Why Uber Refuses to Hire Drivers as Full Time Employees

Problem at Uber
Introduction
Uber has 22,000 employees worldwide and approximately half of its employees work inside the US. The company has nearly 1 million drivers in the US and approximately 4 million worldwide (Sainato, 2019). The problem that Uber has is that it does not consider its drivers as actual employees even though this categorization has been challenged at the federal level. Regulators have argued in the past that the company should count its drivers as employees rather than as freelancers or contractors. Drivers too have argued that they deserve the benefits, protections and compensation that regular employees receive (Rapier, 2019). However, the National Labor Relations Board's general counsel recently revealed that Uber’s drivers will continue to be classified as contractors. Though the company has viewed this as a victory for its business model, there are plenty of problems that remain as a result of this continuation of what many drivers view as an inappropriate classification. This paper will address the issue at the heart of this problem and describe why it is one that needs to be solved. It will discuss the qualitative design used to collect data using the interview method and will present the findings from three interviews with local area Uber drivers. Finally it will conclude with a reflection from a Christian perspective on how Uber should address its driver employment status issue.
The Main Problem
The main problem that Uber has is that its drivers who commit themselves full-time to driving for Uber feel unable to earn a just wage because the company has been allowed to classify them as contractors instead of as employees. It is akin to a company like Nike outsourcing all its production work to wage slaves in Asia. Uber has found a legal loophole that allows it to classify its drivers as contractors, meaning it does not have to provide any of the benefits, support or oversight that comes with having drivers the company employs. Those who drive for the company only part-time have no problem with the arrangement: it is the ones who rely upon the work full-time who feel exploited and rightly so. Uber has displaced the traditional taxi cab business model and undermined the taxi driver’s occupation with its app business that contracts out driving services to independent drivers.
There are indirect issues with Uber’s business, too, including the problem of sexual assaults that have occurred among Uber drivers. Between 2018 and 2019 there 6000 sexual assault claims involving Uber drivers or passengers (Bond, 2019). Because of the lack of oversight that Uber has and the lack of discretion it conducts in outsourcing driving services to anyone with a car, the company puts both drivers and passengers at risk (Bhuiyan, 2018).
Primary Cause of the Problem
The primary cause of the main problem of Uber’s drivers’ employment status is the fact that to be competitive and to differentiate itself from traditional taxi cab companies, Uber had to exploit the share economy and get contractors to provide driving services to riders. People looking for an easy way to earn extra cash on the side were happy with the idea. They did not have to undergo an evaluation or hiring process. They did not have to sit for interviews. All they had to do was download the app, show that they had a driver’s license and a suitable car, and they qualified to drive for Uber. As the business caught on, it put pressure on traditional taxi cab companies and soon many of them were put out of business because there was no more demand for their services. Uber drivers were much faster to respond and the fares were cheaper. Riders loved it because they felt like they had their own personal chauffer. No matter where they were or what time of day it was, they could rely on an Uber driver to show up within minutes and take them where they needed to go.
As people who worked for taxi cab companies now found, they had to sign up to work for Uber if they wanted to continue in the same line of work. The only problem was that they would no longer be employed under Uber’s terms. Uber was not “hiring” them but rather contracting out services to them. Thus, Uber was not responsible to them for health care benefits, dental insurance, sick pay, vacation time, retirement plan, pension, or any of the perks that come along with other places of business that actually hire employees as employees. In short, Uber was taking advantage of the share economy to undercut an established industry and to force employees of that industry to come work for Uber under the conditions and terms that Uber insisted upon. There would be no unions to help drivers organize; there would be no union protection; there would be no way for Uber drivers to fight for better pay. Yet if one wanted to drive, one had no choice but to work for Uber (or its competitor Lyft, which basically acted under the same terms). The arrangement not only meant that those who drove full-time for Uber would be making less, they would also have no job security, and no safety in terms of their physical health if they should be attacked while on the job (North, 2019). Or, as the pandemic of recent months has shown, if the economy were to suddenly close down, there would be no riders. Uber drivers would be left without support.
Methods of Addressing the Problem
Malos, Lester and Virick (2018) argued that because Uber drivers are not technically “employees” of Uber the company has no sense of accountability or of any plan for corporate social responsibility. Though the gig economy could be partly to blame for Uber’s driver employment status issue, the company has certainly exploited its contractors and undermined the traditional driver for hire industry with its app. The fact that federal regulators have permitted Uber to continue to count its drivers as contractors rather than as employees has not helped. To address the problem it will require a change of leadership at the top of Uber and a change of regulator positioning at the federal level. The former has already happened and the latter could happen with some lobbying on the part of Uber drivers, who could potentially unionize regardless of their status as contractors.
Kaltner (2018) points out that the matter of employment status for Uber drivers has been settled but that it still remains a problem because of the fact that these drivers have no job security, no benefits, and no safety net. They also are forced to work for below minimum wage in most cases if they want to be in the driving service industry. For many low skilled workers, there is no alternative and they must settle for something in the gig economy.
