Unions are taking ride-hailing company Uber to court in an effort to force it to recognise its drivers as employees. It's a case that could have implications for the entire gig economy. By Peter Griffin.
If you are an Uber driver, the early hours of a Saturday and Sunday morning can be both the best and worst times to be on Auckland's roads.
When the city's residents aren't confined to their homes, as a result of the pandemic lockdown restrictions, many of them are drinking at bars, nightclubs and parties and thinking about heading home.
Jaspal Dhawan, 35, behind the wheel of his purple Toyota Prius, is waiting for them. Starting at about 6pm, he says goodbye to his daughter and wife, leaves his Mt Albert flat and hits the road.
He'll drive through to 6am the following morning, ferrying people around the city at the command of the Uber app displayed on his glowing smartphone screen. On a busy night, Dhawan will complete dozens of short trips. If there's a big event on or the weather is bad, he'll take advantage of Uber's surge pricing, which can double or quadruple the price of a ride.
"I drive all night, maybe 400km," says Dhawan, a trained automotive engineer from Punjab, one of the Indian states bordering Pakistan. He arrived in New Zealand in 2017 after a stint in Australia and hopes to get certified here and open his own mechanic's workshop.
The Uber job, he estimates, averages out at about $15 an hour once he deducts his costs, including fuel, insurance, taxes and car maintenance. Uber, the San Francisco-based company that's the largest of a growing roster of ride-sharing firms operating here, including Ola, DiDi and Zoomy, takes a 25-28 per cent cut of drivers' gross earnings.
"It's not even minimum wage," says Dhawan. "But if you want to put bread and butter on your table and look after your family, you have to do it. You have to go beyond your limits."
The pay can be woeful, but Dhawan is resigned to that fact. He bristles, however, at the way he and his fellow drivers are treated in the early hours when the alcohol has been flowing and the mood can quickly turn dark.
"As drivers, we are working after midnight and drunk people are jumping in the car," he says.
"If you say, 'Can you please remove your feet from my centre console', they might give you a bad rating.
"If you say, 'Don't open alcohol in my car', or 'Don't smoke in my car', they may give you a bad rating. They can make a complaint against you."
Central to the Uber software platform, which matches riders with nearby drivers, processes payments and acts as a navigation aid, is a star rating system for each driver and passenger. Drivers are rated on their past 500 trips where passengers left a rating. The average rating is displayed in each driver's app. Dhawan says most drivers obsessively check it during the day.
The aim is for a perfect five-star rating. If drivers slip lower, they risk losing benefits, such as the ability to see the intended destination of the rider they have been sent to pick up. Drivers with consistently low star ratings are deactivated. But there's another way to be ejected from the Uber world.
In March, an Uber driver who is a friend of Dhawan's was dropped by Uber after nearly five years for alleged "verbally abusive behaviour and sexually suggestive remarks" towards a passenger.
"It was totally heartbreaking," the driver, who went by the moniker Toby to protect his identity, told Newshub at the time.
"I know I didn't say anything," added Toby. "Maybe they took it in the wrong way, I don't know … Why would I touch somebody or abuse somebody or swear at somebody? For what reason? There's no point."
Toby claims he had no opportunity to defend himself against the complaint and wasn't told when the incident had taken place, which would have allowed him to retrieve the audio from the camera mounted in his car and disprove the allegations.
"He's been deactivated from Uber, frozen out of his account," says Dhawan, who feels deeply aggrieved that drivers have to put up with false allegations. Other drivers he knows have loaded up on debt to buy a car and, as a result of their poor English or a lack of qualifications, have few other employment options. Deactivation can have devastating consequences.
"Drivers feel emotionally blackmailed," Dhawan says. "It's like a slave system."
Afraid to put a foot wrong, he says, drivers are tolerating dangerous behaviour, including passengers refusing to wear a mask while riding in the car – a legal requirement under Covid restrictions – for fear of attracting false complaints or low star ratings.
lack of due process
If Dhawan and the estimated 7000 drivers registered with Uber in Auckland, Hamilton, Tauranga, Wellington, Christchurch, Queenstown and Dunedin were classified as Uber employees, they'd have the legal right to due process, the opportunity to defend themselves.
