In this week’s roundup, senior RSG contributor John Ince shares how Uber for everything is beginning to corrupt other industries, plus changes are coming for delivery drivers in California and rideshare drivers in Seattle, WA.
Third Department Upholds Finding that Uber is an Employer [JDSupre]
Sum and Substance: In what will surely be an important decision for “gig” economy businesses, the Third Department recently upheld two decisions of the Unemployment Insurance Appeal Board finding that Uber is an employer and therefore required to make unemployment insurance contributions…
This decision may have a wide-ranging impact on other gig-based businesses. In general, employees are entitled to a number of protections and benefits that independent contractors are not necessarily entitled to, such as paid sick and safe leave, paid family leave, and leave under the Family and Medical Leave Act. The Third Department provided a roadmap for other New York courts to analyze this issue.
My Take: Lest we assume that Prop 22’s victory in California ended this debate, here’s New York coming out the other way. Plus, the courts in Massachusetts are considering the issue. No, this issue is not settled. Many more rulings coming.
Cathie Wood: Uber And Lyft Missed The Boat [YahooFinance]
Sum and Substance: (Cathie)Wood, CEO of New York-based Ark Invest, said in a tweet Saturday night that Uber and Lyft missed out on a data opportunity that ties in to AI — and which companies will most benefit from it.
Wood said the ride-sharing companies “stayed private too long and lost the plot. They could have incentivized their drivers to put sensors on their cars and collect data much faster than even $TSLA.”…
Data collection and AI are closely intertwined because machine learning systems develop faster and with greater precision when they are paired with large data sets.
Why It Matters: Wood’s opinion carries weight. She has become the breakout star of the 2020 bull market as her actively-managed ETFs generate phenomenal returns. Shares of her ARK Innovation ETF (NYSE: ARKK) are up over 163% this year.
My Take: Here’s one very influential voice speaking out against Uber. This issue is data collection and Cathie Wood argues that Uber and Lyft missed the boat by waiting so long to go public. I don’t know whether she’s right, but the fact that she’s speaking out on this is worth something.
The Problem With ‘Uber for Therapy’ [TheAtlantic]
Sum and Substance: A company that offers app-based coaching laid off its mental-health coaches, then offered them their jobs back without health insurance.
At 10 o’clock one morning this November, Rob Beal’s bosses summoned him and his co-workers onto a mysterious Zoom call. Beal had spent more than two years working as a coach for AbleTo, which provides mental-health services to people through apps, videochats, and calls, like Uber for anxiety.
Beal, a 50-year-old former attorney, had devoted himself to his job coaching people through AbleTo’s anxiety and depression programs. Though he made $55,000 a year—not a cushy salary by San Francisco standards—he loved that he was helping people. About 10 times a day, for 30 minutes at a time, he would call one of AbleTo’s users and offer support or sometimes just a friendly ear. It wasn’t therapy, but it was close. “It’s exhilarating for me,” Beal says. “I invest a lot emotionally in my clients. I care about them.”
But now Beal’s feel-good job was coming to an abrupt end. The manager on the call said Beal and his six fellow coaches were being terminated. Their role no longer fit the company’s business model. They wouldn’t be calling to check in on their clients that day.
Two weeks later, AbleTo offered Beal his job back, but only part-time, and with no health benefits, sick leave, or paid time off. The pay would be 30 percent less than he was making—$18 an hour, or less than $38,000 a year if he was able to get 40 hours a week. He would become a health worker without health insurance in the middle of a pandemic. …
My Take: Uber for psych-therapy. You knew it existed but how exactly does it work? Here it is – all laid out for you in a fascinating article in the Atlantic. We wouldn’t have known about this had Rob Beal not been given the ax. Now, we get the inside scoop. Fascinating.
Instacart Looked Like a Savior. Now Stores Aren’t So Sure. [WallStreetJournal]
Sum and Substance: Some supermarkets plan to stick with delivery service despite fees; Instacart says it lets grocers expand e-commerce without building their own infrastructure
Grocery-delivery service Instacart Inc. once seemed like the perfect partner for supermarkets looking to break into e-commerce. After several years together, though, some grocers are starting to question the relationship.
Instacart’s technology provided a ready-made solution for grocery chains that hadn’t yet created options for customers to shop online. And it became even more attractive when delivery demand ballooned with the pandemic, providing armies of on-demand shoppers to fulfill orders in-store and deliver groceries to people’s homes.
