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Europe hits Uber and other gig-economy firms with tough new rules that will give many contractors the rights of employees

December 9, 2021, 3:37 PM UTC

Earlier this year, the European Union’s leadership fired a warning shot across the bows of Uber, Deliveroo, and other “gig economy” companies. The message was plain: Get serious about workers’ rights or face a legislative crackdown.

Crackdown it is, then.

On Thursday, the European Commission unveiled a raft of proposals that would give the platforms’ workers much stronger labor rights and social benefits, as well as protections when their work is being managed by algorithm.

The core weapon here is a proposed directive that would formally create an employer-worker relationship when the company meets two of the following criteria: It determines how much the workers get paid; tells them how to dress and conduct themselves; electronically supervises their performance; restricts their freedom to choose when to work or not; or stops them from building their own client base or working for anyone else.

For the workers, that means the right to the minimum wage, collective bargaining, working time and health protection, paid leave, unemployment and sickness benefits, and contributory pensions. A lot of people would be affected here; the European Commission estimates 5.5 million platform workers across the EU are incorrectly classified as being self-employed.

For companies such as Uber, it would mean a reversal of the current situation, in which workers who want recognition as such have to go to court to fight for it: Under the new rules, a platform that wants to claim it isn’t employing its drivers or riders will need to prove that’s the case.

Uber has already lost this battle in several European countries, thanks to successful legal challenges by its workers. The most recent example came in September, when a Dutch court said the U.S. firm was employing its drivers. A similar ruling came through in the U.K. in February, and another in Germany late last year pointed in the same direction.

The legislation would also oblige platform companies to use humans to monitor working conditions, and to allow workers (and “genuine self-employed” contractors) to challenge decisions made by the firms’ algorithms. The companies would also have to give national authorities easier access to their data.

“Our proposal for a directive will help false self-employed [people] working for platforms to correctly determine their employment status and enjoy all the social rights that come with that,” said Margrethe Vestager, the Commission’s digital (and competition) chief. “Genuine self-employed on platforms will be protected through enhanced legal certainty on their status, and there will be new safeguards against the pitfalls of algorithmic management. This is an important step towards a more social digital economy.”

Growing workforce

According to the Commission, 28 million people in the EU currently work through “digital labor platforms”—that’s just over 6% of the EU’s population, or 13% of its overall workforce. The tally is expected to reach 43 million in several years’ time.

Over in the U.S., Pew research released on Wednesday found that nearly one in six Americans has earned money through such platforms, with younger age groups and lower-income cohorts being most likely to have done so. Four percent of Americans are currently doing gig work, Pew said, and another 5% have done some gig work in the past year.

There are no federal legislative proposals in the U.S. that would match what the European Commission just unveiled, although the Biden administration did earlier this year jettison a Trump-era rule that made it easier for the platforms to classify their workers as independent contractors. Late last year, following a heavy lobbying campaign by Uber and others, California voters decided such companies should be exempted from a state law requiring them to classify their workers as employees.

The type of law being proposed by the Commission—a directive—would need to be transposed into national law by each EU member state, which gives governments some flexibility in how they do so. (Regulations such as the General Data Protection Regulation, by contrast, must be uniformly applied across the bloc.) However, the criteria for classifying platform companies as employers would remain the same in all EU countries.

Like all EU laws, it will need to go through a legislative process that typically takes more than a year, involving scrutiny and amendments by the European Parliament and by member states. That said, the European Parliament already backed much of the directive’s contents in a September resolution.

Alongside the directive proposal, the Commission also published an official communication setting out its approach to platform work, which it would like to see “lay the foundations for work on future global standards.” It also launched a consultation on new guidelines about how self-employed people can collectively organize to improve their working conditions, without breaking EU competition law.

Reactions

Uber, for one, is not impressed by the Commission’s proposals. A spokesperson said in an emailed statement that the directive would put “thousands of jobs at risk, crippling small businesses in the wake of the pandemic and damaging vital services that consumers across Europe rely on.”

In the same email, a spokesperson for lobby group Delivery Platforms Europe said that “a recent survey of 16,000 couriers across the EU found that flexibility was the No. 1 reason they choose to work with platforms. Where rules have facilitated status reclassification, the negative outcomes for couriers themselves as well as for restaurants and customers is clear.”

European Trade Union Confederation chief Ludovic Voet said the proposed directive “provides long overdue certainty for workers who will no longer face having to take a multinational company to court in order to have something as basic as an employment contract,” adding that it “also provides a level playing field for responsible businesses who faced unfair competition from platforms.”

Labor law professors Valerio De Stefano and Antonio Aloisi wrote in a Thursday article that the Commission’s proposals “would materially reshape work through digital platforms,” and pointed out that the Ubers and Deliveroos of this world may not be the only companies affected: Platforms such as Amazon Mechanical Turk and Upwork, which let people perform tasks remotely, could also fall under the law’s scope.

“Without qualification, the social acquis providing minimum standards in working conditions and labor rights across the union would extend to platform workers. The time of platform exceptionalism seems to be over,” they wrote. “A wide consensus is emerging in policymaking and public opinion. For the first time, the front of platform companies has fragmented.”

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