Rogers (2016) also shows that the predicament of Uber drivers is one that needs to be addressed but that in the current gig economy culture, corporations like Uber are going to do everything they can do to prevent their business model from being upended. Uber came into existence as a disruptor, and its shareholders want the company to succeed in that realm. If Uber were to hire drivers the way taxi cab companies do, its business model would deteriorate rapidly.
Moreover, Uber exercises such control over the ride share business that it is difficult for one to justify the driver employment status as contractor only, as Steinberger (2017) shows: “Uber determines the fare without any input from the drivers, and while drivers are free to set their own hours or refuse rides, this freedom is limited by the fact that if a driver declines three rides in a row, the software will mark the driver as unavailable. Additionally, Uber exerts control by maintaining a strict non-solicitation policy, which prohibits drivers from arranging for rides with Uber customers outside of the Uber software” (p. 585). In short, the so-called contractors that Uber uses as drivers are not really as free as other freelancers who can more legitimately be called contract workers. Uber is pushing the envelope with its classification of drivers as contractor workers and thus far the company has been able to get away with it. Full-time drivers are not happy about that.
To collect more information on this issue, interviews were conducted with three local Uber drivers. The first interviewee was a middle-aged man of Italian descent who had immigrated to the US ten years prior; the second interviewee was a 25 year old white college student; the third interviewee was a Middle Eastern man in his 50s who had been in America since 9/11 and used to drive a cab in New York City. These individuals were found simply by taking Uber rides and asking the driver to be interviewed for this study on what the employee status problem with Uber was for them and what they thought the solution could be. An unstructured interview method was used so that information could come up organically through conversation with the driver. Typically conversation began with a question about whether the driver was a full-time or part-time driver and what his thoughts on Uber’s driver employment status were.
Interview Data
The first person interviewed was the middle-aged Italian Uber driver who immigrated to the US ten years prior. His experience driving for Uber had been satisfactory for him, until the collapse of business during the pandemic. He was not displeased with the service and was generally happy with the work. He had purchased a Chrysler 300 out of lease and made payments on the vehicle out of his Uber profits. He said that he also drove for Lyft, though this was frowned upon by Uber. He said that he would not like to be employed in the traditional sense unless it meant full-time work with a possibility of overtime and benefits. He liked being able to set his schedule, though he admitted he drove 50 hours per week. So far he had not encountered any major maintenance issues with his car but he did admit that if he was in an accident with a passenger, his insurance would not cover the cost because it was against his carrier’s policy to use the car for ride sharing. This he said was risky for him and it put him in a very vulnerable position and if he was actually employed by the company it would be the company’s liability rather than his. That would be the big benefit for himself that he could see for becoming an actual employee of the firm. Aside from that he said that he did not have any concerns, not even for his safety.
The second person interviewed was a white 25 year old college student who drove Uber in his spare time. He said that he would not like to do it full time and that he was going to school for a law degree and simply liked driving people around in the community as it beat sitting at home. For him it was a way to get away from the books for a few hours and connect with people. He said it was also a good way for him to prevent himself from spending money by going out to bars himself. He preferred being a kind of chauffer or designated driver for others. He said that the only problem for him was keeping his car clean. Safety concerns were not an issue for him and while he sympathized with full-time drivers who wanted more compensation he felt that by actually hiring drivers and making them full-time employees it would kill the company’s business model and what makes it so attractive for riders and drivers alike.
The third person was a Middle Eastern man in his 50s who had previously worked as a cab driver in New York. He said that he would love to be a full-time employee of Uber and have benefits and insurance but he doubted that would ever happen because of the way the industry was going. Everything was going towards the gig economy and he was not able to make money any other way. With Uber at least there was some option, but he did not think the pay was great and he did not like the liability he had to assume for himself. However, he believed he could make it work and if it meant sacrificing on his part in some ways then that was what he had to do. He overall was resigned to his fate and saw no way out of it.
What the Findings Show
The findings indicate that none of the drivers interviewed expect Uber to change its policy on driver employment status—at least not voluntarily. Only one of the drivers interviewed said he did the work part-time and was content with that. The others indicated that they would like the work to be full-time and put in full-time hours but they lamented the pay and suggested that they had to live with the situation as it was because there was nothing they could do about it.
Would unionizing help these drivers? The opinion was that the drivers would not be able to unionize because they were not actually employed by Uber and thus their union would not carry and leverage. Unless there was a lobby to Washington to change the status of the company’s policy, there would be no change. The overall mood of the drivers was not very upbeat but they were grateful at least to have some income and they hoped that it would continue.
What could the company do to improve the situation? Uber’s leadership should be willing to assess the situation head-on and develop a better approach to its driver employment status problem. One possible solution could be that contractors work their way up to becoming full-time hires after so many miles driven, so many excellent reviews, and so many years on the road. This could potentially help give drivers the incentive they need to stay with the company and shoot for something bigger, such as sick pay, overtime pay, insurance, or other benefits.