But Uber treats its drivers as contractors, the relationship governed by a "service agreement" that can be terminated with little notice if the terms are breached. It's a situation the unions that represent transport workers, First Union and E tū, are trying to change.
In July, they jointly filed a claim in the Employment Court, on behalf of seven Uber drivers, asking the court to declare drivers as employees and therefore entitled to the minimum wage of $20 per hour, leave entitlements and the right to take a personal grievance.
"Gig workers, such as those employed by Uber, are at the forefront of a new form of exploitation where management is replaced by an algorithm built into an app, with its ability to deactivate workers without reason and take away their income," E tū spokesperson Yvette Taylor said at the time.
Uber declined to outline to the Listener its process for investigating complaints against drivers. It also did not directly answer most of the questions put to it about the Employment Court case or its conditions for drivers.
"We are deeply committed to the safety of drivers using the Uber app who have access to many of the same safety, transparency and accountability features that riders do," an Uber spokesperson wrote in a statement.
Union organiser Anita Rosentreter, who is coordinating the action against Uber on behalf of First Union, says a wide range of businesses, from plumbing to courier companies, are "misclassifying" workers as contractors rather than employees to avoid the costs associated with having an employee workforce.
"It's become a business model in its own right," says Rosentreter. "These companies are undermining very hard-fought-for terms and conditions for workers across the board. It impacts not just Uber drivers but all workers in New Zealand."
The unions are hoping their case will be heard before the end of the year. They will outline the way the Uber app controls every aspect of how a driver works, from setting the trip rate to what rides they are assigned to. There's no room for negotiation.
It's far from the first lawsuit of its kind against Uber. From Australia to the United States, France to the United Kingdom, unions and drivers have been locked in legal action with the tech company, which despite its global reach has racked up billions of dollars of losses to date.
The UK's Supreme Court in February threw out Uber's appeal against an earlier employment tribunal decision that judged the UK's more than 70,000 Uber drivers to be "workers", the third category of employment in the country. (The other categories are employees and contractors.)
"Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill," the Supreme Court found.
"The drivers were rightly found to be 'workers'," it added.
The court also upheld the tribunal's ruling that Uber drivers should be considered as working for the company all the while they are logged into the Uber app, driving to and from pickups, rather than solely for the time they are carrying passengers. That could have massive implications for Uber's business model.
But in the UK, at least, with no other option but to quit the market, Uber has agreed to obey the law. It now grants drivers a limited set of rights, including the national minimum wage and paid leave. It has even done a deal with the major trade union, GMB Union, to allow it to represent Uber drivers around the country.
In March, Uber's chief executive, Dara Khosrowshahi, departed from the company's prevailing narrative, which held that the platform gave drivers independence and the flexibility to set their own hours.
"Our thinking on this issue has evolved over time, and I will be the first to admit that we've struggled to identify solutions that work for Uber and for those who earn on our platform," he wrote in the Evening Standard.
"It is increasingly clear to us that flexibility alone is insufficient, and that it should not come at the expense of social protections."
If Uber has seen the light in the UK, isn't it likely to do the same here?
"I don't buy it," says Rosentreter, who has participated in pay-negotiation rounds for manufacturing and aviation workers. "They wouldn't fight it to the highest court if that was the case."
Indeed, Uber, its arch-rival Lyft and delivery company DoorDash are estimated to have spent US$200 million between them in legal fees and lobbying efforts against union demands for drivers' rights in California, where gig-economy platforms such as Airbnb and dog-walking service Wag! were born.
A 2019 law passed in Sacramento by California's legislators required Uber to finally treat drivers as employees. But that was overturned late last year with Proposition 22, a new legislative ballot that passed with 58 per cent of the vote and gave gig-economy companies the right to continue treating workers as independent contractors.
In August, a Californian court ruled that ballot result to be unconstitutional. In the meantime, Uber has talked up its "third way", a classification of drivers that would give them some rights, similar to the outcome in the UK.
