Contents:

8 min read

    8 min read

    In this week’s roundup, senior RSG contributor John Ince covers how unemployment insurance for drivers may help in the short term, but doesn’t solve the overall question of independent contractors vs. employees. Plus, Uber is shaking up its board and more rideshare news below.

    Lyft’s Driver ‘Referrals’ Show Limits Of Model, As Uber Expands  [Pymnts.com]

    Sum and Substance:  Business models show their resilience when they are stress tested — and limitations are spotlighted, too. So it is with verticals such as ride-hailing and the online firms that serve them, promising disruption to getting people to and from where they need to go. In particular, the coronavirus pandemic has shown Lyft faces challenges that Uber does not when it comes time to pivot gig economy workers to new revenue streams that can help keep them afloat in times of crisis.

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    News came at the end of the week that Lyft is referring drivers to work for Amazon to get extra work “as a way to earn additional income right now,” in roles such as warehouse workers or delivery people. In addition, Lyft also has noted to drivers, as relayed by Bloomberg, that drivers could receive compensation through the recently approved stimulus bill.

    My Take:  It’s a point worth noting that Uber has other options within the company for drivers, like Uber Eats and other food delivery companies, whereas Lyft doesn’t – hence Lyft’s partnership with Amazon.

    Uber co-founder Garrett Camp steps back from board director role  [Techcrunch]

    Sum and Substance: Uber co-founder Garrett Camp is relinquishing his role as a board director and switching to board observer — where he says he’ll focus on product strategy for the ride hailing giant.

    Camp made the announcement in a short Medium post in which he writes of his decade at Uber: “I’ve learned a lot, and realized that I’m most helpful when focused on product strategy & design, and this is where I’d like to focus going forward.”

    My Take:  With this move, you’ve pretty much got a whole new cast at the company now.  That’s par for the course.

    Drivers To Uber CEO: ‘Get Out Of The Way’ Of Unemployment Relief We’re Allowed By Law  [Forbes]

    Sum and Substance:  NYC-based drivers’ advocates say that Uber Technologies is hindering drivers’ access to unemployment insurance (UI) in New York , one of the hardest-hit US states and cities in the COVID-19 pandemic, as well as the nation’s taxi and ride-hail capital.

    The reason, they say, is that the company isn’t being honest or helpful to drivers about their options for UI right now, despite the fact that drivers for platforms like Uber and Lyft have been legally entitled to UI in New York State since at least 2018.

    On Tuesday, the New Yew Taxi Workers Alliance (NYTWA) sent a letter to Uber CEO Dara Khosrowshahi demanding that the company inform New York drivers that they’re already entitled to UI in the state — something Uber has unsuccessfully fought to oppose there so far. According to the group, an email Uber sent to drivers on Sunday about the CARES Act and UI options “is purposely misleading to New York State drivers and misstates the law.”

    The NYTWA also claims that Uber hasn’t been providing New York’s Department of Labor (DOL) with the earnings data it needs to process drivers’ UI applications quickly, either since 2018 — when the state last confirmed that Uber drivers are entitled to UI — or in recent weeks….

    My Take:  The federal law CARES muddies this whole debate.  CARES didn’t take a position on whether Uber/Lyft drivers are employees.  It just established a fund that can be accessed by drivers.  So the situation hasn’t changed as to whether drivers are employees – they’re still in limbo.

    Wondering how the coronavirus is affecting drivers? Stay up to date on the latest at: Here’s What Drivers Are Saying About the Coronavirus.

    Uber warns drivers against avoiding ‘disadvantaged’ areas [Financial Times]

    Sum and Substance:  Uber has warned some drivers in California that they may be kicked off the platform for avoiding customers in “disadvantaged” areas, after the company said some were using a new booking policy to circumvent low-income patrons.

    Starting in January, Uber made it possible for drivers in the state to see the destination of a ride before deciding whether or not to take the business — part of an effort to strengthen its argument that its workers are “independent” and therefore should not get employee benefits.

