A Better Way to Disrupt the Workplace

Many on-demand businesses today make grandiose claims about how they’re creating a world where workers can be their own bosses, work when they want and monetize their free time. Their online advertisements tout the ability to “create your own schedule” and “enjoy total freedom, total flexibility,” all while making more money.

But, they caution, they can’t deliver the flexible jobs that workers crave unless government gets off their back. Those troublesome laws requiring businesses to pay payroll taxes and minimum wage are so last century – completely incompatible with the flexible work and exciting future they offer to workers in America, they say.

Their claims warrant a closer look. Are these jobs all that flexible? Should we believe them when they say it’s impossible to treat workers as employees – pay Social Security taxes, ensure workers earn a minimum wage, respect civil rights laws – and still offer flexibility?

The reality is that on-demand work is not necessarily as flexible as the companies make it seem: Workers must drive and deliver and run errands when consumers need them to. The peak demand hours for transportation network drivers, for example, are between 10 p.m. and 4 a.m. If you need money, those are the hours you work. That’s why it’s called “on-demand” work.

And let’s be honest: The degree of flexibility a worker enjoys has an inverse relationship to the amount of money he or she needs to pay the rent. If you already have a stable income from another source, you have lots of freedom to choose whether to pick up a few extra hours on Saturday night. If you rely on driving for Uber as your first or second job to meet basic needs, not so much. The 1 in 5 Uber drivers who work full time can only take a day off if the bills are paid.

Companies also place demands on when workers can work. Some of the companies set strict standards about what workers must do to keep their jobs or get ahead. Reportedly, Uber offers a guaranteed minimum wage, but only to those drivers who accept 90 percent of trips offered, accept one trip per hour and are online for 50 minutes of every hour worked.

Are these workers happy to give up workplace protections for supposedly more flexibility? That’s not so clear. In a survey of crowdworkers by the International Labour Office, fewer than 1 in 10 said they did on-demand work because they enjoyed it. In other research, workers said they enjoy the freedom of these jobs, but their biggest worry was having enough work and earning a stable income. The average on-demand worker had income from three different income streams.

Income volatility is a huge issue: A survey by the JPMorgan Chase Institute found that 7 in 10 young adults saw an average 30 percent change in their income month to month. Sounds like a lot of workers are seeking on-demand work more out of desperation than for its freedom over hours.

Some companies claim that they cannot offer flexible schedules to workers and still treat them as employees. Not so. In reality, many on-demand companies can and do offer flexible schedules to their workers, and they treat those workers as employees, with rights to minimum wage, civil rights protections, Social Security contributions and workers’ compensation. Companies such as the cleaning service Managed by Q even offer workers paid family leave and stock options. Instacart allows its employee-shoppers to choose their own hours. These companies prove that flexibility and employee status are perfectly compatible. All it takes is a company that cares not only about profits but its workers too.

Finally, some companies and their boosters have tried to elevate their flexibility argument into a bogus legal doctrine. They argue that under the law, having some flexibility in hours automatically converts workers into independent contractors. But that’s not true, either. In a wide variety of contexts, the courts have found that just because a worker has a flexible schedule doesn’t mean she is somehow transformed into the operator of her own business – the true benchmark of independent contractor status.

Cake decorators, home researchers, nurses, couriers and restaurant workers have all been found to be employees, despite the fact that they could choose their own schedules. Laws don’t force workers into choosing between having wage-and-hour protections and having flexibility; companies do.

Here’s how companies in the on-demand economy could be truly innovative: Make the right choices for the workers who are your company’s lifeblood. Hire W-2 employees. Let them have a say over wages and working conditions. Increase wages over time rather than decreasing them. Provide opportunities for advancement. Offer paid sick days and paid family leave. Let’s really disrupt the workplace – by offering flexibility as well as opportunity, security and equal bargaining power.

Rebecca Smith is deputy director at the National Employment Law Project and author of a new white paper on Flexibility in the On-Demand Economy.

Read the original op-ed at U.S. News & World Report.