The unions are wary of that happening here, which would probably require a law change.
"If that category has inferior rights and conditions associated with it, then that's detrimental to those workers," says Rosentreter.
It may also deny workers the right to unionise, which would cut the labour unions out of the picture. In Australia, the Fair Work Commission, in considering unfair-dismissal cases lodged by deactivated drivers, has found that no employment relationship existed between drivers and Uber, although litigation against Uber continues.
Our own Employment Court came to a similar conclusion in January, when it considered the unfair-dismissal case of Auckland Uber driver Atapattu Arachchige, who was deactivated after four years of driving for the company when a passenger complained about him. Like "Toby", he was given no notice of the agreement ending and no opportunity to defend himself.
The court ruled that Arachchige's relationship with Uber didn't constitute an employment agreement and that he had the ability to choose whether to work at peak times and decide what vehicle, phone and insurance provider he used. In the court's eyes, he was a contractor.
Arachchige didn't appeal the decision. "He just wanted to get on with his life," says Rosentreter. "It's a shame, because the issue needs to be examined in further detail, which is why we are taking this case."
Clarifying the law
Peter Kiely, a senior partner of Kiely Thompson Caisley and one of this country's most experienced employment lawyers, believes the Uber drivers "have their work cut out for them" to argue that they are employees under the existing law.
One of the key factors, says Kiely, is that Uber drivers don't have to exclusively work for Uber. Many of them take jobs for Ola and Zoomy, even running two smartphones on their dashboard and switching between platforms constantly during a shift behind the wheel.
"It's not like being a courier driver, where you've got the company name on the van. Uber drivers can work for a competitor. They can choose their own hours. Those are not factors of an employee," says Kiely.
First Union has mounted a similar battle on behalf of courier drivers following a test case last year, involving Parcel Express driver Mike Leota who was successful in his bid for the Employment Court to deem him an employee of the courier company.
Rosentreter says that the following day, a large courier company began issuing employment contracts to its drivers who it previously dealt with as contractors, but that the majority of operators had carried on as normal.
A test case doesn't ensure employers will change their ways. Although future cases involving Uber drivers will look at the Arachchige decision, the UK Supreme Court outcome could prove influential here.
"I'd argue that the UK Supreme Court decision is highly persuasive," says Kiely. "Even a lawsuit you don't succeed in can be useful. It's not a matter of winning or losing. Getting clarification of what the law is in relation to this set of facts is of value."
The upcoming case against Uber may even be overtaken by larger forces. The Ministry of Business, Innovation & Employment (MBIE) last year formed a working group to look at conditions for what it considers "vulnerable contractors".
After gathering public submissions, it is now coming up with recommendations. But MBIE noted there was "widespread opposition" to creating a new category of workers with limited rights, as exists in the UK.
Between the landmark "fair pay agreements", which will introduce a new system for collective bargaining across industries, clarification of the Holidays Act and legislation that would allow collective bargaining in the screen industry, the Labour Government has a lot on its plate when it comes to labour reform. But a major change to the law is more likely now than ever.
Kiely counts himself as an Uber customer. "They are cheap and the app is brilliant," he says. "But as a consumer, I would be prepared to pay a little bit more if it gave drivers holiday pay, sick pay and a minimum wage."
There is, of course, always the option for passengers to voluntarily tip drivers. Uber resisted including a tipping option in its app for many years, but finally introduced the feature in the US in 2017, following a public campaign by New York drivers.
However, it would appear that tipping is no solution to low wages. Although tipping is common in the US, a study of 40 million Uber trips carried out by the University of Chicago in 2019 found only 16 per cent of rides were tipped. Nearly 60 per cent of passengers never tipped and only 1 per cent always tipped.
The feature was introduced to the New Zealand app in 2019. A spokesperson for Uber here said the company did not have any information about New Zealand's rate of tipping, but it seems safe to assume that it's minimal.
Julian Ang drove for Uber for two years, from 2016 to 2018, as he tried to save money to fund a couple of small businesses he was trying to get off the ground in Wellington.
