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4th  Conference  of  the  Regulating  for  Decent  Work  Network  
International  Labour  Office  |  Geneva,  Switzerland  |  8-­10  July  2015  
  
Commoditized  Workers  
The Rising of On-Demand Work
a Case Study Research on a Set of Online Platforms and Apps
  
Antonio  Aloisi,  Bocconi  University  
Agenda  
  
n  Sharing  is  the  new  renting
n  The  matching  between  labour  
demand  and  supply    
n  Causes of the on-going paradigm
shift
n  From ownership to membership
n  Crowd-­Work  
n  “Employing humans-as-a-service”
n  Reputation and internal ranking
n  Insecurity, the price for flexibility  
n  How  to  dismantle  an  atomized  
market    
n  Professionalization
n  “Contingent handyman”   
1.  Amazon  Mechanical  Turk  
2.  Uber  
n  Conclusions  
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All  we  need  is  sharing
n  These schemes may enlarge opportunities for
people willing to find a job or to top up their salaries
n  These platforms may also be used to circumvent
employment regulation, by operating
informally in traditionally regulated markets
n  Companies are skyrocketing their profits
thanks to the use of new technologies that allow
cutting transaction costs by outsourcing
n  Global trend towards the decentralization of structures and facilities
as well as the creation of dense and dispersed production networks:
n  “sharing”  assets  so  affordable  and  accessible.  
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trend towards
globalization   
enabling role of
technologies  
the spread of
broadband  
ubiquitous
communications  
user-friendly
software and
interfaces   
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From  ownership  to  membership    
n  “Invisible infrastructure” connects supply and demand of services
and facilitate interaction between individuals and firms
n  «Coming  up  with  asolid  definition  of  the  sharing  economy  that  reflects  common  usage  is  nearly  impossible.  There  is  great  diversity  among  
activities  as  well  as  baffling  boundaries  drawn  by  participants.  TaskRabbit,  an  “errands”  site,  is  often  included,  but  Mechanical  Turk  
(Amazon’s  online  labor  market)  could  not.  Airbnb  is  practically  synonymous  with  the  sharing  economy,  but  traditional  bed  and  breakfasts  
are  left  out.  Lyft,  a  ride  service  company,  claims  to  be  in,  but  Uber  does  not.  
n  When  I  posed  these  questions  to  a  few  sharing  innovators,  they  were  pragmatic,  rather  than  analytical»    
[Juliet Schor, Debating the Sharing Economy, 2014]
n  Benefits:
n  UberX fees are, at least in principle, competitive with those of conventional taxi cooperatives,
n  Airbnb landlords provide comfortable and low-cost housing solutions if compared to those
offered by big hotel chains.
n  “Routine parts of knowledge work can be parcelled out to individuals”
à it is like technology had “exploit[ed] the knowledge of enthusiasts”
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Social  implications    
n  Facing a digital version of Taylorism, i.e.the efficient exploitation
(or expropriation) of work at the detriment of education and skill
development of workers
n  Websites like TaskRabbit,Elance,Lift,Handy (“commodities market” vs
“knowledge economy”) threaten to dismantle traditional labour mkts
as they do not seem to ensure a fair protection of workers’ rights
n  This new configuration implies wages fixed by
a dynamic calculation of supply and demand, and every
worker’s act constantly traced, appraised and
“subject to the sometimes harsh light of customer satisfaction”
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“Employing  humans-­as-­a-­service”    
n  According to Alek Felstiner, “crowdworking”:
n  “the act of taking a job traditionally performed by a designated agent
(usually an employee) and outsourcing it to an undefined,
generally large group of people in the form of an open call”
n  These tools have the potential to “chop up” a broad array
of traditional jobs into detached tasks that can be allocated to workers
just when they are needed à on-demand economy
n  The legal issue: workers of the on-demand economy continue to be
independent contractors (not employees, in a word) even though many
indicators reveal a disguised employment relationship
(disproportionate presence of vulnerable players)
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“Contingent  handyman”    
n  At the time of registration (“sign in”) the user needs to be aware to
be part of a contract that creates a so pervasive system that can be
considered akin to an independent institution aimed at
maximizing profits through tools such as processes design that
reduces up to exclude the likelihood of disputes.
n  “Click-wrap agreements” (or “click-through agreements”), binding
guidelines which define a completely autonomous legal system.
Used to disclaim warranties, restrict liability, indicate the applicable law
and forum for dispute resolution; entering the website user can only…
þ  “I  accept”  à  in  the  long  run,  a  race  to  the  bottom?    
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Reputation  and  internal  ranking  
n  «While we totally distrust strangers, we totally trust people – significantly more
than we trust corporations or governments»
n  Reputation  has  a  prominent  role:  all  these  exchanges  involve  an  ex  post  
evaluation  that  affects  the  ex  ante  selection  
n  The selection process is orientated by the internal ranking,
entailing moral hazard or determining a struggling
in order to be recruited in the future
n  The online platform keeps for itself, on average, 15% of the fee
as commission and excludes all liabilities,
in this way limiting its role to the activity of intermediary
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Professionalization
n  Until recently, crowd-working has been like “hiring  a  neighbourhood  teen  
to  mow  your  lawn  twice  a  summer,  but  on  a  grand  and  global  scale”  à  
n  “The  sharing  economy  is  becoming  professionalized”, with 2 outcomes:
n  Dozens of such firms have been established and announced to be the
“Uber or Airbnb of X” (“X” = any good or service).
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the “sharers”
(one who enjoys an on-
demand system) become
factual workers;
platforms become
intermediaries (“middlemen”) in
charge of developing the network
of connections and overseeing the
property of transactions.
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Insecurity,  the  price  for  flexibility  
n Uberizing probably means “trapping” a set of innovative procedures
– geo-location, payments and driver management and distribution –
into an “app-accessible service” or a “sweatshop”, with lower entry
barriers since people monetize resources they already own
n  Being full-time employed by a corporation or government agency
could probably be the exception rather than the rule.
