The tech-driven gig economy is running afoul of employee rights
June 11, 2015 2:00AM ET
One Florida man’s unemployment claim could help take down a unicorn.
In April, Darrin McGillis filed for unemployment benefits from Uber, claiming that he was unable to continue driving for the company after his vehicle was damaged. Uber is already facing a handful of lawsuits alleging that drivers should be classified, treated and paid as employees, but McGillis effectively jumped the line. With his claim approved by the state, he is effectively Uber’s first employee driver — and a forerunner of likely more legal trouble to come for the growing app-based service economy that relies on legions of underpaid and underprotected contract workers in order to boost their profits.
The companies of the gig economy, the on-demand economy, the 1099 economy — whatever you want to call it — have proved the most financially successful and most ethically and legally vexing of Silicon Valley’s recent startup surge. The apps may be new, but the contract work arrangement keeping these companies humming is hardly a unique or recent innovation. Hiring contractors to lower tax and legal liabilities has been a business strategy for decades. Taxi drivers were freelancers long before Uber disrupted personal vehicle travel, and they joined blue- and white-collar freelance workers across a variety of industries, from home health aides to truck drivers to engineers.
Potential class-action lawsuits like the ones pending against Lyft and Uber in California may chasten the fast-growing app-based service economy and raise awareness of worker misclassification. But the other millions of freelancers who bear the higher cost of independence with few if any of the protections that come from having a staff job will be as precarious as ever without reforms.