The growing gig economy has HR “walking a tightrope”

Here’s a riddle: What’s a company that has created 3.5 million jobs worldwide but reports fewer than 23,000 total employees?

Uber, the poster child for the gig economy, drives its business through a network of roughly 1 million independent contractors (“gig workers”) nationwide each year. The company is quick to tell the media and the courts that these workers are contractors—not employees.

Jeroen Meijerink, an assistant professor of human resource management (HRM) at the University of Twente, studies the gig economy and says companies that rely heavily on independent contractors present a unique challenge for HR. According to Meijerink, although independent contractors are meant to require less daily management, in practice, many HR teams treat hourly employees and contingent workers similarly.

“Firms are walking a tightrope,” Meijerink told HR Brew. “They constantly have to balance between exercising control…without implying that they are exercising control. So one of my colleagues said, ‘Well, they’re actually doing HRM without HRM.’”

Meijerink says the result is that some employers manage independent contractors from the shadows, controlling recruitment, training, scheduling, compensation, and discipline in a way that he believes makes it difficult to articulate the difference between contractor and employee.

The reason for the careful balancing act, in Meijerink’s view, is that companies may want to avoid opening a legal can of worms. He said many legal debates about employment status can hinge on if “an employer exercises authority and control over you.”

Meijerink pointed to HRM activities like “performance appraisal” and “compensation” as potentially curtailing “the freedom that [freelancers] are supposed to have.”

Uber representative Harry Hartfield told HR Brew that Uber’s HR department isn’t involved in managing contractors.

“Uber corp folks don’t have a ton of interactions with our platform folks,” Hartfield said. “Drivers and delivery workers can access support 24/7 through the app, and we also have phone and in-person support.”

HR Brew reviewed the job postings for these support roles, like the “senior greenlight expert” or “greenlight Uber expert,” and found some job responsibilities that, in another organization, might be assigned to an HR generalist.

According to the listing, the Uber senior greenlight expert will be expected to convert “prospective earners to take their first trip on the platform,” to ask “probing questions to understand [drivers’] needs, reservations, and goals,” and to re-engage with “earners who have stopped using the platform by overcoming blocks and obstacles they are facing.”

A disclaimer on that job posting reads, in bold type, “Please note that the Uber Senior Expert is not a people manager role. The position is an hourly customer support role with a set wage.”

Uber and Lyft declined to make representatives from their HR departments, who work with corporate employees, available for an interview for this story.

Workers on demand

The gig economy refers to the ecosystem of online labor platforms that connect consumers with on-demand workers. It’s growing: According to data from HR management service Gusto, since 2017 across all industries in the US, nearly one contractor was hired for every five employees. Although the gig economy does include highly specialized workers, including consultants, interior decorators, and accountants, Lindsey Cameron, an assistant professor at the Wharton School of Business, told HR Brew that she predicts most jobs well-positioned for gig work will continue to be low-skilled.

“It’s going to be service work: more low-to-medium skills, service…tasks that almost anyone can do,” Cameron explained. “I call it on-demand work…[that] means there’s always somebody available to do the job. That’s really only going to work if the work is not highly [specialized].”

Nicole Moore, a part-time Lyft driver and organizer with the California–based group Rideshare Drivers United, said the demographics of gig work make independent-contractor classification an equity issue. 

“Workforces like Lyft and Uber, the majority of us are Black and brown and immigrant workers,” Moore told HR Brew. “We’re being assigned a second-class status. A misclassified status. And it’s hurting us.”

Gig's up?

According to Matthew Spoke, the CEO and founder of Moves, a website that provides financial services for gig workers, gig-worker discontent is unlikely to lead to contractors being re-classified, because companies are “dumping money into lobbying” to keep workers classified as independent contractors.

Cameron said that although most gig workers “want health care [and] they want time off,” they are more concerned with “day-to-day survival.”

Some believe the most viable solutions to gig workers’ concerns are ones that dodge the question of employment status. Gig-worker advocates have suggested creating decentralized platforms, like CalFLEXI: “horizontal,” local, “government-run gig-work platforms,” that could provide workers with employment benefits including health care and upskilling.

Watching the Department of Labor and the courts’ rulings in recent and upcoming gig-work related cases, and how compelling they find the arguments from contractors seeking access to benefits like workers’ compensation, will be critical.

“HR professionals should keep an eye on all developments that come out of the DOL, the courts, or otherwise when it comes to independent contractors,” labor and employment attorney David Pryzbylski told HR Brew. “If you misclassify independent contractors…the consequences can be pretty drastic, right? Unpaid overtime: Independent contractors don’t get overtime. They should have been on your health plan, you’re gonna have a lot of penalties and back contributions to make for these workers.”

Shadow HR

Within the current system, former and present drivers feel companies’ watchful eyes through careful, often algorithmic management.

Meijerink, who has driven for UberEats, hoisted the distinctive, lime-green bag into the view of his webcam. He described how his onboarding and training were done before he was hired. For example, he says he took a 20-item quiz as part of the driver application process; the test, he said, was full of instructions on how to perform the role.

“Uber does this because if they give these instructions when the worker is already working for them, then it could mean there is a control relationship,” Meijerink said. “If [prospective drivers] were willing to do it [before working], then you can instruct them as much as possible, because then there is no working relationship yet.”

Independent? That depends...

Moore was attracted to driving for Lyft by the possibilities of choosing her own schedule and being her own boss. She said that for her, independent contracting is anything but independent.

“Contractors are supposed to have complete control over their jobs. They are supposed to be able to pick what jobs they take, they get to negotiate their own rates,” Moore said. “Uber, or the other app-based companies, lie. [Their] business model is, basically, they completely control the rate, what jobs you get. It gets you in trouble if you don’t take enough of their jobs. And so, their control over our lives, of the way we do business, [it] is absolutely the same as an employee.”

Hartfield disagreed.

“Workers on our platform are free to work whenever and wherever they want, and we strive to make it as easy as possible for people to work on our platform,” Hartfield said. “Our algorithms account for a wide range of factors, but drivers do not lose access for rejecting or canceling trips.”

According to Uber’s cancellation policy, drivers can cancel a ride whenever they choose, but drivers who cancel a ride “once aware of the destination” or demonstrate a pattern of “systematic and/or persistent cancellation of trips” may find their access to Uber’s platform restricted.

Cameron said this nuance complicates the question of if drivers can face actions from the app.

“I have heard from Uber reps (in the past six months) they are no longer punishing drivers for not accepting rides, but the question is: What is punishment?” Cameron told HR Brew. “Drivers can be blocked from the app for a period of time if they don’t accept rides (because the app interprets that [as] drivers are not ready to work.)”

Incentives to continue driving, referred to as “nudges,” can influence drivers to keep driving by “asymmetries (e.g., the driver does not always know the passenger’s [precise] destination, which is only shown after the ride is accepted), [and] surge pricing,” Meijerink explained.

Nudges aren’t outright controls over workers, but have been shown to heavily influence drivers’ behavior, increase engagement with the platform, and keep contractors on the road for longer stretches of time.

For Moore’s part, she says she’s only experienced HR as an app.

“We’re fired by algorithm, we’re disciplined by an algorithm,” Moore said. “That is our relationship to the company. It’s through, you know, an algorithm.”—SV

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