New actors make the social-economic scene: independent contractors,
freelancers,unconventional workers and micro-entrepreneurs [acceleration]
n  Where to find new sources for essential worker protection measures
like health coverage, insurance against injuries, paid vacations…
n  The “insecurity” (i.e.the erosion) of this kind of rights results
in a potential dismal quality of social services rendered
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n  In some sense one should not underestimate the importance of
social  media  in  creating  a  “sense of community”
(or a “fantasy of community in an atomized population”):
n  all these platforms use gadgets, instant marketing, and partnerships in order to
engage people and get them involved towards these challenges between
“old/boring/institutionalized” and “new/amazing/entrepreneurial”
n  Just think of Lyft and to its logo: pink moustaches.
“a brand identity and emblematize the touchy-feely spirit that Lyft has adopted
as its credo. Drivers bump fists with their passengers at the end of each ride”.
n  Lyft drivers ask passengers to sit in the front “a more human vision for the service industry”.
n  It is not for us to establish whether the idea is sincere or instrumental, but it seems to be
effectual.
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A  sense  of  community  
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Organizing
n  Workers will gather in communities where it is feasible to exchange
knowledge and tricks.
n  The blog “Ride share guy” provides guidance and instructions to drivers
on maximizing their income from the diverse car sharing marketplaces.
n  “Peers.org” could be considered a “power-organizer”;
n  a system of pooling many accounts into one, organizing, caring, supporting
participants in the sharing economy, both its freelance population
n  Guilds like “Peers.org” and “Freelancers Union” are starting to engage
in a struggle aimed at pooling bargaining power, in order to let
independent contractors access promotional health insurance
n  Platform  “cooperativism”  =  new  forms  of  solidarity  aimed  at  fighting  
for  better  conditions  for  “cloud  workers”  and  vulnerable  workforce.  
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n  MTurk was started on November 2, 2005.
n  “AMT is almost certainly the largest crowdsourcing platform on the web, and
has become the first stop for many individuals and firms seeking cheap, on-
demand crowd labor”
n  The platform allows the accomplishment of tasks amenable to being sent down
a wire through APIs (i.e. Application Programming Interface).
n  Amazon’s founder and CEO Jeff Bezos personally followed the project,
n  From the very beginning, this creature was treated as the spearhead of Amazon’s ventures,
n  Named after an eighteen-century mechanical wooden device man shaped, adorned with a
turban, that could compete against human players at the game of chess
(a dwarf was hidden and moved pawns from inside, so no technology at all).
Maria Theresa, the sovereign of Austria, was told it was the first “robot” ever built.
Amazon  Mechanical  Turk  
The  picture    
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n  Around 500,000 “Turkers” (the internal definition for crowd-
workers) populate the Mechanical Turk land
n  from 100 countries around the world, with a strong prevalence:
n  of Americans [57%]
n  Indians [32%], paid in rupees since 2007;
n  millions more fill up contender platforms like CrowdFlower, Clickworker,
CloudCrowd and a heap of smaller ones. Requesters range from
multinationals to family firms and start-ups.
n  The heterogeneity of Turkers is evident: “[they] are highly educated office
workers with downtime, disabled persons or caretakers who are housebound, or
felons passed over by more traditional employers”
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Amazon  Mechanical  Turk  
Demography    
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Amazon  Mechanical  Turk  
Human  Intelligence  Tasks    
n  «It's  actual  humans  doing  stuff  to  the  Internet  that  you  think  is  
automatic»  +  «You  put  some  input  in  and  you  get  back  a  result»
n  These people are the “scaffolding” behind the Internet;
their activities allow to kick start something online
that everybody takes for granted
n  One example of this is the case of a worker that completes HITs
belonging to a work he would never have done if he had known
it in its entirety (weapons design or spamming, for example).
n  “Disembodied  HITs  can  deprive  people  of  the  chance  to  make  
judgements  about  the  moral  valence  of  their  work”    
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n  Some workers handle tasks that are still too intricate for automation. In
many cases, computers are still not able to achieve certain results – or
they are not reliable as humans – or they “do not want to”.
n  from  copying  texts  to  translation,    
n  from  identifying  spelling  errors  to  processing  raw  data,    
n  from  participating  in  some  experiments  to  grouping  items  and  labelling  them,    
n  from  hunting  for  email  addresses  to  data  transcription,  
n  “detecting  a  positive  or  negative  bias  in  an  article,    
n  recognizing  irony,    
n  accurately  reading  the  text  off  a  photograph  of  a  building,    
n  determining  if  something  is  NSFW  (not  safe  for  work)    
n  discerning  among  ambiguous  search  results  (…)”  
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Amazon  Mechanical  Turk  
Activities  
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n  The terms of use postulate that Turkers are independent contractors
n  Providers are not “entitled to any of the benefits that a Requester or AMT
may make available to its employees, such as vacation pay, sick leave, insurance
programs, including group health insurance or retirement benefits”.
n Workers and Requesters are at the mercy of this
agreement they have to accept if they want to enter
MTurk’s dashboard.
n  The mechanism also prevents parties from contracting freely
outside the platform eventually shrinking their contractual freedom
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Amazon  Mechanical  Turk  
Building  a  marketplace  
  
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n  Amazon Mechanical Turk provides a venue for third-party Requesters and third-party
Providers to enter into and complete transactions. Amazon Mechanical Turk and its
Affiliates are not involved in the transactions between Requesters and Providers.
As a result, we have no control over the quality, safety or legality of the Services, the
ability of Providers to provide the Services to Requesters’ satisfaction, or the ability of
Requesters to pay for Services.
n  We are not responsible for the actions of any Requester or Provider.
We do not conduct any screening or other verification with respect to Requesters or
Providers, nor do we provide any recommendations. As a Requester or a Provider, you
use the Site at your own risk.
n  As a Provider you are performing Services for a Requester in your personal capacity as an
independent contractor and not as an employee of the Requester.
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Amazon  Mechanical  Turk  
AMT  Participation  Agmt.    