But many supermarkets say they aren’t making money through Instacart, largely because the delivery company typically charges them a commission of more than 10% of each order…
My Take: The pandemic has raised Instacart’s value to $17.7 billion. That’s a lot of money for a company that just barely made its first profit. Otherwise, the company, like all the delivery companies, has seen tremendous growth but little profits. And what happens when the pandemic is over? That’s the billion-dollar question.
Gig economy workers say they can no longer survive [BangkokPost]
Sum and Substance: Gig economy workers at Uber, Deliveroo and Lyft fear they can no longer survive on meagre earnings from jobs that leave them increasingly vulnerable….
Wissem Inal does more than 700 kilometres (450 miles) a week on his scooter, delivering up to 10 takeout meals in the Paris suburbs every evening…. “At the moment, with the lockdown I end up with 500 euros ($600) a month net,” said the 32-year-old who has driven for Deliveroo since 2017 but also takes jobs for Uber Eats and Stuart.
Inal has trouble seeing the “good side” of his job at the moment and criticises calculations by Deliveroo’s algorithm that decide how much to offer him for jobs. “A delivery that’s worth six euros at noon is worth just three euros in the evening. You can’t earn a living with this job, unless you’re willing to live like a slave.”…
My Take: Their stories are all different, but the message is the same, “We’re not making enough money to survive.” What are the companies going to do about it? California thought they had the answer in AB5, but Uber, Lyft et all had their own answer to that in Prop 22. $200+ million later we’re back in the same place.
I don’t have an answer here. Maybe, billionaires like Travis Kalanick do. They’re very smart … right?
Grubhub gig workers react angrily to change in tipping policy [Grubhub]
Sum and Substance: California-based workers for food delivery app Grubhub have reacted angrily to changes to the platform which they say discourage tipping, saying they would wipe out the supposed benefits of new gig worker rules in the state…
Like other apps, Grubhub added an additional “benefit” fee, in its case $1.50, to each order in California—though that money is put into a centralized pot for which only a limited number of drivers are expected to fully qualify.
“[The] benefits are not nearly high enough to compensate for encouraging no tipping,” wrote one Grubhub worker on Reddit. “Such bullshit to drive this wedge between customers and drivers,” wrote another. A third added: “This is chilling. Really disappointing.” …
My Take: The fine print in Prop 22 is beginning to kick in and workers are not happy about it. Here, the default tipping amount went from 20% to 0% and the supposed replacement doesn’t nearly cover the loss. There are other changes to health care policies, etc. California got stuck with this. And 58% of the people voted for it.
Read more to changes to Grubhub’s tipping policy here.
Uber Eats avoids landmark ruling on workers’ status by settling case with delivery rider [TheGuardian]
Sum and Substance: Uber has settled a high-profile case with one of its food delivery riders, avoiding a landmark ruling on whether gig economy workers are employees or contractors, experts say.
The Australian arm of the multinational company settled with former Uber Eats delivery rider Amita Gupta before the full bench of the federal court could rule on whether she was an employee or a contractor. It would have been the first ruling in the federal court on the status of Uber’s workers….
The Transport Workers’ Union said it believed Uber had settled because the company was facing defeat after a series of critical questions from judges in a court hearing earlier in November. Federal court judge Mordecai Bromberg said in court that Uber Eats riders “appear to be the representative of the Uber Eats”, despite the company’s protests.
… Labour law expert Prof Joellen Riley Munton from the University of Technology Sydney, said it appeared that Uber had “decided not to take the risk” of a court ruling, and settled.
My Take: This is a very interesting situation. Uber may have established that workers are not employees in California with Prop 22, but halfway around the world, the issue is still up for grabs. Had the court ruled against Uber, it would have had serious ramifications, so Uber just decided to cut its losses and settle. I wonder how much the settlement was for.
Uber raising trip prices 24% in new year in response to Seattle’s new minimum wage law for drivers [Geekwire]
Sum and Substance: The cost of an Uber trip in Seattle will jump about 24% starting Friday as the ride-hailing company is raising its prices in response to a new law requiring drivers to be paid the city’s minimum wage.
The Seattle City Council unanimously voted in September to adopt new regulations designed to ensure Uber and Lyft drivers earn the city’s $16.69 per hour minimum wage in 2021.
Lyft hasn’t announced an immediate price increase but has said in the past it could do so in the future as a result of the new law. …
My Take: Expect to see more fare increases in the future. Uber has been pricing its service below cost for years and it took the Seattle City Council to call them on it. Now the question is what will Lyft do. Assuming they follow suit, the next question is what will taxi drivers do.
Readers, what do you think of this week’s roundup?
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-John @ RSG