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The biggest threat to the Gig Economy

Brian O'Sullivan | March 1, 2017

What do you call a thousand lawyers at the bottom of the sea?
A good start.

I heard this joke a lot growing up when people found out my father was a lawyer. The joke was always told in jest, but to the owners of gig employee businesses, it’s nothing to laugh about.  Lawyers and lawsuits might just be their downfall.

LAWSUITS APLENTY

Continued lawsuits against the companies who employ gig workers is one of the few things that could truly bring down the burgeoning Gig Economy. There are literally thousands of lawsuits by independent contractors of the Gig Economy suing these big companies, and it’s becoming a very scary reality of employing people who aren’t considered employees.

UBER has been in and out of court since their launch back in 2009. Amongst the things they are being sued for: Employee Benefits, Early termination, Price Fixing, Safety, and many, many more.

One of the major problems for the companies who employ gig economy contractors is that it’s impossible for a company the size of UBER to properly vet all of their drivers. Their “employees” may have to have clean driving records, but besides that they don’t know much about their employees.  A sexist comment, a minor crash, and obviously anything major will likely land UBER in court.

While UBER is trying to distance themselves by saying their drivers are independent contractors, they will be added to any of these lawsuits, because they are the ones with the deep pockets. If “Creepy Bob” worked as an UBER driver and tried to touch a female passenger, and she files a lawsuit, her attorney is undoubtedly going to add UBER as a defendant. They have the money and they might be willing to settle out of court, making money for the plaintiff and her attorney. “Creepy Bob”, who only works as an independent contractor for UBER, certainly is not worth suing alone.

And that’s where the problem lies. Although companies like UBER are trying to say that people who work for them are just independent contractors, if they are continually added on as co-defendants, they may not find this relationship so hunky dory. I could see them limiting the amount of contract work, and starting to employ more drivers full time. The ease and simplicity of the UBER app would still make people choose it over a random Yellow Cab, so UBER would still be highly profitable even without all of the Gig Employees.

The problem is that the people who are just looking for part time work might be cut out of the mix.  With full time employees, UBER might find it doesn’t have as much liability as it has with millions of part time employees.

I haven’t even discussed wrongful death suits in which UBER is being sued, and those promise to be the most expensive of all.  They settled a case in which a six year old girl was killed in San Francisco by an UBER driver back in 2013.   The cost of dealing with these lawsuits versus paying the drivers as employees will be of the utmost importance, and could cause a change in how UBER drivers sign up.

IN ENGLAND TOO

And this is not just the case in the always litigious United States.   England just had a high profile case in which a plumber named Gary Smith had a heart attack and sued his employer, saying he was entitled to sick pay. The company countered that he was self-employed and refused to pay. The courts found in the favor of Mr. Smith and ordered the company, Pimlico Plumbers, to pay for his sick pay as he recovered.

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In another case in England, Maggie Dewhurst, who worked as a courier, should be considered a worker for the company and not just self employed, the judge ruled.  Most courts seem to be siding with the independent contractors and that will make it a tough decision for these massive companies.

The problem will be that they may see independent contractors as more trouble then they are worth.  If the contractors can sue companies like UBER, or if UBER can be included in lawsuits with the contractors, they may decide to go the more traditional route, where they are less liable for actual employees.

And while that may help people who want medical insurance, sick leave, and the like, it may help to squeeze out all the people who want to work 5-30 hours a week.  And that’s really the bread and butter of the gig economy.

 

 

 

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