  
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n  It concerns “employees” covered by labour laws
such as minimum wage and antidiscrimination statutes.
n  Outdated? 1938 à Who was the U.S. President?
n  The definition of employee, the only addressee of the regulation,
offered by the FLSA is unfortunately narrow and perilously meaningless:
“any individual employed by an employer”.
n  AMT “label” is out of scope of any labour legislation covering employees:
n  the National Labor Relations Act (NLRA),
n  Title VII of the Civil Rights Act and related anti-discrimination legislation,
n  the Family Medical Leave Act (FMLA),
n  the Occupational Safety and Health Act (OSHA),
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Amazon  Mechanical  Turk  
The  FLSA  (Fair  Labor  Standards  Act)    
  
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n  In the U.S., as well as in many European countries (like Italy),
labels placed by the parties are not dispositive at all.
n The classification imposed by terms of use
could be deemed as incorrect.
n  As a consequence “vendors will not necessarily insulate firms (or the
vendors themselves) from liability”
n  Supreme Court:“[w]here the work done, in its essence, follows the usual
path of an employee, putting on an ‘independent contractor’ label does
not take the worker from the protection of the Act. 95”
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Amazon  Mechanical  Turk  
Labels  are  not  dispositive  
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n  Whether a worker is an employee or a contractor depends on a “multifactorial” test
based on the facts emerging from the employment relationship.
n  the possibility of having free personal judgement and control over one’s own work,
n  the way in which tasks are performed,
n  the “economic realities” and the concrete dependency in relation with the employer,
n  the permanency of the relationship,
n  the number of working hours,
n  the power of direction exercised by the employee,
n  the freedom of managing its own time schedule,
n  the ownership of equipment,
n  the method of payment (hours vs project),
n  the degree of flexibility and protections,
n  the disparity of relative bargaining power.
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Amazon  Mechanical  Turk  
“Multifactorial”  test  
  
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n Turkopticona potential source of worker organizing in virtue of class-
consciousness “an activist system that allows workers to publicize and evaluate their
relationships with employers”.
n  The website permits Turkers “to engage one another in mutual aid”..
n  Researchers put a provocative task on the platform, asking workers to
define an ideal “Workers’ Bill of Rights” from their point of view.
n Dynamo a community founded by scholars, which could be seen as the first step
toward granting Turkers a collective voice.
n  This trend deserves attention, as Providers are a platform’s fundamental
economic inputs, for this reason alone they should be protected, though AMT can
tolerate the loss of accounts that do not accept the system’s terms.
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Amazon  Mechanical  Turk  
An  attempt  to  organize    
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UberX  (UberPop  in  EU)    
The  picture  
n  Uber is the most renowned ridesharing company, an “obvious inspiration”
n  Founded in 2009, it now operates in 53 countries and “had sales exceeding $1
billion in 2014 and a valuation of $40 billion”
n  According to Brugel, it “is currently one of the fastest growing start-ups
worldwide.In 2014 its estimated valuation reached 17 billion USD,up from 3.5
billion USD a year earlier”
n  Thought for a population equipped with smartphones and used to pay with
credit cards and through online bank account or PayPal account
n  It could be also seen as a way of making urban mobility less congested, clearing
roads from private vehicles and letting parking spots free.
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n  The reduction in information asymmetries seems unmistakably evident, as
ridesharing companies’ dependence on digital technology provides riders
with a “better overview of quality and prices”.This leads to privacy concerns!
n  Much worse is that it also leaves the field wide open for discrimination,
since drivers could ignore requests if they don’t like a pick up place or a
destination request.
n  Aversion towards taxis often represents the best advertising for ridesharing companies
n  While the user has a potentially complete knowledge of drivers and fees
(he can calculate estimated beforehand prices of the rides using an
algorithm that measures the distance from the desired destination and
potential traffic), the driver ignores completely characteristics of his
costumer.
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UberX  (UberPop  in  EU)    
Information asymmetries   
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n  After downloading the mobile app and creating a personal account, every user can
request the nearest available Uber using a GPS to pinpoint the driver’s position.
n  To become a driver “partner” one must complete Uber’s application process,
providing its driver’s license information, as well as evidences about its
vehicle’s registration and insurance.
n  You do not need to prove special requirements (apart the age of legal majority)
n  They do not necessarily have signed a business insurance.
n  Aspiring drivers could be required to pass a “city knowledge test” + interview:
n  On the contrary, critics object that drivers lack of appropriate training and experience
of extensive driving. No one, for instance, seems to be concerned about checking drivers’
criminal background.
n  Training à https://youtu.be/makYbqd7mGA
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UberX  (UberPop  in  EU)    
How  it  works  
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n  Uber cannot be considered light-heartedly as a transport firm as “the company does
not provide transportation services,and has no liability for services provided by
third parties”,at least according to its terms and conditions.
n  Conversely, it should not be regarded as a technological business since its revenues
do not depend on the distribution of its interface, but on the amount of rides
generated by drivers.
n  The company maintains to be simply an arena, like an “eBays for gigs”. Uber works as
a matching platform and gets revenues thanks to a 10-20% cut from each ride
(tipping is forbidden).
n  UberX is different: drivers are not contractors but private citizens in accordance
with the motto “Everyone’s Private Driver”.
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UberX  (UberPop  in  EU)    
How  it  works  
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n  The drivers’ behaviour has a direct impact on the rating according to which they
will get the chance to be recruited again in future
n  Riders con rate the ride, evaluations ranging from 1 to 5 stars.
If the rate falls below a certain threshold,
the driver could lose access to Uber application
(Is account deactivation a new soft form of dismissal?)
n  “Uber and Lyft are exercising employer-like control over termination decisions”
n  Uber can also use the star ratings as a means of enforcing specific rules: for
instance, cleanliness, beverage to be served, how to dress
n  This system could lead to “frenetic self-marketing campaigning”:
the inexhaustible effort to please customers with “binding smiles” .
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UberX  (UberPop  in  EU)    
Stars  system    
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n  Drivers are supposed to be independent as for managing
their time and deciding when turning their own car into a taxi
– the operation consisting in being online or offline on the app.
n  Uber controls and supervises both the methods and means of its drivers’ provision of transportation services.
n  Uber claims not to be a transportation carrier:
n  “The quality of the transportation services requested through the use of the APP or the Service is
entirely the responsibility of the Transportation Provider who ultimately provides such
transportation services to you. Uber under no circumstance accepts liability in connection with and/
or arising from the transportation services provided by the Transportation Provider or any acts,
actions, behaviour, conduct, and/or negligence on the part of the Transportation Provider.”.
n  Many similar cases concerning Uber drivers have been recorded, from creepy sex text stalking to
kidnapping and allegedly raping a passenger to killing a young girl.
