This appendix provides a brief summary of some of the key developments in international jurisdictions that have moved to apply increased regulation to employment models in the on-demand platform sector.
California enacted legislation designed to provide gig economy workers with more rights. California's AB-5 legislation first passed the Senate Committee on Labor, Public Employment, and Retirement, and was enacted in September 2020. The purpose of the bill was to:
… provide that for purposes of the provisions of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity's business, and the person is customarily engaged in an independently established trade, occupation, or business.
The bill sought to codify a California Supreme Court decision known as 'Dynamex', by requiring businesses to apply an 'ABC test' to figure out whether an employee is an employee on a contractor. To categorise a worker an independent contractor, businesses must prove that the worker:
'A': is free from the company's control;
'B': is doing work that isn't central to the company's business; and
'C': has an independent business in that industry.
If workers don't meet all three conditions, then they have to be classified as employees.
After the law was passed, three of the major employers of gig workers—Uber, Lyft, and DoorDash—resisted reclassifying their workers, leading to a court case, the result of which was that the Californian Superior Court ordered the companies on 10 August 2020 to comply with the legislation. This would have meant that the companies 'would become responsible for providing the same benefits traditional employees are entitled to, including workers' compensation, unemployment insurance, family leave, and more'.
On August 10, 2020, the Superior Court of San Francisco ruled that Uber and Lyft were violating AB 5 and misclassifying their workers as contractors. Attorney General Xavier Becerra said: 'The court has weighed in and agreed: Uber and Lyft need to put a stop to unlawful misclassification of their drivers while our litigation continues.' The companies threatened to suspend operations in California. On October 22, on appeal, Uber and Lyft were given 30 days to implement changes 'unless Proposition 22 is approved'.
In the wake of the passage of AB-5, DoorDash, Lyft, and Uber initiated a 'ballot initiative campaign', Proposition 22, aimed at preventing their workers being categorised as employees. Uber contributed $59.5 million, DoorDash contributed $52.1 million, Lyft provided $49.0 million, InstaCart provided $31.6 million, and Postmates provided $13.3 million, making it a total spend of over US $205 million to finance the 'Yes' campaign. The 'No' campaign, funded by unions and others, received US $18.88 million. The ballot passed on 3 November 2020 with 68.63 per cent of the vote.
The ballot measure 'overrode' AB-5 on the question of whether app-based drivers are employees or independent contractors. The ballot initiative defined app-based drivers as workers who:
(a) provide delivery services on an on-demand basis through a business's online-enabled application or platform; or
(b) use a personal vehicle to provide prearranged transportation services for compensation via a business's online-enabled application or platform.
Then, in relation to those workers, Proposition 22 'enacted labor and wage policies that are specific to app-based drivers and companies, including':
payments for the difference between a worker's net earnings, excluding tips, and a net earnings floor based on 120% of the minimum wage applied to a driver's engaged time and 30 cents, adjusted for inflation after 2021, per engaged mile;
limiting app-based drivers from working more than 12 hours during a 24-hour period, unless the driver has been logged off for an uninterrupted 6 hours;
for drivers who average at least 25 hours per week of engaged time during a calendar quarter, require companies to provide healthcare subsidies equal to 82% the average California Covered (CC) premium for each month;
for drivers who average between 15 and 25 hours per week of engaged time during a calendar quarter, require companies to provide healthcare subsidies equal to 41% the average CC premium for each month;
require companies to provide or make available occupational accident insurance to cover at least $1 million in medical expenses and lost income resulting from injuries suffered while a driver was online (defined as when the driver is using the app and can receive service requests) but not engaged in personal activities;
require the occupational accident insurance to provide disability payments of 66 percent of a driver's average weekly earnings during the previous four weeks before the injuries suffered (while the driver was online but not engaged in personal activities) for upwards of 104 weeks (about 2 years);
require companies to provide or make available accidental death insurance for the benefit of a driver's spouse, children, or other dependents when the driver dies while using the app.
In addition, Proposition 22 required companies to develop anti-discrimination and sexual harassment policies, traffic and accident avoidance training programs, drug and alcohol policies and criminal background checks for drivers. It also defined drivers' 'engaged time' as 'the time between accepting a service request and completing the request'.
