Business First Look

What does a British court battle mean for workers' rights in the gig economy?

A British plumbing company has lost an appeal over the case of a job-to-job worker, after the Court of Appeals rejected its claim that he was an 'independent contractor.'

A Pimlico Plumbers van is parked in London, Britain on February 10, 2017.
Stefan Wermuth/ Reuters
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Britain’s Court of Appeals upheld a ruling on Friday in favor of a plumber who argued that his job-to-job work for one company entitled him to employment rights, rejecting the firm’s claim that he was an “independent contractor.” The case is the latest among a wave of court cases reconsidering labor practices in the growing freelance economy.

“We are absolutely delighted,” Jacqueline McGuigan, the plaintiff's lawyer, told The Guardian on Friday. “The decision brings welcome clarity to the issue of employment status relating to work in parts of the economy.”

Gary Smith, who claims he was dismissed from work after trying to reduce his hours after a heart attack, brought the case against Pimlico Plumbers, where he worked full-time for six years. While the plumber argued that he was entitled to rights such as sick pay, the company argued that he was not because he was technically self-employed.

Yet, amid the ongoing battle over employment status in the growing "gig economy," the decision may have wider implications. About 162 million people in the United States and Europe participate in the gig economy, according to an October 2016 report by the McKinsey Global Institute. And those numbers are only poised to grow with the proliferation of apps and websites that connect short-term, flexible jobs with workers.

But the business models of these companies that rely on on-demand workers have come under scrutiny in recent years. Without recognition as full-time employees, many lack greater legal support and protections. Minimum wage, overtime pay, family and medical leave, unemployment insurance, retirement savings, health insurance, and workers' compensation for injuries at work – all were designed for people in traditional jobs.

For instance, ride-hailing service Uber, a company that has seen its own share of controversy over benefits for its drivers, has tried to claim that by not setting hours for its drivers, who also have the freedom to work for competitors, Uber drivers do not qualify as employees, and thus, do not receive benefits.

The legal landscape has slowly begun to challenge that assumption, however. In December 2015, the Seattle City Council voted unanimously to approve a proposal that allows drivers of both ride-sharing services and taxi companies to unionize, giving them the power to organize and collectively bargain for pay and worker protections. In April 2016, a California judge rejected Uber's proposed $100 million settlement in a class-action lawsuit brought by drivers in California and Massachusetts who wanted compensation for job-related expenses. 

A London employment tribunal took action against Uber further, ruling in October that Uber drivers are “workers” and should receive national living wage and vacation pay. Though the San Francisco-based firm said it would appeal against the judgement, it was a blow to the industry’s business practice, and has opened the way for other contract workers in Britain, such as Mr. Smith, to seek compensation from the courts.

As gig-economy companies and court systems continue to battle over workers' rights through individual lawsuits, some suggest that better defined regulations that provide protections for those trying to earn honest wages are needed overall.

“It’s absurd to wait for the courts to decide all this case-by-case. We need a simpler test for determining who’s an employer and employee,” Robert Reich, a former secretary of labor and a professor of public policy at University of California, Berkeley, wrote in 2015. “I suggest this one: Any corporation that accounts for at least 80 percent or more of the pay someone gets, or receives from that worker at least 20 percent of his or her earnings, should be presumed to be that person’s ‘employer.’ ”

This report includes material from the Associated Press.