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UberX  (UberPop  in  EU)    
Workers  classification  
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n  Uber, but also Lyft and other ridesharing companies, are blamed for
(mis)classifying their drivers as independent contractors.
n  “The label placed by the parties is not dispositive, and subterfuges are not countenanced”
n  Costs and risks associated with hiring employees are higher than those
derived from employing independent contractors.
n  In a class action lawsuit brought against Uber and pending in front of the
California Federal Court, Uber drivers have sued the platforms alleging
violations of the California Labor Code, and arguing that they are actually
employees under California law although they were denied the relevant
benefits and protections such as minimum wage, reimbursement for
expenses, overtime...
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UberX  (UberPop  in  EU)    
Workers  (mis)classification  
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n  “At first glance, Lyft drivers don’t seem much like employees. We generally understand an employee
to be someone who works under the direction of a supervisor, for an extended or indefinite period of
time, with fairly regular hours, receiving most or all his income from that one employer. Lyft drivers
can work as little or as much as they want, and can schedule their driving around their other activities.
(side activity, little extra income)
n  But Lyft drivers don’t seem much like independent contractors either. We generally understand an
independent contractor to be someone with a special skill (and with the bargaining power to negotiate
a rate for the use of that skill), who serves multiple clients, performing discrete tasks for limited periods,
while exercising great discretion over the way the work is actually done. Their work is central, not
tangential, to Lyft’s business. Lyft might not control when the drivers work, but it has a great deal of
power over how they actually do their work, including the power to fire them if they don’t meet Lyft’s
specifications about how to give rides. And some Lyft drivers no doubt treat their work as a full-time
job—their livelihood may depend solely or primarily on weekly payments from Lyft
n  Indeed, this type of Lyft driver looks very much like the kind of worker the
California Legislature has always intended to protect as an ‘employee’
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UberX  (UberPop  in  EU)    
Judge  Chhabria’s  reasoning    
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n  A federal judge in San Francisco“Plaintiffs are Uber’s presumptive
employees because they ‘perform services’ for the benefit of Uber”.
n  The decision contains an enumeration of indicia of an employment
relationship like the presence of a “right to control work details”
(in the light of the doctrine of respondeat superior:“not how much control a
hirer exercises,but how much control the hirer retains the right to exercise”)
or the fact that Uber “depends on its drivers’ performance of services for its
revenues”.
n  The court rejects Uber’s self-definition as a mere “technology company”, since the argument is
too formalistic and omits an analysis of the substance of how Uber actually works.
n  As for the “right to control” test, Uber’s “Driver Handbook” is clear and asks drivers to accept
all ride requests, also rating their readiness and availability.
31
UberX  (UberPop  in  EU)    
Judge  Borello’s  reasoning    
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n  This multi-part test scrutinizes the presence of the following factors:
I.  whether there’s a right to control how the worker does his job;
II.  whether a worker has set hours or can work whenever he or she wants;
III.  how the worker is paid i.e., by the hour (which points toward employment) vs. by the
job (which points toward an independent contractor relationship;
IV.  whether the business provides the tools to perform the job;
V.  whether a written agreement exists classifying the worker as an independent
contractor or employee;
VI.  the permanency of the relationship, with an indefinite term pointing toward
employment and a defined term pointing toward an independent contractor
arrangement;
VII.  whether the work requires a special skill;
VIII.  whether the services rendered are an integral part of the employer’s business.
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UberX  (UberPop  in  EU)    
  The  multi-­part  test      
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n  “success is not based just on regulatory arbitrage”,suspects seem to have
been validated in the labour law field
n  In August, a group of drivers established the California App-based Drivers
Association, a sort of Uber drivers union
n  The same happened in Seattle and NewYork City...
n  Threats of work stoppage are the order of the day. People want to join forces
n A  feeling  of  dissatisfaction  towards  Uber  employment    
–  and  price,  too  –  models  and  unilateral  changes  in  T&C.  
33
UberX  (UberPop  in  EU)    
Strikes  and  protests  
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n  The “e-topia”, apparently driven by an altruistic spirit (like the Wikipedia
example suggests), could eventually take the risk of turning into a social
spirale  descendant  when risks  traditionally  borne  by  firms are being “pushed  
back”  on  to  individuals  à  “precarious employment”
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Conclusions    
  
Pro  app  
lawyer  
Uber/ATM = little more than a
marketmaker / a forum for buyers
and sellers
Pro  worker  
lawyer  
Uber/ATM = exercise considerable
control over workers
“The  jury  in  this  case  will  be  handed  a  square  peg  and    
asked  to  choose  between  two  round  holes.”  
+
n  The new fabric of the job market has rendered obsolete definitions and
categories like employee or contractor. According to W. Liebman,
“a  third  category  is  necessary”:  the  dependent  contractor  
n  The “independent  contractor”  formula privileges only the classic freelancer, who is a skilled professional, and
the “employee” one seems not to fit for the new modalities previously sketched out.   
n  Some  on-­demand  firms  will  choose  to  classify  their  workers  as  employees  à  
Instacart, a grocery delivery service, has invited some of its freelancers to
become part-time employees.
n  Provide a social  safety  net  to  people  whose  chosen  form  of  work  is  something  
other  than  full-­time  employment.
n  Health coverage, insurance against workplace injuries, paid vacations and maternity leave: these have long
been universal entitlements in many economies.They should not become exclusive perks for a dwindling
band of salaried employees (Arun Sundararajan)
35
Conclusions    
  
+
ü  Law-makers: dynamic potential of sharing forces
cannot be hindered by strict and out-dated rules;
regulations have to protect both users and workers
ü  Governments should recognize that the new peer-to-peer marketplaces have internal
controls; they have turned out to be even stricter and more sophisticated, even
though “self-policing isn’t a universal panacea”
ü  Platforms and apps: improve and humanize their model,
building technology seamlessly in tandem with workers’ rights.
ü  Lyft has signed a partnership with Freelancers Union, offering possibility for its
drivers to enter the pressure group’s health plan and benefit plans.
36
Conclusions    
Updating  employment  law  
+
Open-­ended  questions  
n  We should redefine the notion of employment. After all it is true that the
transformations brought about by digital technology cannot replay drifts like
exploitation and degraded human dignity of work.
n  Encouraging  a  big  cultural  shift.  Virtual  does  not  mean  exploitable.    