Some have criticised Proposition 22, saying drivers will be disadvantaged. A study by the University of California Berkeley Labor Center found that drivers 'will earn as little as $5.64 per hour under Prop 22'. However, other studies have found different results, including one by Thornberg, which estimates drivers 'are more likely to earn between $25 and $27 an hour, after accounting for driver expenses and wait time'.
According to Newsweek's Kristen Wong, a 'potential problem' with Proposition 22 is that:
The measure also make it nearly impossible for lawmakers to amend it in the future ... Changes in any of its provisions need to be approved by a super majority of seventh-eighths of the state legislature to pass.
Commentators have suggested that Proposition 22 is 'expected to reverberate beyond California', impacting on the legal and political battles in other jurisdictions in relation to gig work. This is particularly true as many gig companies, including Uber, Lyft and Intacart are headquartered in California.
Norton Rose Fullbright reported that legislation passed at the federal level in the United States 'could limit the impact of Proposition 22'. The President, Joe Biden and Vice President, Kamala Harris, opposed Proposition 22, with Biden promising 'to create a federal version of California's AB 5, implementing the same ABC test'. Norton Rose Fullbright wrote:
Rideshare companies have also been pushing states and the federal government to add a third classification, a hybrid between independent contractor and employee that would afford some, but not all of the benefits enjoyed by employees. The coming years will show the widespread effect that AB 5 and Proposition 22 in its wake will have on the country.
The continuing operation of AB-5
Shortly after it was enacted, a number of sectors were excluded from AB-5. Ms Wong said the state of California continued 'handing out exemptions in every direction', exempting truck drivers in January 2020:
And in September, California Governor Gavin Newsom signed an emergency measure to modify AB5 and loosen requirements for writers, photographers, musicians and other creative professionals. Now with Prop 22 passed, ride-sharing drivers will also be exempt.
Ms Wong observed that the exemptions to AB-5 mean that 'widespread changes to the gig economy that were anticipated … haven't materialized'. She also noted that similar legislation in other states 'has stalled'.
Freelance Isn't Free Act
New York has the Freelance Isn't Free Act, enacted in 2017. According to the Freelancers Union, the Act:
This groundbreaking law protecting freelancers from nonpayment was a victory for Freelancers Union members in New York City and serves as a blueprint for other cities and states.
Taxi and Limousine Commission Driver Income Rules
In August 2018, the New York City Council passed an ordinance enabling the Taxi and Limousine Commission to set minimum payments for 'for-hire vehicle drivers for trips dispatched by high volume for-hire services'. Accordingly, the Taxi and Limousine Commission's (TLC) Driver Income Rules, issued on 4 December 2018, sets minimum per-trip payment. While not constituting a 'minimum wage', these rules do regulate the minimum amount for-hire vehicle service providers must pay their drivers. The New York City Taxi Commission website makes it clear that these rules apply to Uber and other rideshare drivers:
TLC's driver pay rules apply to any driver working for a High-Volume For-Hire Service (Uber, Lyft, Via). For more information visit High‑Volume For-Hire Service. These rules establish a minimum per-trip payment to drivers; they do not establish a minimum wage or set the exact driver payment or passenger fare.
The committee heard evidence around the operation of these rules at a public hearing on 20 April 2021. This evidence is discussed in Chapter 6 of this report and the transcript for the hearing is available on the committee's website.
Dependent Worker Act
In 2019, lawmakers in New York attempted to secure passage of the Dependent Worker Act; legislation designed to provide gig workers with the right to unionise and bargain collectively and to pursue claims against 'wage theft', among other matters. The Act 'aimed to define a new class of worker'—the 'Dependent Worker'—who would be defined as:
… an individual who provides personal services to a consumer of such personal services through a private sector third-party that: establishes the amounts charged to the consumer; collects payment from the consumer; pays the individual; or any combination of the preceding.
The bill, which provided some protections to these workers, but not all protections enjoyed by employees, ultimately failed and a New York gig economy taskforce project stalled, as dealing with COVID-19 became the priority for the Governor in early 2020.
Media reports from early 2021 indicated that New York lawmakers have taken note of events in California and are seeking to find alternative ways of providing protections to gig workers, without necessarily classifying them as 'employees':
As Albany mulls various proposals to grant its own gig workers more benefits, labor experts said that story is a warning to some in the labor movement that similar efforts to reclassify gig workers as employees in New York will face an uphill battle.