"I didn't want to go through my life savings," says Ang, who, despite no longer driving for Uber, has joined the unions' case as a plaintiff. When he started the work, Uber was advertising that drivers could make $35 an hour. But Ang says that eroded as more drivers joined the network and Uber's commission increased.
Ang tried to avoid the late-night shifts for safety reasons, and because he grew tired of receiving racial abuse. But he observed another worrying factor: driver fatigue. Ride-share drivers are required by law to keep logbooks and are limited to working 13 hours at a time, with a break of at least 30 minutes after five and a half hours of work time.
Uber says drivers are automatically logged off the app for 10 consecutive hours after 13 cumulative hours spent online. But Ang maintains some drivers log in and out of the three main ride-sharing apps so they can extend their earning hours across the platforms, putting themselves and passengers at risk in the process as they drive while fatigued.
"If they had a choice, they would choose not to do this work," Ang says. "The pay is low, they get abused, they have no job security."
Not every Uber driver is doing the work because they have no other choice to make ends meet. Wellington driver Sarah – the Listener has agreed to change her name to protect her identity – could easily be earning $150 an hour as a software architect.
"I found myself getting extremely disillusioned with the government, where I was doing a lot of software projects," she says. "I'm sociable, I like to drive. I wanted something that I could turn off and go home afterwards and work when I wanted to."
Sarah's background in software gives her a unique insight into the Uber app's design. Every morning, she opens her app to see a map with splotches of colour across it, pale blue through to intense red. The red points to surge-pricing hotspots and act as a beacon for drivers looking to boost their earnings.
"I found, time after time, I would be in this hotspot where I was supposedly going to get a huge fare," says Sarah. "But there was no surge fare."
Over time, she began to feel manipulated by Uber's system of rewards and punishments. Drivers who maintain a high frequency of rides, a high star rating and rarely cancel a passenger's ride can progress through tiers to eventually reach diamond status. "I got sucked into it; I went for the platinum status," Sarah says.
That status tier is supposed to include a priority airport rematching, giving Sarah priority to pick up a rider at the airport following a drop off there. Airport rides tend to result in larger fares. "I found, in the end, it wasn't worth having. There's a big list of rewards, but they aren't very useful," she says. "Uber is going to do whatever it needs to do to make money. To make money, they need us to behave predictably. They need a short wait for a ride and a reliable driver who is not prone to cancelling."
Mathematical algorithms, which are a mystery to Uber drivers, balance supply and demand from computer servers in San Francisco. "It's very slick," says Sarah. "But I don't think most passengers realise just how blatantly exploited the people driving them are."
Ola, the India-based ride-sharing company that competes with Uber here, takes a lower commission on fares, just 18-20 per cent. Ride-share company Zoomy, owned by a group of local taxi companies, takes a 15 per cent cut.
"There are minor differences," says Rosentreter. "Zoomy takes less money, but that's a strategic decision; they are trying to lure drivers on to the platform."
Uber entered the market taking a much lower commission and has ratcheted up its cut as its dominance has grown.
"They basically march into a new market and try to kill off any businesses that might compete with them," she says.
In other countries, such as Singapore and China, Uber has responded to regulatory headwinds by winding down its operation, but buying a stake in its main local competitor. It owns 12 per cent of DiDi.
Rosentreter says that's a scenario that could play out here. Uber may be a tech-platform operator, but in her eyes, it's no different from any big company she has faced in collective-bargaining negotiations on behalf of workers. "When I first started union organising, the employer would say, 'If you push us too hard, we'll just offshore the manufacturing to China. There'll be redundancies.'
"It's the same in horticulture. If you push too hard, they say, 'We'll automate your job.'
"In reality, if they wanted to do it, they'd have done it already. Uber isn't really any different."
Jaspal Dhawan agrees with Uber to some extent. The flexibility to set his own hours, so he can spend time with his daughter, is the real appeal of driving for Uber. But he doesn't see a long-term future in the ride-sharing business, unless Uber changes, voluntarily or at the behest of the courts. "If Uber's attitude stays the same, I'll definitely quit."