We need to offer better  protection    
to what is behind the scenes of on-demand economy
n  “Sharing” = “an equitable split in wealth and responsibility”
1.  Tightening  up  international codes of good practice  and  make  
worldwide  firms  sign  and  respect  them?    
2.  And  what  about  stretching the plainness of worker classification?
37
+
  
Thank  you!  
  
  
aloisi.antonio@phd.unibocconi.it  

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Commoditized Workers

  • 1. + 4th  Conference  of  the  Regulating  for  Decent  Work  Network   International  Labour  Office  |  Geneva,  Switzerland  |  8-­10  July  2015     Commoditized  Workers   The Rising of On-Demand Work a Case Study Research on a Set of Online Platforms and Apps   Antonio  Aloisi,  Bocconi  University  
  • 2. Agenda     n  Sharing  is  the  new  renting n  The  matching  between  labour   demand  and  supply     n  Causes of the on-going paradigm shift n  From ownership to membership n  Crowd-­Work   n  “Employing humans-as-a-service” n  Reputation and internal ranking n  Insecurity, the price for flexibility   n  How  to  dismantle  an  atomized   market     n  Professionalization n  “Contingent handyman”   1.  Amazon  Mechanical  Turk   2.  Uber   n  Conclusions  
  • 3. + All  we  need  is  sharing n  These schemes may enlarge opportunities for people willing to find a job or to top up their salaries n  These platforms may also be used to circumvent employment regulation, by operating informally in traditionally regulated markets n  Companies are skyrocketing their profits thanks to the use of new technologies that allow cutting transaction costs by outsourcing n  Global trend towards the decentralization of structures and facilities as well as the creation of dense and dispersed production networks: n  “sharing”  assets  so  affordable  and  accessible.   3 trend towards globalization   enabling role of technologies   the spread of broadband   ubiquitous communications   user-friendly software and interfaces  
  • 4. + From  ownership  to  membership     n  “Invisible infrastructure” connects supply and demand of services and facilitate interaction between individuals and firms n  «Coming  up  with  asolid  definition  of  the  sharing  economy  that  reflects  common  usage  is  nearly  impossible.  There  is  great  diversity  among   activities  as  well  as  baffling  boundaries  drawn  by  participants.  TaskRabbit,  an  “errands”  site,  is  often  included,  but  Mechanical  Turk   (Amazon’s  online  labor  market)  could  not.  Airbnb  is  practically  synonymous  with  the  sharing  economy,  but  traditional  bed  and  breakfasts   are  left  out.  Lyft,  a  ride  service  company,  claims  to  be  in,  but  Uber  does  not.   n  When  I  posed  these  questions  to  a  few  sharing  innovators,  they  were  pragmatic,  rather  than  analytical»     [Juliet Schor, Debating the Sharing Economy, 2014] n  Benefits: n  UberX fees are, at least in principle, competitive with those of conventional taxi cooperatives, n  Airbnb landlords provide comfortable and low-cost housing solutions if compared to those offered by big hotel chains. n  “Routine parts of knowledge work can be parcelled out to individuals” à it is like technology had “exploit[ed] the knowledge of enthusiasts” 4
  • 5. + Social  implications     n  Facing a digital version of Taylorism, i.e.the efficient exploitation (or expropriation) of work at the detriment of education and skill development of workers n  Websites like TaskRabbit,Elance,Lift,Handy (“commodities market” vs “knowledge economy”) threaten to dismantle traditional labour mkts as they do not seem to ensure a fair protection of workers’ rights n  This new configuration implies wages fixed by a dynamic calculation of supply and demand, and every worker’s act constantly traced, appraised and “subject to the sometimes harsh light of customer satisfaction” 5
  • 6. + “Employing  humans-­as-­a-­service”     n  According to Alek Felstiner, “crowdworking”: n  “the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call” n  These tools have the potential to “chop up” a broad array of traditional jobs into detached tasks that can be allocated to workers just when they are needed à on-demand economy n  The legal issue: workers of the on-demand economy continue to be independent contractors (not employees, in a word) even though many indicators reveal a disguised employment relationship (disproportionate presence of vulnerable players) 6
  • 7. + “Contingent  handyman”     n  At the time of registration (“sign in”) the user needs to be aware to be part of a contract that creates a so pervasive system that can be considered akin to an independent institution aimed at maximizing profits through tools such as processes design that reduces up to exclude the likelihood of disputes. n  “Click-wrap agreements” (or “click-through agreements”), binding guidelines which define a completely autonomous legal system. Used to disclaim warranties, restrict liability, indicate the applicable law and forum for dispute resolution; entering the website user can only… þ  “I  accept”  à  in  the  long  run,  a  race  to  the  bottom?     7
  • 8. + Reputation  and  internal  ranking   n  «While we totally distrust strangers, we totally trust people – significantly more than we trust corporations or governments» n  Reputation  has  a  prominent  role:  all  these  exchanges  involve  an  ex  post   evaluation  that  affects  the  ex  ante  selection   n  The selection process is orientated by the internal ranking, entailing moral hazard or determining a struggling in order to be recruited in the future n  The online platform keeps for itself, on average, 15% of the fee as commission and excludes all liabilities, in this way limiting its role to the activity of intermediary 8
  • 9. + Professionalization n  Until recently, crowd-working has been like “hiring  a  neighbourhood  teen   to  mow  your  lawn  twice  a  summer,  but  on  a  grand  and  global  scale”  à   n  “The  sharing  economy  is  becoming  professionalized”, with 2 outcomes: n  Dozens of such firms have been established and announced to be the “Uber or Airbnb of X” (“X” = any good or service). 9 the “sharers” (one who enjoys an on- demand system) become factual workers; platforms become intermediaries (“middlemen”) in charge of developing the network of connections and overseeing the property of transactions.
