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British Uber ruling: What does it mean for alt-labor?

A British court granted two Uber drivers paid vacation days and a guaranteed minimum wage on Friday. It's a shift in the way we think about alt-labor, and not everyone welcomes the change.

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    A British tribunal on Friday ruled that Uber drivers receive a minimum wage and paid vacation days.
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A British court may just have put itself at the forefront of a revolution in the way we think about work and benefits.

On Friday, the Central London Employment Tribunal ruled in favor of two Uber drivers in Britain, agreeing that they should be given paid vacation days and a guaranteed minimum wage. The GMB union said that this decision could affect as many as 30,000 drivers.

The case has been watched closely by workers in the so-called "gig economy": self-employed contractors who operate without the social safety net traditionally offered to full-time company employees. Some say it’s a step to protect a growing segment of the working population, but Uber may be concerned about the effects of this decision on its business model.

Recommended: Top 10 cities for 'gig economy' workers

Laurent Belsie described the phenomenon in The Christian Science Monitor on Monday:

Welcome to 21st century work. Instead of holding full-time jobs, millions of workers are contracting out their labor for minutes to months at a time. Called contingent, independent, or solo works – or sometimes alt-labor – it is not particularly new (think temp workers or substitute teachers). What is new is their ranks are growing, apparently rapidly.

In the United States, alternative labor can account for almost all job growth since 2005, a new National Bureau of Economic Research found. Though some economists question this measurement, the ranks of the independently employed have undeniably swelled in the past decade.

That pattern is similar in developed European countries. Together, more than a quarter of the working-age population in these countries are in the alt-labor market.

That means the Uber suit is likely to be just the beginning of a struggle over the relationship between alt-labor workers and the companies that employ them, explained Sean Nesbitt, a partner at international law firm Taylor Wessing. 

“With conflicting data over the size and impact of the gig economy, there is too much at stake for government, business, unions, and the individuals who work in the gig economy for this to be anything other than the first in a series of battles,” he told the Associated Press.

Uber drivers, along with foster carers and couriers, work through single organizations, and have begun to challenge their status with those companies, calling for the benefits that full-time workers get. Without these worker protections, alt-labor is essentially encouraging income inequality, some analysts have suggested.

But Uber says it is a technology company that connects self-employed drivers with people who needs rides. From that perspective, the company does not employ the drivers at all. Some have suggested that asking the company to provide benefits and guarantee a minimum wage may have a negative effect on Uber’s business model, which hinges on providing a low-cost service.

Uber also believes that the ruling – which it is fighting – would limit drivers who "want to keep the freedom and flexibility of being able to drive when and where they want." That’s something most drivers value, argued Jo Bertram, the company’s regional general manager.

Similar cases have been brought in the United States, where labor laws may make it difficult to provide certain benefits to workers who are not full-time employees. In June 2015, the California Labor Commissioner’s office ruled that a San Francisco Uber driver should be classified as an employee. In December, the Seattle City Council said that drivers for ride-sharing services should be allowed to form unions.

Material from the Associated Press contributed to this report.

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