This is an important article about Uber and the new “sharing economy.” It is great for the entrepreneurs, whose companies are valued in the billions. But not good at all for the workers, who don’t earn minimum wage and have no health insurance or any benefits. The article was written by Strphen Greenhouse, who covered labor issues for the Néw York Times for many years.

“AT ANY GIVEN MOMENT in recent American history, one corporation has stood out as the “it” company, the symbol of the new and the cool—think of IBM, then Microsoft, Apple, Google, Facebook, Amazon—now it seems to be Uber’s moment. In just six years, Uber has gone from start-up to upstart to juggernaut, pushing its way into 250 cities and 53 countries. Boasting 1.1 million drivers worldwide and 400,000 in the United States, Uber is one of the fastest-growing start-ups in history, with an eye-popping valuation of $62.5 billion, more than that of General Motors. Uber has probably done more to transform—its executives would say “disrupt”—urban transportation around the world than any other company in the last half-century. Its investors include such heavyweights as Goldman Sachs, Microsoft, and Jeff Bezos.

“Uber has also become the foremost symbol of the on-demand economy, with a super-convenient app that consumers love because it often gets them a car faster than it takes to find a taxi. The company sees and depicts itself as offering a cool, new, flexible employment model that is being copied by other companies, including Lyft, Handy (housecleaning), Caviar (food delivery), Postmates (on-demand delivery), Washio (dry cleaning), and Luxe (parking your car).

“To many, however, Uber has become the foremost symbol of something else—something unlawful. Many labor advocates view Uber as the leading practitioner of illegal worker misclassification because it insists that its 400,000 U.S. drivers are independent contractors rather than employees. Uber says its drivers—it calls them “partners”—are their own bosses who have the flexibility to drive whatever hours they want and even drive for competitors like Lyft and Sidecar.

“Indeed, with its clout, cachet, and big-name backers, Uber has sought to redefine what an employee is. No way, it says, should its drivers be considered employees, asserting that its relationship with them is attenuated—even though the company hires and fires the drivers, sets their fares, takes a 20 percent commission from fares, gives drivers weekly ratings, and orders them not to ask for tips. For Uber, there are manifold advantages to treating its drivers as independent contractors. Not only does it avoid being covered by minimum wage, overtime, and anti-discrimination laws, but it sidesteps having to make contributions for Social Security, Medicare, workers’ compensation, and unemployment insurance. It also escapes the employer obligations of the Affordable Care Act. By some estimates, all this cuts Uber’s compensation costs by more than 20 percent per driver.

“Uber’s aggressive expansion and unusual employment model—almost all driver interactions with the “boss” are through Uber’s smartphone app—have raised questions about what a 21st-century company’s responsibilities are to workers in—whatever you want to call it—the gig economy, the on-demand economy, the crowdsourcing economy, the sharing economy, or perhaps the unsharing economy. (I’m flummoxed why anyone, except for public relations reasons, would call Uber and Lyft part of a sharing economy when they are in essence little different from a taxi or any other livery service that picks up riders and charges a fare.)

“Uber’s critics say the company is shrewdly seeking to evade all of an employer’s traditional legal responsibilities and obligations, while enjoying all the benefits of being an employer—including taking a hefty percentage of what its workers earn. But many champions of Uber argue that the nation’s employment laws have grown obsolete and need to be updated because, in their view, Uber’s employment model is so different from, so much looser and less structured than, the models at traditional companies like General Motors and Procter & Gamble. In response, labor advocates often argue that the nation’s employment laws are not outmoded and that the problem is that many people simply fail to recognize that Uber has a fairly traditional employer-employee relationship (with its newfangled app and boasts of being a master disrupter confusing matters).”

–