  • 10. + Insecurity,  the  price  for  flexibility   n Uberizing probably means “trapping” a set of innovative procedures – geo-location, payments and driver management and distribution – into an “app-accessible service” or a “sweatshop”, with lower entry barriers since people monetize resources they already own n  Being full-time employed by a corporation or government agency could probably be the exception rather than the rule. New actors make the social-economic scene: independent contractors, freelancers,unconventional workers and micro-entrepreneurs [acceleration] n  Where to find new sources for essential worker protection measures like health coverage, insurance against injuries, paid vacations… n  The “insecurity” (i.e.the erosion) of this kind of rights results in a potential dismal quality of social services rendered 10
  • 11. + n  In some sense one should not underestimate the importance of social  media  in  creating  a  “sense of community” (or a “fantasy of community in an atomized population”): n  all these platforms use gadgets, instant marketing, and partnerships in order to engage people and get them involved towards these challenges between “old/boring/institutionalized” and “new/amazing/entrepreneurial” n  Just think of Lyft and to its logo: pink moustaches. “a brand identity and emblematize the touchy-feely spirit that Lyft has adopted as its credo. Drivers bump fists with their passengers at the end of each ride”. n  Lyft drivers ask passengers to sit in the front “a more human vision for the service industry”. n  It is not for us to establish whether the idea is sincere or instrumental, but it seems to be effectual. 11 A  sense  of  community  
  • 12. + Organizing n  Workers will gather in communities where it is feasible to exchange knowledge and tricks. n  The blog “Ride share guy” provides guidance and instructions to drivers on maximizing their income from the diverse car sharing marketplaces. n  “Peers.org” could be considered a “power-organizer”; n  a system of pooling many accounts into one, organizing, caring, supporting participants in the sharing economy, both its freelance population n  Guilds like “Peers.org” and “Freelancers Union” are starting to engage in a struggle aimed at pooling bargaining power, in order to let independent contractors access promotional health insurance n  Platform  “cooperativism”  =  new  forms  of  solidarity  aimed  at  fighting   for  better  conditions  for  “cloud  workers”  and  vulnerable  workforce.   12
  • 13. + n  MTurk was started on November 2, 2005. n  “AMT is almost certainly the largest crowdsourcing platform on the web, and has become the first stop for many individuals and firms seeking cheap, on- demand crowd labor” n  The platform allows the accomplishment of tasks amenable to being sent down a wire through APIs (i.e. Application Programming Interface). n  Amazon’s founder and CEO Jeff Bezos personally followed the project, n  From the very beginning, this creature was treated as the spearhead of Amazon’s ventures, n  Named after an eighteen-century mechanical wooden device man shaped, adorned with a turban, that could compete against human players at the game of chess (a dwarf was hidden and moved pawns from inside, so no technology at all). Maria Theresa, the sovereign of Austria, was told it was the first “robot” ever built. Amazon  Mechanical  Turk   The  picture     13
  • 14. + n  Around 500,000 “Turkers” (the internal definition for crowd- workers) populate the Mechanical Turk land n  from 100 countries around the world, with a strong prevalence: n  of Americans [57%] n  Indians [32%], paid in rupees since 2007; n  millions more fill up contender platforms like CrowdFlower, Clickworker, CloudCrowd and a heap of smaller ones. Requesters range from multinationals to family firms and start-ups. n  The heterogeneity of Turkers is evident: “[they] are highly educated office workers with downtime, disabled persons or caretakers who are housebound, or felons passed over by more traditional employers” 14 Amazon  Mechanical  Turk   Demography    
  • 15. + Amazon  Mechanical  Turk   Human  Intelligence  Tasks     n  «It's  actual  humans  doing  stuff  to  the  Internet  that  you  think  is   automatic»  +  «You  put  some  input  in  and  you  get  back  a  result» n  These people are the “scaffolding” behind the Internet; their activities allow to kick start something online that everybody takes for granted n  One example of this is the case of a worker that completes HITs belonging to a work he would never have done if he had known it in its entirety (weapons design or spamming, for example). n  “Disembodied  HITs  can  deprive  people  of  the  chance  to  make   judgements  about  the  moral  valence  of  their  work”     15
  • 16. + n  Some workers handle tasks that are still too intricate for automation. In many cases, computers are still not able to achieve certain results – or they are not reliable as humans – or they “do not want to”. n  from  copying  texts  to  translation,     n  from  identifying  spelling  errors  to  processing  raw  data,     n  from  participating  in  some  experiments  to  grouping  items  and  labelling  them,     n  from  hunting  for  email  addresses  to  data  transcription,   n  “detecting  a  positive  or  negative  bias  in  an  article,     n  recognizing  irony,     n  accurately  reading  the  text  off  a  photograph  of  a  building,     n  determining  if  something  is  NSFW  (not  safe  for  work)     n  discerning  among  ambiguous  search  results  (…)”   16 Amazon  Mechanical  Turk   Activities  
  • 17. + n  The terms of use postulate that Turkers are independent contractors n  Providers are not “entitled to any of the benefits that a Requester or AMT may make available to its employees, such as vacation pay, sick leave, insurance programs, including group health insurance or retirement benefits”. n Workers and Requesters are at the mercy of this agreement they have to accept if they want to enter MTurk’s dashboard. n  The mechanism also prevents parties from contracting freely outside the platform eventually shrinking their contractual freedom 17 Amazon  Mechanical  Turk   Building  a  marketplace    
  • 18. + n  Amazon Mechanical Turk provides a venue for third-party Requesters and third-party Providers to enter into and complete transactions. Amazon Mechanical Turk and its Affiliates are not involved in the transactions between Requesters and Providers. As a result, we have no control over the quality, safety or legality of the Services, the ability of Providers to provide the Services to Requesters’ satisfaction, or the ability of Requesters to pay for Services. n  We are not responsible for the actions of any Requester or Provider. We do not conduct any screening or other verification with respect to Requesters or Providers, nor do we provide any recommendations. As a Requester or a Provider, you use the Site at your own risk. n  As a Provider you are performing Services for a Requester in your personal capacity as an independent contractor and not as an employee of the Requester. 18 Amazon  Mechanical  Turk   AMT  Participation  Agmt.      
