How Ruling Uber as a Transportation Company Will Affect Uber Drivers

Uber and the courtroom may as well be joined at the hip. It seemingly faces legal action every other day from disgruntled taxi organizations, city governments, and even its own drivers. It all centers on one big question: what is Uber? You’d think by now that we’d be able to firmly define a company that’s been around seven years and has a valuation of around $70 billion but we haven’t.

Uber insists that it is merely a platform, a means for independent, freelance drivers to conduct their work. Critics say it is a transport company and should be regulated as such. It’s a massive difference. If Uber has its way, it avoids strict taxi rules that countries and cities all over the world apply to the traditional sector. Those critics say this creates an unfair environment for ordinary drivers where they just can’t compete.

At the same time, its drivers want to be treated better, earn a fair living, and get the benefits that they feel they are entitled to. But Uber wants to avoid that as well.

In October, a UK court ruled that Uber drivers are not self-employed and should be paid a “national living wage”. Uber of course is appealing the decision. It has some 40,000 drivers in the UK, who could soon be entitled to basic employee rights and benefits like a pension and vacation time, which may open the floodgates against the gig economy.

Now this week the ridesharing giant had its day in court in Europe. Uber presented its case for lax regulations in the European Court of Justice in Luxembourg. It wants to avoid any strict rules that could completely upend its business model if they were implemented.

The company faces a patchwork of support and opposition across the EU member states. If it wins, the app could operate across the 28-member bloc without heeding local or national laws.

Most governments are backing Uber to a degree, supporting light-touch regulations. However major countries like France and Spain as well as Ireland are arguing otherwise, calling for transport service regulations.

The case in question made its way to the ECJ after a Spanish court referred the case brought by taxi company, Asociación Profesional Elite Taxi that argued against the US company.

Photo by Carl Court / Staff / Getty Images

On Tuesday, the plenary session—a Grand Chamber of 15 judges—listened to the opinions of Uber, several EU members, and Asociación Profesional Elite. It’s a potentially monumental case as it marks the first time that EU judges will rule on the so-called sharing economy or gig economy. The EU Advocate General will also hand down an official opinion early next year, which will guide a final ruling by the end of 2017.

Throughout Tuesday’s court case, the judges levelled several seemingly simple questions against Uber’s lawyers. Who gets paid? Does the passenger get the ID of the driver? Can Uber drivers drive for other companies? If we were talking about any traditional company, answering these questions would be easy but for Uber it’s not.

At the center of the case is control. Who controls who? Opponents will argue that Uber is unfair to drivers, despite drivers being the backbone of the service, and that it controls operations too much for it to be considered an independent agreement between the two parties. Uber argues that it has no exclusive control over drivers—they drive when they want and can work other jobs too.

Asociación Profesional Elite Taxi has simply accused Uber of being a taxi company that doesn’t own a single taxi.

But the fact that Uber has a variety of services like UberPOP and UberX, using a mix of drivers that are professionally accredited and those that aren’t, only muddies the water further.

Dontse Ballagué Farré, the lawyer for Asociación Profesional Elite Taxi, claimed that Uber pays fines that its drivers accrue—something an employer may do. Farré added that customers pay Uber for a journey, not to use an app, and that equates to a transport service.

Lawyers for Spain itself are backing this position

Photo by Spencer Platt / Staff / Getty Images.

The Netherlands (the home of Uber’s EU HQ, make of that what you will) is also making the digital platform argument. When it held the EU presidency for the first half of 2016, it was a staunch supporter of Uber pushing for an “innovation-friendly regulatory approach”. Estonia too was very open to the app operating as a platform. “Society is content with the system and supporting Uber’s general position,” its lawyer said.

But others want transport regulations but aren’t committing to full-on regulation. This makes things even more muddled.

France defined Uber as being in the “domain of transportation” and Ireland said it was in the “field of transportation”. This sort of language is unlikely to get us to a conclusion any time soon but it suggests a desire for a middle ground, if such a thing exists.

There is also an ongoing case against the company in the French courts. It’s likely to be stalled until after the country’s presidential election next year but this EU ruling, whenever it lands, could influence that decision greatly.

Whatever the final ruling is, it could have transformative effects on the sharing economy in Europe as it will harmonize national laws across the bloc for regulating the likes of Uber.

It’s a potentially massive thorn in the side of Uber if it doesn’t get its way. The EU has a population of 500 million, which is a figure regularly trumpeted by tech companies and digital services as a massive market that must be tapped for success. In Uber’s view, any hard line regulations would hinder that.

Opponents of regulation fear that an adverse ruling could, for example, lead to Airbnb being regulated like a hotel but several lawyers presenting in the case have said that this matter concerns just one company: Uber.

Returning Stateside, Uber continues to face more of these questions.

On Monday, Uber drivers staged protests in 24 cities as part of a movement called “Fight for $15”, referring to the demand for a $15 an hour minimum wage. One of Uber’s arguments here is that most of its drivers do not use it as a source of primary or full-time income. However part-time workers are still entitled to the minimum wage.

We keep going back to the same question: are the drivers employees? Lawsuits in California and Washington are trying to find out and perhaps we could see a repeat of the UK ruling.

The Fight for $15 protests are very different from the other protests we’ve seen around the world, usually led by taxi companies. They are not anti-Uber—quite the opposite in fact—but feel they need assurances for the future as we move deeper and deeper into the gig economy. Whether or not Uber is willing to sacrifice profits to provide that is another matter altogether.