Uber CEO says gig workers need benefits - but wants a law first

Uber's CEO has acknowledged criticism of the ride-sharing app's treatment of drivers, calling for government and industry support in setting up a benefits fund for gig-economy workers.

Uber has faced legal challenges in the UK and US arguing its drivers should be treated as employees, including a California law classifying them as employees rather than contractors, amid protests from some drivers about low pay.

CEO Dara Khosrowshahi, who took over from founder Travis Kalanick in 2017, wrote in a column for The New York Times that treatment of drivers has been an "existential question" for the company, but that obvious solutions - notably hiring drivers as employees rather than considering them contractors - would remove the flexibility that drivers prefer.

"Our current employment system is outdated and unfair," he writes. "It forces every worker to choose between being an employee with more benefits but less flexibility, or an independent contractor with more flexibility but almost no safety net."

If required to employ drivers as full-time workers, Khosrowshahi argues, only a small fraction could be hired, which would reduce the number of cities Uber could operate in and lead to an increase in fares. "Uber would not be as widely available to riders, and drivers would lose the flexibility they have today if they became employees," he says.

It is possible to hire staff on flexible or part-time contracts, which he doesn't address, and employees get benefits beyond financial perks — indeed, Terri Gerstein, a workers right law fellow at Harvard University, noted on Twitter that employees also get social security, anti-discrimination protections, and other legal rights.

Instead, Khosrowshahi calls for a "third way" in which gig-economy companies pay into a benefits fund to pay workers for health insurance or days off, accessible based on how many of hours of work they put in. The fund would operate across different companies, helping workers who drive for multiple apps.

Uber's report detailing the idea suggested that its version would have paid $655 million into such a fund in 2019, giving a driver in Colorado who worked for 35 hours weekly $1,350 over the course of the year for a two-week vacation or to pay healthcare premiums if they didn't already have insurance as most do.

"This is a cheapskate proposal that shouldn’t get airtime or serious consideration," says Gerstein. "If the diner down the street or the mom and pop hardware store can manage to have actual employees and the safety net that entails, so can major corporations like these gig companies."

But it's worth noting that Uber isn't going to start such a fund without the rest of the industry required to via government regulation. Instead, while the company awaits government action on such a "third way", Khosrowshahi said Uber will offer a new earnings estimator and survey every driver in the US.

"This is the time for Uber to come together with government to raise the standard of work for all," he wrote. "The opportunity is now, and the responsibility is ours. The world has changed, and we must change with it."