  • 19. + n  It concerns “employees” covered by labour laws such as minimum wage and antidiscrimination statutes. n  Outdated? 1938 à Who was the U.S. President? n  The definition of employee, the only addressee of the regulation, offered by the FLSA is unfortunately narrow and perilously meaningless: “any individual employed by an employer”. n  AMT “label” is out of scope of any labour legislation covering employees: n  the National Labor Relations Act (NLRA), n  Title VII of the Civil Rights Act and related anti-discrimination legislation, n  the Family Medical Leave Act (FMLA), n  the Occupational Safety and Health Act (OSHA), 19 Amazon  Mechanical  Turk   The  FLSA  (Fair  Labor  Standards  Act)      
  • 20. + n  In the U.S., as well as in many European countries (like Italy), labels placed by the parties are not dispositive at all. n The classification imposed by terms of use could be deemed as incorrect. n  As a consequence “vendors will not necessarily insulate firms (or the vendors themselves) from liability” n  Supreme Court:“[w]here the work done, in its essence, follows the usual path of an employee, putting on an ‘independent contractor’ label does not take the worker from the protection of the Act. 95” 20 Amazon  Mechanical  Turk   Labels  are  not  dispositive  
  • 21. + n  Whether a worker is an employee or a contractor depends on a “multifactorial” test based on the facts emerging from the employment relationship. n  the possibility of having free personal judgement and control over one’s own work, n  the way in which tasks are performed, n  the “economic realities” and the concrete dependency in relation with the employer, n  the permanency of the relationship, n  the number of working hours, n  the power of direction exercised by the employee, n  the freedom of managing its own time schedule, n  the ownership of equipment, n  the method of payment (hours vs project), n  the degree of flexibility and protections, n  the disparity of relative bargaining power. 21 Amazon  Mechanical  Turk   “Multifactorial”  test    
  • 22. + n Turkopticona potential source of worker organizing in virtue of class- consciousness “an activist system that allows workers to publicize and evaluate their relationships with employers”. n  The website permits Turkers “to engage one another in mutual aid”.. n  Researchers put a provocative task on the platform, asking workers to define an ideal “Workers’ Bill of Rights” from their point of view. n Dynamo a community founded by scholars, which could be seen as the first step toward granting Turkers a collective voice. n  This trend deserves attention, as Providers are a platform’s fundamental economic inputs, for this reason alone they should be protected, though AMT can tolerate the loss of accounts that do not accept the system’s terms. 22 Amazon  Mechanical  Turk   An  attempt  to  organize    
  • 23. + UberX  (UberPop  in  EU)     The  picture   n  Uber is the most renowned ridesharing company, an “obvious inspiration” n  Founded in 2009, it now operates in 53 countries and “had sales exceeding $1 billion in 2014 and a valuation of $40 billion” n  According to Brugel, it “is currently one of the fastest growing start-ups worldwide.In 2014 its estimated valuation reached 17 billion USD,up from 3.5 billion USD a year earlier” n  Thought for a population equipped with smartphones and used to pay with credit cards and through online bank account or PayPal account n  It could be also seen as a way of making urban mobility less congested, clearing roads from private vehicles and letting parking spots free. 23
  • 24. + n  The reduction in information asymmetries seems unmistakably evident, as ridesharing companies’ dependence on digital technology provides riders with a “better overview of quality and prices”.This leads to privacy concerns! n  Much worse is that it also leaves the field wide open for discrimination, since drivers could ignore requests if they don’t like a pick up place or a destination request. n  Aversion towards taxis often represents the best advertising for ridesharing companies n  While the user has a potentially complete knowledge of drivers and fees (he can calculate estimated beforehand prices of the rides using an algorithm that measures the distance from the desired destination and potential traffic), the driver ignores completely characteristics of his costumer. 24 UberX  (UberPop  in  EU)     Information asymmetries  
  • 25. + n  After downloading the mobile app and creating a personal account, every user can request the nearest available Uber using a GPS to pinpoint the driver’s position. n  To become a driver “partner” one must complete Uber’s application process, providing its driver’s license information, as well as evidences about its vehicle’s registration and insurance. n  You do not need to prove special requirements (apart the age of legal majority) n  They do not necessarily have signed a business insurance. n  Aspiring drivers could be required to pass a “city knowledge test” + interview: n  On the contrary, critics object that drivers lack of appropriate training and experience of extensive driving. No one, for instance, seems to be concerned about checking drivers’ criminal background. n  Training à https://youtu.be/makYbqd7mGA 25 UberX  (UberPop  in  EU)     How  it  works  
  • 26. + n  Uber cannot be considered light-heartedly as a transport firm as “the company does not provide transportation services,and has no liability for services provided by third parties”,at least according to its terms and conditions. n  Conversely, it should not be regarded as a technological business since its revenues do not depend on the distribution of its interface, but on the amount of rides generated by drivers. n  The company maintains to be simply an arena, like an “eBays for gigs”. Uber works as a matching platform and gets revenues thanks to a 10-20% cut from each ride (tipping is forbidden). n  UberX is different: drivers are not contractors but private citizens in accordance with the motto “Everyone’s Private Driver”. 26 UberX  (UberPop  in  EU)     How  it  works  
  • 27. + n  The drivers’ behaviour has a direct impact on the rating according to which they will get the chance to be recruited again in future n  Riders con rate the ride, evaluations ranging from 1 to 5 stars. If the rate falls below a certain threshold, the driver could lose access to Uber application (Is account deactivation a new soft form of dismissal?) n  “Uber and Lyft are exercising employer-like control over termination decisions” n  Uber can also use the star ratings as a means of enforcing specific rules: for instance, cleanliness, beverage to be served, how to dress n  This system could lead to “frenetic self-marketing campaigning”: the inexhaustible effort to please customers with “binding smiles” . 27 UberX  (UberPop  in  EU)     Stars  system    
  • 28. + n  Drivers are supposed to be independent as for managing their time and deciding when turning their own car into a taxi – the operation consisting in being online or offline on the app. n  Uber controls and supervises both the methods and means of its drivers’ provision of transportation services. n  Uber claims not to be a transportation carrier: n  “The quality of the transportation services requested through the use of the APP or the Service is entirely the responsibility of the Transportation Provider who ultimately provides such transportation services to you. Uber under no circumstance accepts liability in connection with and/ or arising from the transportation services provided by the Transportation Provider or any acts, actions, behaviour, conduct, and/or negligence on the part of the Transportation Provider.”. n  Many similar cases concerning Uber drivers have been recorded, from creepy sex text stalking to kidnapping and allegedly raping a passenger to killing a young girl. 28 UberX  (UberPop  in  EU)     Workers  classification  