    But the company has confirmed that it has had to warn an unspecified number of drivers against avoiding areas that “largely comprised of low-income residents, minority residents and/or other residents who may belong to certain disadvantaged communities”. …

    Ride-share platforms have a longstanding discrimination problem, with black riders facing longer wait times and more frequent cancellations. …

    Eihab Amari, a driver who received a warning from Uber over behaviour it perceived to be discriminatory, said he disputed its algorithm’s determination. “It’s ironic because, me myself, I’m considered low-income,” said Mr Amari, a 24-year-old Yemeni-American. He said he received the notice after a day of driving in Oakland, a city neighbouring San Francisco. …

    My Take:  This is one of the consequences of the change that so many drivers wanted: showing the destination before you accept the ride.  How deep a problem it is remains to be seen.  Keep your eye on this problem.

    Uber drivers, Airbnb hosts could soon receive unemployment checks. Some call it a ‘bailout’ for big tech. [WashingtonPost]

    Sum and Substance:  Some Uber drivers, Airbnb hosts and other gig-economy workers sidelined as a result of the coronavirus outbreak could soon receive unemployment checks from the government, part of an effort by Congress to ease the wide-ranging hardships wrought by a deadly global pandemic.

    The expansion to the country’s social safety net is a critical component of the roughly $2 trillion coronavirus aid package that President Trump signed into law Friday. It is set to put hundreds of dollars each week in the pockets of eligible Americans who no longer can transport passengers, deliver meals or rent out their homes as a primary source of income because they have been ordered to stay indoors.

    Had Congress not acted, some workers for on-demand companies would have been unable to obtain such aid: That’s because these laborers — in the eyes of the law and the Silicon Valley tech giants that they serve — are not treated the same as traditional full-time employees and afforded similar help when they’re facing financial duress.

    My Take:  There are going to be a lot of arguments over who pays what, but the federal government has at least taken the first step.  They’ve said that there’s a pool of money here and that’s a good thing. Now, how that will work is the big question.

    Uber Eats turns to grocery deliveries to fill pandemic-shaped hole in its business  [The Verge]

    Sum and Substance: Uber Eats is launching a series of partnerships with supermarkets, convenience stores, and other businesses to offer home deliveries of essential items, Reuters reports. In France, the company is partnering with supermarket chain Carrefour to offer deliveries from 15 of its Paris stores. The Financial Times reports that it’s also working with Galp in Spain to deliver items from 25 petrol station convenience stores, and in Brazil it’s offering deliveries from local pharmacies, pet shops, and convenience stores.

    This isn’t an entirely new initiative from Uber, which TechCrunch notes trialled similar partnerships in Australia and the UK last year, but it’s fast-tracking the plans as other areas of its business suffer as a result of the COVID-19 pandemic. Uber is facing a huge drop in demand for its existing services, as people cut down on non-essential travel and many restaurants are forced to close. The Financial Times notes that Uber CEO Dara Khasrowshahi recently said the company was looking for “alternative use cases” for the company’s pool of drivers. …

    My Take:  In tough times, good companies adapt. That’s what Uber is doing here. It’s not going to make Uber profitable, but it will help the bottom line.

    Judge to Uber: Find short-term benefits for drivers [SF Chronicle]

    Sum and Substance:  A federal judge put off a decision Wednesday on whether to reclassify thousands of Uber drivers in California as employees to qualify them for state sick-leave pay during the coronavirus pandemic.

    But the judge told the ride-hailing company to try to reach a quick agreement with drivers for short-term benefits. The health of drivers and their customers would be served by “access of drivers to benefits for an interim period during the pandemic crisis,” U.S. District Judge Edward Chen of San Francisco said at the close of a nearly two-hour hearing, held by telephone.

    He asked opposing lawyers to work on an interim agreement that “serves the public interest in public health” and told them to report on their progress by Friday. …

    “A lot of Uber drivers don’t even have health care. They don’t have a doctor’s office,” Liss-Riordan said. She said employees can take sick leave in California after calling their employer and saying they felt unwell….

    My Take:  This is a case in progress so we don’t know how it will turn out, but right now it appears that the judge is nudging Uber’s lawyers to come up with a compromise solution – “dependant contractors”, anyone?

    Readers, what do you think of this week’s roundup?

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    John Ince

    John Ince

    John Ince is a former Fortune reporter and Wall Street banker. He has about 1,000 rides under his belt driving part time for Uber and Lyft.  He’s writing a book about his experiences entitled:  Travels With Vanessa:  A Rideshare Driver Tries To Make Sense of It all - For a sneak peak visit the link above.