During the COVID pandemic, the Seattle City Council has passed two ordinances—the 'Gig Worker Premium Pay Ordinance' and the 'Gig Worker Paid Sick and Safe Time Ordinance'. These ordinances temporarily impose increased requirements on transportation network and food delivery network companies, in relation to workers, as below.
The Gig Worker Premium Pay Ordinance
The Gig Worker Premium Pay Ordinance went into effect on 26 June 2020. It is designed to compensate gig workers for 'the hazards of working with significant exposure to an infectious disease'. Under the ordinance, food delivery network companies are required to pay delivery drivers at least $2.50 in 'premium pay' for any delivery made with a pick-up or drop-off location in Seattle, 'for the duration of the coronavirus civil emergency'. Remittance advice must itemise the premium pay, and companies must provide drivers with a written copy of 'their rights under the law'.
According to the International Lawyers Network:
The ordinance also prohibits food delivery network companies from retaliating against drivers for exercising their rights under the law, and from: (i) reducing or modifying service areas in Seattle, (ii) reducing drivers' compensation, (iii) limiting drivers' earning capacity, including by restricting drivers' access to online orders, and (iv) charging customers additional fees for grocery deliveries, if the ordinance is a 'motivating factor' in the decision.
The Gig Worker Premium Pay Ordinance does not apply to ridesharing services like Uber and Lyft. This is because Seattle city council members proposed separate regulations to 'establish a minimum wage and other protections for drivers' (discussed below).
The Gig Worker Paid Sick and Safe Time Ordinance
The Gig Worker Paid Sick and Safe Time Ordinance went into effect in July 2020, covering transportation network and food delivery network companies. It imposed a temporary obligation upon these companies 'to provide paid sick and safe time benefits to ride-share and food delivery drivers, notwithstanding the drivers' independent contractor status'. Drivers earn one day of paid leave for every 30 calendar days they work, dating back to 1 October 2019, when they were engaged. The ordinance continues 'through 180 days after certain civil emergency orders relating to the coronavirus pandemic have been terminated'.
Covered businesses must provide drivers with information on their rights, and are 'prohibited from retaliating against drivers for exercising their rights under the law', or be subject to 'various penalties and fines'.
The International Lawyers Network noted that, although the ordinances are temporary, they may have lasting effects, and 'state and local governments in other jurisdictions may ultimately adopt legislation with similar objectives'.
Minimum pay rate for rideshare drivers
From January 2021, rideshare companies in Seattle have been obliged to provide a minimum pay rate of $16.39 per hour (after expenses; equivalent to the minimum wage in Seattle for companies with more than 500 employees) to their drivers, under law passed by the Seattle City Council in September 2020. The laws also provide other protections, including the right to bargain collectively.
Reuters reported that city officials argued the regulation was aimed at preventing Uber and Lyft from 'oversaturating the market at drivers' expense', leaving drivers to 'cruise' around, unpaid for hours on end. Reuters referred to research from the University of California and the New School, which 'found drivers net only about $9.70 an hour, with a third of all drivers working more than 32 hours per week'.
In 2018 the government established the Committee on Regulation of Work 'to advise the government on the future of the regulation of the labour market'. It presented its final report on 23 January 2020. The committee argued for a simplification of employment contracts into three clear types:
an employment contract (fixed-term or permanent);
a temporary agency contract; and
a contract for the provision of services in case of genuine self‑employment/entrepreneurship.
Under the model proposed, the 'classification of employees and self-employed persons should be clear and needs to be enforced'.
As at January 2020, the government was considering the report. In December 2020, Norton Rise Fullbright reported that government:
intends to begin considering 'a presumption of an employment relationship for gig economy workers';
has launched a six-month pilot of a web-based module, which 'allows contracting parties to determine whether a person should be categorised as self‑employed or as an employee according to the criteria applied by the tax authorities'; and
is intending to facilitate 'a broad social discussion about the way work is carried out and to what extent certain working methods are desirable'.
The United Kingdom
In a number of countries, including New Zealand, Canada and the United States, on-demand platform workers tend to be categorised in a similar manner to Australia—as independent contractors. However, the United Kingdom (UK) uses a different categorisation, where the category of 'worker' exists between employees and independent contractors.