The multi-cultural dimension of the issue suggests that it is primarily minorities or individuals of a low-skilled and low-income background who depend upon Uber for income. The college student had plans to become a lawyer and was more interested in driving more for a little side cash and as a way of distraction from his studies. The others relied upon it as their main source of income. Culturally speaking it seems that Uber is taking advantage of low-income populations, such as the Middle Eastern population in America or other European immigrant populations. The issue could be addressed through a cultural sensitivity training session for Uber’s executives and leaders. They could see through the acquisition of cultural competence that their approach to their drivers’ employment status is problematic because it does not consider the fact that these drivers may depend upon Uber for their livelihood.
If Uber were concerned about its corporate social responsibility it might be more willing to address this issue and to promote its own positive stance. However, current leaders are more beholden to shareholders who want to see maximum profits than they are to stakeholders who might want to see better social policies. The cultural issue at Uber is something that still needs to be addressed head on as it ties into the issue of driver employment status.
Reflection from a Christian Perspective
Christian leadership focuses on servant leadership. It puts the needs of others first—i.e., it puts stakeholder interests ahead of its own. Another way to put it is that the company that has Christian leadership puts people before profits. Putting people before profits has been found to be a successful approach to leadership, as leaders like Herb Kelleher of Southwest Airlines have shown (Reingold, 2013). Kelleher made his company into a success by making sure his employees were satisfied and happy. He believed that by motivating workers to be their best it was imperative that they have all their needs met. This is basically the same idea as Maslow’s hierarchy of needs model, which implies that people should have lower level needs met before they can achieve self-actualization.
From the Christian perspective, it is easy to see where the message of Christ would fall on this issue. Christ said, “Love your neighbor as yourself. There is no commandment greater than these” (Mark 12:30-31). What He meant was that people need to look out for others rather than try to take advantage of them.
The problem at Uber is that the company’s leaders are looking to take advantage of the poor economy and the plight of low-skilled workers with low-income and few options. These leaders recognize that the gig economy has become accepted in mainstream America and they are willing to exploit immigrants and minorities for their ride sharing service. It is not a very Christian approach to business or to leadership. The company should consider offering full-time employment to those drivers who would like to become full-time drivers for the company. This would allow the company to offer stability, benefits and a better service all the way around. The company could alter its app so that drivers can pick between full-time employees and pay a higher rate to support their pay or contract drivers for a lower rate. That is one option, but the company could literally brainstorm a thousand other options that might work even better. The key is that the company’s leaders should approach this issue from a servant leadership position and act as Christ would act towards those in need: attentive, with full heart and head oriented towards satisfying others.
Conclusion
Uber is in a good position as far as the ride share industry is concerned. However, the company’s lack of corporate social responsibility is not very positive and shows a troubling orientation towards the needs of its drivers. By refusing to hire full-time drivers as employees, the company has basically announced that it is willing to exploit low-skilled workers and make them dependent on the contractor for hire business model that Uber uses. Since Uber has undermined the traditional taxi cab business it has no real competition as a threat, so it can get away with this model. Yet from a Christian perspective Uber’s leaders are not demonstrating servant leadership and should rethink their approach to this issue. The less Uber offers to its drivers, the less Christ-like its leaders appear.
References
Bhuiyan, J. (2018). Uber’s sleek new product? Your safety. Retrieved from https://www.vox.com/2018/9/6/17824294/uber-safety-product-features
Bond, S. (2019). Uber Received Nearly 6,000 U.S. Sexual Assault Claims In Past 2 Years. Retrieved from https://www.npr.org/2019/12/05/785037245/uber-received-nearly-6-000-u-s-sexual-assault-claims-in-past-2-years
Kaltner, J. (2018). Employment status of uber and lyft drivers: Unsettlingly settled.  Hastings Women's LJ, 29, 29.
Malos, S., Lester, G. V., & Virick, M. (2018). Uber drivers and employment status in the gig economy: Should corporate social responsibility tip the scales?. Employee Responsibilities and Rights Journal, 30(4), 239-251.
North, A. (2019). It’s not just passengers being assaulted in Ubers. Drivers are at risk, too. Retrieved from https://www.vox.com/2019/12/7/20998646/uber-safety-report-sexual-assault-lyft-cases
Rapier, G. (2019). Uber scored a major victory when the US government ruled drivers aren't employees, but not everyone is happy. Retrieved from https://www.businessinsider.com/uber-drivers-disappointed-ruling-not-employees-2019-5
Reingold, J. (2013). Southwest’s Herb Kelleher: Still crazy after all these years. Retrieved from http://fortune.com/2013/01/14/southwests-herb-kelleher-still-crazy-after-all-these-years/
Rogers, B. (2016). Employment rights in the platform economy: Getting back to basics. Harv. L. & Pol'y Rev., 10, 479.
Sainato, M. (2019). ‘I made $3.75 an hour’: Lyft and Uber drivers push to unionize for better pay. Retrieved from https://www.theguardian.com/us-news/2019/mar/22/uber-lyft-ipo-drivers-unionize-low-pay-expenses
Steinberger, B. Z. (2017). Redefining employee in the gig economy: Shielding workers from the Uber model. Fordham J. Corp. & Fin. L., 23, 577.