Because the primary purpose of the laws creating the “worker” category had been to protect individuals with little power to influence the terms of their employment, to give controlling weight to Uber’s own formulation of those terms would be to “reinstate the mischief which the legislation was enacted to prevent.” Instead, the proper approach was to examine the relationship’s economic reality and determine whether the statute defining “workers,” construed in light of its broader purpose, was intended to apply to that reality. That purpose, the Court reiterated, was to extend protection to individuals made vulnerable to exploitation on the job by their “subordination to and dependence upon another person in relation to the work done.” Reasoning that the “touchstone” of subordination and dependence is the “degree of control exercised by the putative employer,” the Court examined Uber’s power to set rates, dictate contractual terms, monitor drivers’ performance, mandate routes, and restrict communication with passengers, ultimately finding that the company exercises “tight[]” control over its drivers’ work and that drivers can only realistically “improve their economic position” by working longer hours on Uber’s terms. Taken together, Lord Leggatt concluded, these findings provided the employment tribunal with “ample basis” to classify the drivers as “workers.”
Although Uber has downplayed the decision’s significance, Aslam is a major victory for gig workers, who now have a Court-recognized entitlement to the minimum wage, paid holiday leave, on-the-job breaks, and other important rights. But it is also important to emphasize that the drivers did not argue, and Aslam did not hold, that they fall into the category of “employees,” which remains reserved for the most regular and secure work structures. Instead, their “worker” status is a hybrid classification with elements of both independent contracting, such as a right to refuse certain rides, and traditional employment—for example, an obligation to follow Uber’s instructions about how to interact with passengers. At first glance, this status would appear to be precisely the sort of “third way” classification that Uber itself has advocated as an improvement over the employee-contractor binary.
So why did Uber fight all the way to the U.K. Supreme Court to keep its drivers out of the “worker” category? An answer might be found in the contours of Prop. 22, which the company co-drafted with its industry peer Lyft. That bill, and Uber’s support for it, reveal a markedly different vision for the future of gig work. Prop. 22’s principal effect was to exempt rideshare companies from AB5, a 2019 California law that made it much more difficult for employers like Uber to maintain boss-like control over their employees while deeming them independent contractors. In a minor concession to labor advocates, the ballot initiative also provided for certain baseline benefits like a minimum wage, modest healthcare subsidies, and limited accident insurance. Because these specific provisions apply only to app-based drivers, Prop. 22 can be seen as creating an intermediate employment status unique to them.
But the protections associated with this status, which Uber and other gig companies designed and then backed with over $200 million of campaign spending, pale in comparison to the rights guaranteed by the United Kingdom’s “worker” classification, whose statutory foundation pre-dates the gig economy’s rise. Unlike their U.K. counterparts, drivers working under Prop. 22 will have their minimum wages calculated on a denominator of “engaged” time, rather than total time on the app, and will be placed beyond the reach of anti-discrimination laws, occupational safety regulations, and unemployment benefits. Perhaps most importantly, Prop. 22 prevents California’s legislature from altering its provisions with anything less than a seven-eighths majority of both chambers, practically guaranteeing that lawmakers will be unable to grant drivers the right to form unions—a right afforded to all working people across the pond. Not surprisingly, evidence is already emerging that this new status is lowering labor standards while failing to deliver much in the way of countervailing benefits to drivers.
Prop. 22 is only the beginning. Just days after the initiative passed in California, gig company executives announced their plans to replicate the legislation across the country. With these plans already in motion and labor leaders showing willingness to negotiate for modest improvements rather than risk losing another all-out fight, the proliferation of intermediate statuses seems practically inevitable. A look at Aslam and Prop. 22 offers a reminder of the tremendous stakes in the battles to shape these classifications. Depending on which components they borrow from the traditional “employee” and “contractor” poles, these new categories can guarantee workers the ingredients of a dignified life while allowing them a greater degree of flexibility. Alternatively, they can serve as tools for gig employers like Uber to have their cake and eat it too—to evade hard-won worker protections without relinquishing the power to control the how, what, when, and where of their employees’ labor.