Norton Rose Fullbright reported in December 2020 that there were 'around five million' people working in the gig economy in the UK in 2019, and that figure 'is expected to have increased in 2020 as unemployment has risen and more people turn to flexible work'.
The UK is distinct from many countries in that it has three categories of employment status—employees, workers and self-employed. All employees and workers are entitled to minimum wage, minimum paid national holidays, rest breaks, protection against discrimination, whistle-blower protections and protections against wage theft. However, employees have 'extra employment rights and responsibilities' that don't apply to workers, including:
statutory maternity, paternity, adoption and shared parental leave and pay (workers only get pay, not leave);
minimum notice periods if their employment will be ending, for example if an employer is dismissing them;
protection against unfair dismissal;
the right to request flexible working;
time off for emergencies; and
Statutory Redundancy Pay.
Those who are self-employed 'run their business for themselves and take responsibility for its success or failure'. They do not have the employment rights and responsibilities of employees. A person is generally classed as a worker, rather than self‑employed, if:
they have a contract or other arrangement to do work or services personally for a reward (your contract doesn't have to be written);
their reward is for money or a benefit in kind, for example the promise of a contract or future work;
they only have a limited right to send someone else to do the work (subcontract);
they have to turn up for work even if they don't want to;
their employer has to have work for them to do as long as the contract or arrangement lasts; and
they aren't doing the work as part of their own limited company in an arrangement where the 'employer' is actually a customer or client.
The category of 'worker' has similarities to the Australian category of 'casual employee'.
Norton Rose Fullbright reported a recent trend in cases related to workers in the gig economy, where judges have found that 'the individuals are workers rather than self-employed':
The decisions have considered the degree of control that the business has over how the individual carries out the task, and that many of the individuals appear to be integrated into the business wearing a uniform and company branding. A couple of cases have indicated that the individuals are self-employed, looking at the fact that the individual in particular is able to provide a substitute and that the substitution clause is unfettered and genuine.
UK Supreme Court ruling on Uber drivers
This approach culminated in a unanimous decision on 19 February 2021 (Uber BV and others v Aslam and others) by the Justices of the UK Supreme Court that Uber drivers are not independent contractors, but are in fact 'workers', with rights to 'a minimum wage and other worker protections, including a right to receive pay while deadheading (or driving without passengers between rides)'. The Justices' decision was based on their assessment that the tasks undertaken by drivers are 'very tightly defined and controlled by Uber', requiring the designation of worker.
Commentators have suggested the case has ramifications for the way in which rideshare and food delivery driver platform workers are classified around the world. One of the claimants, Mr James Farrar from the App Drivers & Couriers Union, said: 'This ruling will fundamentally re-order the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery'.
Uber released a counter-statement in relation to the ruling, saying it applied only to those workers from 2016, and was not relevant to current workers:
Over the last few years we have made significant changes to our business and have been guided by drivers every step of the way. Many of the examples called out in the judgement are no longer relevant. For example, drivers now have full transparency over the price and destination of their trip, and since 2017 there has been no repercussion for rejecting multiple consecutive trips. … We've made a lot of progress in recent years, but we know there is more to do. We will now launch a nationwide consultation to seek the views of all active drivers who use our app in the UK. We want to understand what drivers value about Uber and–crucially–where things could improve.
In March 2021, Uber announced that its drivers in the UK would now be classed as 'workers':
From tomorrow, more than 70,000 drivers in the UK will be treated as workers, earning at least the National Living Wage when driving with Uber; this is a floor and not a ceiling, with drivers able to earn more, as they usually do. They will also be paid for holiday time and all those eligible will be automatically enrolled into a pension plan.
Policy and legislative reform
In the policy arena, a 2017 UK government report, Good Work: The Taylor Review of Modern Working Practices, (the 'Taylor Review') made 53 recommendations aimed at improving the labour market in the UK. Recommendations included that the three-tier approach to employment status remain in place, with the 'worker' category renamed as 'dependent contractor', and a new test for determining work status adopted. In its 2018 response, the UK government noted the Review's recommendations, and stated that it was 'committed to taking action in this area', and was commencing consultation.
In 2018, the government held consultations on a number of matters including employment status, specifically:
codifying the common law employment status tests;
creating new 'objective' statutory employment status tests;
redefining the 'worker' employment status;
defining 'self-employed' and 'employer' in legislation; and
aligning the frameworks for determining employment status for employment rights and tax.
