Are digital nomads independent or employed?
May 11, 2021
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by Stephen Kanyi

Categorising digital nomads and gig workers

Digital nomads and gig workers across the world often have a tough time defining themselves. Governments in Europe and the US have recently been grappling with the classification of gig economy workers. The Biden government for instance recently withdrew a law set in by the Trump era. This rule would have made it easier for a gig worker to be classified as an independent contractor.

This rule was finalised in Trump’s last month in office. It was designed to make it harder for workers to be classified as employees under federal law. This denies them benefits such as paid leave, health insurance, minimum wage and pension schemes.

Secretary of Labour Marty Walsh said in a statement that withdrawing the Independent Contractor Rule, would “ help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect.”

Independent contractors

Last November Uber, Lyft and Doordash won a huge victory in California with the passage of Prop 22. This law would exempt them from classifying their workers as employees with benefits and minimum wages. Uber and Lyft spent a whopping $200 million to cement the classification of their drivers as independent contractors. This was compounded by the use of in-app messages on their platforms to convince both drivers and riders to vote yes on the bill. The pop-up messages threatened longer wait times and higher prices for riders if Prop 22 failed. Drivers were also threatened with loss of their jobs.

The passage of Proposition of 22 was on the back of an open letter penned in the spring by Uber CEO Dara Khosrowshahi. In this document, he not only asked for a bailout by the government during the COVID crisis, but also wanted a review of the classification of Uber drivers. He proposed “a new standard for flexible work so that it benefits all who choose it and continues to be readily available to as many people as possible when they and our country need it most.”

In short most gig economy platforms are dead set on retaining the classification of their workers as independent contractors. This will ensure that they will not be liable for their employees’ benefits.

A new dawn?

While last year may have been somewhat victorious for them, recent events have seen much of their work undone. In addition to the revocation of the Independent Contractors Rule in the US, a recent case in the UK saw the classification of Uber drivers in the country as workers.

The case was first filed by two drivers in 2016 by two drivers James Farrar and Yaseen Aslam in the employment tribunal. They believed that drivers should be considered as workers rather than self-employed. Fast forward to February 2021 and a ruling by Lord Leggat of the Supreme Court means that their beliefs have now been confirmed. This was done based on five reasons dictated by the judge:

  • Uber sets the fares for each ride the drivers carry out and the drivers are not permitted to set their own prices as they would if they were self-employed
  • Uber sets the terms and conditions of using its service
  •  Drivers face penalties for cancelling or not accepting rides – sometimes preventing them from working
  • Uber has significant control over the way that drivers work, as they face a rating system. If a drivers’ Uber rating falls below a certain level they face penalties or termination of their contract
  • Uber takes active steps to prevent drivers and passengers from having an agreement outside of the Uber app.

These five important ‘reasons’ may form the basis of a radical change in the gig economy. Gig workers are indeed employees of the platforms they work under. And be it drivers, delivery people or even online freelancers they have rights just as any employee in the ‘mainstream’ market.

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