This is a momentous day for Uber drivers, who have long decried their status as “independent contractors,” as they won the case in New Zealand, and are now classified as “employees.” Here’s the scoop.
From ‘independent contractors’ to ‘employees’
In New Zealand, a win for Uber drivers is a loss for the company. Uber lost a significant legal battle after the New Zealand Supreme Court unanimously agreed and ruled that four drivers who brought a case versus Uber should now be treated as employees.
Previously, two unions that represented Uber drivers filed the action, arguing that the ridesharing app controls the working conditions, enough to let them be categorized as employees.
The first of them, the Workers First Union, celebrated the verdict, saying that it has allowed members to seek full employment rights, which include claims for underpayment and collective bargaining. They also stated they will continue their efforts after the decision. Good for them.
On the part of Uber, it’s all about lamentations. They decried that the ruling has cast doubts on Uber’s job categories for its New Zealand drivers. However, they clarified that this will not stop them from continuing their operations as usual because the judgment solely affects the four drivers alone.
Yet, they filed an appeal to the country’s appeals court, noting the imporance of employment definitions amidst work structural changes.
The judges pointed out that employee status impacts minimum pay, protections, regulated hours, and other statutory benefits.
The issue on employment category
The issue of employment categories has long haunted the ridesharing world. Why are most ridesharing drivers classified as “independent contractors”? Well, this is because the companies they work with structure their agreements to highlight driver independence and entrepreneurial opportunities, more than control over work and relationships, as some drivers point out.
This issue interestingly sits at the center of a heated legal battle, as well as economic and ethical debates. While drivers are liking they could choose their own schedules, many argue that this freedom comes at the cost of necessary worker protections.
Since they are independent contractors in the law, they typically do not receive minimum wage guarantees, overtime pay, health insurance, unemployment benefits, or paid leave. Thus, these create income instability, especially when demand and surges fluctuate or when the apps’ algorithms reduce earnings through fare adjustments and incentive changes. To hear that, yes, it’s a bit unfair.
Then, there’s the issue of bargaining power. Mostly, if not all the time, it’s the app like Uber that sets rates and policies, not the drivers, even if it’s their hardwork. This system has prompted calls and grievances for hybrid classifications that maintain flexibility, all the while granting a little portion of labor protections. Drivers have sought the help of courts and regulators, who are working their best to keep things fair.
Lastly, there’s the broader economic impact. Several cities now rely heavily on ridesharing, but there are industry and business risks to drivers, such as car maintenance, fuel costs, and insurance. These risks are prompting them to keep pushing for the independent contractor status to be lifted.