Uber has spent millions of dollars funding campaigns and lobbyists to convey one message: Reclassifying its drivers from independent contractors to employees may require the company to completely change the service it provides.
But the ride-hailing giant’s backpedaling following a recent ruling from the British Supreme Court questions the validity of that claim.
The court’s decision stops short of classifying the 70,000 drivers in the U.K. as employees. But the court ruled that drivers should be classified as workers, and therefore be entitled to a minimum wage and vacation time.
Like it has done in the U.S., Uber lobbied to keep its drivers classified as independent contractors, only admitting defeat after the ruling came down last week. “We could have continued to dispute drivers’ rights to any of these protections in court,” Uber CEO Dara Khosrowshahi wrote in an opinion piece for the Evening Standard on Wednesday. “Instead, we have decided to turn the page.”
But it turns out all the huffing and puffing may not have been that big of a deal to begin with.
Analysts at Bank of America said they believe that the change will only increase Uber’s driver costs by 7% to 9% and that they could likely be offset by lowering driver incentives. And the ruling may have strengthened Uber’s case for creating a third way to classify drivers, which would keep them labeled as independent contractors but provide them with additional benefits.
“Overall, we view this as a similar outcome to the California Prop 22 classification,” the note reads. “Uber can use the change as an example for other countries (or U.S. states) that don’t have a third employment classification.”
Angelo Zino, analyst at investment research firm CFRA Research, said CFRA is “surprised by Uber’s decision, given efforts to avoid such a move in the past.” But ultimately, the analyst doesn’t expect the move to alter Uber’s profitability forecast. The company had previously said it expected to be profitable, minus certain expenses, by the end of the year.
Though Uber lost its big battle in the U.K., don’t expect it to completely change its tone moving forward. In his op-ed, Khosrowshahi left the door open to taking different approaches for different countries.
“The future of work is too big of an issue for a one-size-fits-all solution, and that’s OK,” he wrote.
So Uber may not have completely flipped the script. But at least it’s willing to admit the current benefits provided to independent contractors, as Khosrowshahi says, is “simply not good enough.”
Danielle Abril
@DanielleDigest
danielle.abril@fortune.com
NEWSWORTHY
Groceries, home goods, and … health care? Amazon is once again expanding what it can deliver. This time, it’s aiming to deliver telehealth services to employers across the country. The service, called Amazon Care, began as a pilot at its Seattle headquarters in 2019. But on Wednesday, the company announced that it’s expanding the service to other companies, starting with those located in Washington. In summer, Amazon said it intends to offer the service to companies in all 50 states.
Listen up, groupies. Facebook is cracking down on groups, aiming to limit the reach of those that break the service’s rules. Facebook said group members who repeatedly violate the rules will be temporarily blocked from posting or commenting in any group. The service also plans to alert users when they’re about to join a group that has violated Facebook’s rules, in an attempt to make them think twice about joining. Facebook said it will also make rule-breaking groups harder to find by pushing them down the list of recommended groups.
TikTok wants to be even more social. Speaking of groups, TikTok is reportedly considering debuting a group messaging feature this year, according to Reuters. The feature, which has been available on TikTok’s Chinese sister app Douyin since 2019, is expected to make TikTok more socially interactive. It would also allow TikTok influencers to more easily chat with their fans and increase its competition with Facebook. Let’s hope TikTok is prepared for the moderation challenges associated with group messaging.
Shoo, pesky robocalls! If you’re tired of those annoying robocalls alleging that your car warrantee is out of date, you’re not alone. It’s become such a massive problem that Verizon, AT&T, and T-Mobile are sharing information in order to block more spammy calls, Aaron reports. Meanwhile, the Federal Communications Commission is also trying to combat the issue, slapping two telemarking firms with a record fine of $225 million for making 1 billion robocalls in 2019.
FOOD FOR THOUGHT
The coronavirus pandemic wreaked havoc on U.S. employment, disproportionately affecting communities of color and other marginalized groups. But possibly exacerbating the crisis are artificial intelligence tools some employers use to evaluate candidates. In an opinion piece for The New York Times, Alexandra Reeve Givens, chief executive of the Center for Democracy & Technology, and New York University A.I. professors Hilke Schellman and Julia Stoyanovich suggest that new laws may help curb racism and sexism in the hiring process.
The three experts point to a proposed law in New York City that would require the technology vendors to audit the tools for bias and discrimination. It also would require them to disclose the characteristics the tools measure. But Reeve Givens, Schellman, and Stoyanovich say the bill should go even further. It should require vendors to disclose what their audit finds, test the tools to ensure they measure what they say they do, and explain to job candidates how they will be screened by the systems. If done right, the bill could serve as a model for other cities and states or even federal regulators, they said.
“With this bill, the city has the chance to combat new forms of employment discrimination and get closer to the ideal of what America stands for: making access to opportunity more equitable for all. Unemployed New Yorkers are watching,” the authors wrote.
IN CASE YOU MISSED IT
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Busting Bitcoin myths: 7 misconceptions about the cryptocurrency By Alex Tapscott
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(Some of these stories may require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
Shaan Puri, an angel investor, recently tweeted an entertaining thread with a hot take: The buzzy social media app Clubhouse is doomed to fail.
The main issue, according to Puri: Clubhouse content has to be both interesting and live in order to attract new users and retain its early adopters. But Puri isn’t all doom and gloom. He ends the thread with the following tweet: “ps. I hope I'm wrong. I hope clubhouse solves the content problem, and becomes a $50B company - and people shove this thread in my face every year.”
The entire thread is worth a read if you’re interested in Clubhouse or even just a peek of what happens behind the curtain of rapidly growing startups.