In February 2021, the Guardian Australia reported that new legislation around the gig economy and zero-hour contracts had been delayed.
Workers in Canada are generally categorised as 'employees' or 'independent contractors', with employees defined as those subject to significant organisational control, and independent contractors defined as those with more freedom. A third category is the 'dependent contractor', who may have a different levels of 'economic dependence, vulnerability, bargaining power, exclusivity and permanence' than independent contractors.
While case law in Canada 'provides no clear consensus on the status of gig workers', Norton Rose Fullbright notes a ' a growing attractiveness in the case law towards finding gig workers to be dependent contractors', who have the right to unionise, and 'may also be owed certain entitlements upon termination without cause in some jurisdictions'.
In February 2019, the Canadian federal government established the Expert Panel on Modern Federal Labour Standards, which examined 'protections for non-standard workers, including gig workers'. The panel's Report addressed working conditions of gig workers and 'the expressed need for and potential advantages of securing stronger protections and benefits for those working in the gig economy'. However, with 'no new or amended legislation … expected any time soon', Norton Rose Fullbright caution that litigation in this area is likely to continue, especially considering the 'substantial' and growing 'contribution of gig workers to the Canadian economy'.
In France gig workers are traditionally classed as self-employed. A law was passed in 2017 which granted 'some minimal rights' to individuals who worked providing services through digital platforms, including:
… the obligation for the company to pay for work-related accident insurance cover, some sparse obligations to cover the financial cost of professional training and the right to strike and to constitute a trade union.
The legislation stopped short of clarifying the 'status of such individuals', leaving it up to the courts to determine each relationship 'based on the facts of the case'.
In 2019, legislation that would 'allow platforms to set up their own social policy or charter determining the individuals' rights and obligations' was struck down as 'invalid' by the Constitutional Court, 'on the basis that the courts should have the power to qualify the individual as an employee'. In 2020, a Decree was published which provides the authorisation of these kinds of charters by government administration. However, it did 'not introduce any new rules on determining the status of the individuals'.
The Supreme Court has decided in at least two cases (2018 and 2020) that gig economy riders/drivers were in fact employees, because they could be sanctioned for not accepting work, and could not set the price of their services. Norton Rose Fullbright reported that:
In light of the recent Supreme Court decisions and of the EU Directive on transparent and predictable working conditions (Directive 2019/1152), which Member States have until August 1, 2022 to transpose into national law, the government is working on a law, the timing and content of which remain uncertain.
European Union gig economy consultation
On 24 February 2021, the European Commission launched a consultation to address 'working conditions for digital platform workers in the gig economy'. The consultation will as trade unions, employers and other stakeholders for their views on the following questions:
Do you consider that the European Commission has correctly and sufficiently identified the issues and the possible areas for EU action?
Do you consider that EU action is needed to effectively address the identified issues and achieve the objectives presented?
If so, should the action cover all people working in platforms, whether workers or self-employed? Should it focus on specific types of digital labour platforms, and if yes which ones?
If EU action is deemed necessary, what rights and obligations should be included in that action? Do the objectives presented in this document present a comprehensive overview of actions needed?
Would you consider initiating a dialogue under Article 155 TFEU on any of the issues identified in this consultation? (Article 155 of the Treaty on the Functioning of the European Union provides for dialogue between employers and labour unions or representatives).
The consultation comes as the COVID-19 crisis has accelerated the digital transformation of the European economy and the expansion of the platform model: 11% of the EU workforce say they have already provided services through a platform. It will tackle particular areas of concern around health and safety and limited access to social protection and benefits for platform workers.
The consultation is intended to be run over two stages, with results feeding into the European Union's promised 'legislative initiative on platform work', scheduled for the end of 2021. The consultation document is available here.
The European Commission has released a first phase Consultation Document to guide submitters.
Motor Vehicle Aggregator Guidelines
In 2020, the Indian Ministry for Road Transport and Highways issued regulations designed to 'govern how ridesharing operators such as Uber and Ola operate within the country'.
minimum base rates for fares (between 25 and 30 rupees);
set 'maximum surge prices' (1.5 times the original fare);
control how long drivers may be logged into the app on one day; and
set a maximum '20 per cent commission on rides, with the remaining 80 per cent of the fare going to the driver'.