The case was supposed to be the thing that finally put the almighty Uber back on its heels. Since its founding in 2009, the ride-hailing giant has seemed to enjoy nothing but momentum–first San Francisco, then the world. But a class-action lawsuit brought in California demanding that Uber drivers be classified as employees, not just independent contractors, threatened to torpedo the company’s business model. Real employees, after all, cost a lot more.
Well, Uber doesn’t have to worry–at least for now. The company has reached a settlement in the suit, as well as another brought in Massachusetts, by promising to pay drivers up to $100 million in exchange for retaining its right to employ them as contractors. It’s a lot of money, sure, but with billions in financing, it’s a modest price for Uber to pay to protect its business.
The thing is, the settlement doesn’t really settle anything.
The so-called on-demand economy may still represent a very small segment of total employment in the US. But its proponents understandably see the Uber-ization of labor as the future. Optimized for mobile, both on the supply and demand sides of the exchange, summoning work via app as needed is exactly the kind of tech-enabled efficiency that the past 200 years of capitalism tell us will only spread. And as it does, the tension over how the law should view this new way of allocating work will only grow.
By settling these suits, Uber has forestalled anything like a precedent being set by a federal judge. Even had Uber faced trial, it’s not clear whether a verdict would have brought a final answer to the question of whether the company–or any one like it–had a legal obligation to classify its workers as employees. But it probably would have forced the issue.
Instead, the country, its workforce, and Uber itself are back to the same old uncertainty. Settling with drivers now may tamp down some of the disaffection that led to the suit in the first place. Some may reportedly receive as much as $8,000 from the settlement, and Uber has mostly agreed not to simply kick drivers off the platform with no warning or explanation. They may even seek tips, according to The Wall Street Journal, a practice Uber CEO Travis Kalanick has long resisted. But the settlement doesn’t settle the question of who these drivers are under the law, and that’s a question that needs settling.
Discontent driven by economic insecurity has become the defining theme of the current presidential election. Clearly the US economy isn’t working for many. Many of these same people are likely to be tempted by the promises of flexibility, control, and potential income that companies like Uber use to recruit new workers. And for many, it’s great this option exists. Yet until the law catches up with these new jobs, none of these on-demand workers will know exactly what kinds of chances they’re taking, and what their rights or options really are.
In an ideal world, lawmakers would make sure that they did know by legislating for the 21st century, rather than forcing employers and workers to muddle through by applying old laws that may not fit new models. But addressing the consequences of technological change in an informed, nuanced way is not exactly in Congress’ skill set these days. Rather, we’re likely to see more lawsuits, disparate regulations concocted by states and cities, and more discontent. It’s all pretty unsettling.