  • 29. + n  Uber, but also Lyft and other ridesharing companies, are blamed for (mis)classifying their drivers as independent contractors. n  “The label placed by the parties is not dispositive, and subterfuges are not countenanced” n  Costs and risks associated with hiring employees are higher than those derived from employing independent contractors. n  In a class action lawsuit brought against Uber and pending in front of the California Federal Court, Uber drivers have sued the platforms alleging violations of the California Labor Code, and arguing that they are actually employees under California law although they were denied the relevant benefits and protections such as minimum wage, reimbursement for expenses, overtime... 29 UberX  (UberPop  in  EU)     Workers  (mis)classification  
  • 30. + n  “At first glance, Lyft drivers don’t seem much like employees. We generally understand an employee to be someone who works under the direction of a supervisor, for an extended or indefinite period of time, with fairly regular hours, receiving most or all his income from that one employer. Lyft drivers can work as little or as much as they want, and can schedule their driving around their other activities. (side activity, little extra income) n  But Lyft drivers don’t seem much like independent contractors either. We generally understand an independent contractor to be someone with a special skill (and with the bargaining power to negotiate a rate for the use of that skill), who serves multiple clients, performing discrete tasks for limited periods, while exercising great discretion over the way the work is actually done. Their work is central, not tangential, to Lyft’s business. Lyft might not control when the drivers work, but it has a great deal of power over how they actually do their work, including the power to fire them if they don’t meet Lyft’s specifications about how to give rides. And some Lyft drivers no doubt treat their work as a full-time job—their livelihood may depend solely or primarily on weekly payments from Lyft n  Indeed, this type of Lyft driver looks very much like the kind of worker the California Legislature has always intended to protect as an ‘employee’ 30 UberX  (UberPop  in  EU)     Judge  Chhabria’s  reasoning    
  • 31. + n  A federal judge in San Francisco“Plaintiffs are Uber’s presumptive employees because they ‘perform services’ for the benefit of Uber”. n  The decision contains an enumeration of indicia of an employment relationship like the presence of a “right to control work details” (in the light of the doctrine of respondeat superior:“not how much control a hirer exercises,but how much control the hirer retains the right to exercise”) or the fact that Uber “depends on its drivers’ performance of services for its revenues”. n  The court rejects Uber’s self-definition as a mere “technology company”, since the argument is too formalistic and omits an analysis of the substance of how Uber actually works. n  As for the “right to control” test, Uber’s “Driver Handbook” is clear and asks drivers to accept all ride requests, also rating their readiness and availability. 31 UberX  (UberPop  in  EU)     Judge  Borello’s  reasoning    
  • 32. + n  This multi-part test scrutinizes the presence of the following factors: I.  whether there’s a right to control how the worker does his job; II.  whether a worker has set hours or can work whenever he or she wants; III.  how the worker is paid i.e., by the hour (which points toward employment) vs. by the job (which points toward an independent contractor relationship; IV.  whether the business provides the tools to perform the job; V.  whether a written agreement exists classifying the worker as an independent contractor or employee; VI.  the permanency of the relationship, with an indefinite term pointing toward employment and a defined term pointing toward an independent contractor arrangement; VII.  whether the work requires a special skill; VIII.  whether the services rendered are an integral part of the employer’s business. 32 UberX  (UberPop  in  EU)      The  multi-­part  test      
  • 33. + n  “success is not based just on regulatory arbitrage”,suspects seem to have been validated in the labour law field n  In August, a group of drivers established the California App-based Drivers Association, a sort of Uber drivers union n  The same happened in Seattle and NewYork City... n  Threats of work stoppage are the order of the day. People want to join forces n A  feeling  of  dissatisfaction  towards  Uber  employment     –  and  price,  too  –  models  and  unilateral  changes  in  T&C.   33 UberX  (UberPop  in  EU)     Strikes  and  protests  
  • 34. + n  The “e-topia”, apparently driven by an altruistic spirit (like the Wikipedia example suggests), could eventually take the risk of turning into a social spirale  descendant  when risks  traditionally  borne  by  firms are being “pushed   back”  on  to  individuals  à  “precarious employment” 34 Conclusions       Pro  app   lawyer   Uber/ATM = little more than a marketmaker / a forum for buyers and sellers Pro  worker   lawyer   Uber/ATM = exercise considerable control over workers “The  jury  in  this  case  will  be  handed  a  square  peg  and     asked  to  choose  between  two  round  holes.”  
  • 35. + n  The new fabric of the job market has rendered obsolete definitions and categories like employee or contractor. According to W. Liebman, “a  third  category  is  necessary”:  the  dependent  contractor   n  The “independent  contractor”  formula privileges only the classic freelancer, who is a skilled professional, and the “employee” one seems not to fit for the new modalities previously sketched out.   n  Some  on-­demand  firms  will  choose  to  classify  their  workers  as  employees  à   Instacart, a grocery delivery service, has invited some of its freelancers to become part-time employees. n  Provide a social  safety  net  to  people  whose  chosen  form  of  work  is  something   other  than  full-­time  employment. n  Health coverage, insurance against workplace injuries, paid vacations and maternity leave: these have long been universal entitlements in many economies.They should not become exclusive perks for a dwindling band of salaried employees (Arun Sundararajan) 35 Conclusions      
  • 36. + ü  Law-makers: dynamic potential of sharing forces cannot be hindered by strict and out-dated rules; regulations have to protect both users and workers ü  Governments should recognize that the new peer-to-peer marketplaces have internal controls; they have turned out to be even stricter and more sophisticated, even though “self-policing isn’t a universal panacea” ü  Platforms and apps: improve and humanize their model, building technology seamlessly in tandem with workers’ rights. ü  Lyft has signed a partnership with Freelancers Union, offering possibility for its drivers to enter the pressure group’s health plan and benefit plans. 36 Conclusions     Updating  employment  law  
  • 37. + Open-­ended  questions   n  We should redefine the notion of employment. After all it is true that the transformations brought about by digital technology cannot replay drifts like exploitation and degraded human dignity of work. n  Encouraging  a  big  cultural  shift.  Virtual  does  not  mean  exploitable.     We need to offer better  protection     to what is behind the scenes of on-demand economy n  “Sharing” = “an equitable split in wealth and responsibility” 1.  Tightening  up  international codes of good practice  and  make   worldwide  firms  sign  and  respect  them?     2.  And  what  about  stretching the plainness of worker classification? 37
  • 38. +   Thank  you!       aloisi.antonio@phd.unibocconi.it