Uber Funding IAM Corporate Union In NYC To Control Workforce

Uber Funding IAM Corporate Union In NYC To Control Workforce
"The guild has already signed up roughly 45,000 Uber drivers since it was launched, says Jim Conigliaro Jr, founder of the guild and the general counsel at the Machinists Union District 15, which is closely affiliated with the Independent Drivers Guild. The guild draws most of its financial support from Uber and it is free for drivers to sign up. It is planning to shift to a voluntary dues system soon, which will offer extra benefits such as life insurance."
Uber and Airbnb business models come under scrutiny"


Silicon Valley behemoths put under pressure from around the world in 2016

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Golden formula: Uber and Airbnb have become household names, with valuations of $68.5bn and $30bn respectively © FT Graphic / Getty

DECEMBER 30, 2016 by: Leslie Hook in San Francisco

At the beginning of 2016, the heady progress of Silicon Valley’s most high-profile start-ups seemed unstoppable. In January, Uber was busy providing helicopter ridesto the Sundance film festival and expanding its food delivery service across the US. Meanwhile, Airbnb dispatched its policy chief to woo US mayors with the promise of millions of dollars in additional tax revenues, while its co-founder made the rounds at the World Economic Forum in Davos, talking up the company’s growth in China.

But over the past 12 months, these two icons of disruptive tech have clashed again and again with courts and lawmakers, and found their businesses constrained by increasing regulation.

At Sundance, it was only a few days before authorities ordered Uber to suspend its helicopter rides; fights over permits and employment lawsuits have plagued the company this year. Airbnb has not fared any better, as it has been fined in multiple countries and slammed with restrictive laws in major markets such as New York and Berlin.

No longer small start-ups, Uber and Airbnb have become household names with valuations of $68.5bn and $30bn, respectively — valuations that are higher than many of their traditional counterparts. In 2016, regulators began to take note and rein in these emerging giants.

For the start-ups, the clashes have come at a time of awkward transition as the companies struggle to shed their rule-breaking habits and take a more mature, conciliatory tone. Uber and Airbnb have also tried working more closely with regulators to craft policy, although with mixed results.

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“Regulators and lawmakers and states and localities are acknowledging that they can’t ignore them any more; they are too big, too powerful,” says Michael Drobac, a Washington-based tech lobbyist at law firm Akin Gump. “Now, rather than having to insist on having a seat at the table, they are being invited to the table.”

Uber, under the guidance of David Plouffe, who was Barack Obama’s campaign manager, has worked hard to present a more grown-up image. In May, the company brought in a board of heavyweight policy advisers that included Neelie Kroes, the former European competition commissioner, and Ray LaHood, a former US secretary of transportation.

Chief executive Travis Kalanick, known for his brash style, started adopting a more subdued tone. “We haven’t done everything perfectly,” he told a conference in October. “We have made mistakes.”

Yet the company has still clashed with city after city, showing that its brazen approach has not entirely disappeared. In Austin, Uber pulled out after a voter referendum that demanded fingerprint checks for its drivers, a measure with which Uber refused to comply. In San Francisco, the company pushed ahead with testing self-driving vehicles even though it lacked a permit to do so — and continued to run the tests even after receiving a cease and desist letter from the state.

In addition to these city-level skirmishes, the bigger long-term threat to Uber’s business model is the question of whether its drivers are independent contractors or employees. The company considers all its drivers to be independent contractors, which means they do not receive benefits such as healthcare and are not guaranteed the minimum wage.

Uber's Travis Kalanick has had to become less abrasive this year © Charlie Bibby
In April, Uber agreed to a payout of up to $100m for drivers in California and Massachusetts, who argued that they should be classified as employees, not contractors. That settlement was thrown out and the case is now under appeal.

In London, a ruling in October found that Uber drivers should be considered “workers”, entitled to a minimum wage and holiday pay. Uber is appealing the ruling, but the result is expected to encourage other Uber drivers to bring similar lawsuits.

In the US, many so-called sharing economy companies that rely on independent contractors could see their business models upended if courts determine that their workers should be treated as employees.

Companies are trying to skirt the issue by making their contractors agree to arbitration — rather than class action — in the case of a dispute. This makes it much more difficult for workers to bring big class action cases.

How Airbnb and Uber have clashed with regulators
● Apr 2016 — Uber agrees to a settlement of up to $100m in class-action lawsuit from drivers in California and Massachusetts. That settlement was overturned in August and now under appeal
● May 2016 — Berlin enforces a ban on short-term rentals of entire apartments, including for Airbnb and its rivals
● Jun 2016 — French court finds Uber guilty of starting an illegal car-booking service in a criminal case, and fines the company €800,000
“Ultimately this issue is likely to go to the Supreme Court,” says Shannon Liss-Riordan, the lawyer who is spearheading the drivers’ case against Uber in California, referring to arbitration clauses. “The outcome there will hang in the balance of who is the next [Supreme Court] Justice.”

In contrast to Uber’s reputation for brazenness, Airbnb has tried to cultivate a good guy image. Over the past year it has poured resources into grassroots initiatives, setting up more than 100 Airbnb clubs for hosts and guests globally, in the hope these will grow into a political force to shape local regulation in its favour.

“They always had to be more careful than Uber, because Airbnb involves more trust and intimacy,” says Max Wolff, a strategist at 55 Capital who follows late-stage start-ups.

“A year or so ago, Airbnb got more of a feeling of invincibility,” he adds. “They believed their popularity with hosts who needed the money, and guests who liked the experience, would help provide political momentum.”

However, the regulatory setbacks have come thick and fast. In October, New York passed a law that imposes heavy fines on short-term apartment rentals. Airbnb sued the state in response, arguing that the law was unconstitutional, but settled the lawsuit in December. From Berlin to Barcelona to San Francisco, Airbnb has increasingly faced sanctions and restrictions on who can let their home and how often.

In response, the company has started to adjust its model in major markets, a tacit acknowledgment that it has too much to lose from doing battle with regulators.

In two of its largest markets, London and Amsterdam, Airbnb will begin blocking its hosts from letting homes for more nights than the legal limit next year, which will curb its revenue growth in those markets. In New York and San Francisco, the company has banned new hosts from having more than one listing, in an effort to limit commercial operators.

Such concessions are a stark reversal by a company that long resisted policing its hosts on the grounds that it is the hosts, not Airbnb, who are responsible for complying with local laws.

Some analysts see Airbnb’s new, conciliatory approach as a sign that it is eager to resolve regulatory conflicts ahead of its initial public offering, which could come as soon as 2018. This is expected to be a key issue for both Airbnb and for Uber as they must reassure potential investors about the risks of their business before going public.

Looking ahead, a big wild card for Uber, Airbnb and many Silicon Valley start-ups will be the policies of the Trump administration. The president-elect’s scant remarks on tech policy mean that much is still unknown.

One potential area of political action could be employment law, which could be good news for Uber’s worker classification lawsuits. Bradley Tusk, an adviser to Uber and an investor in the company, says he is cautiously optimistic that Congress might pass legislation to create a third employment category that falls between full-time employee and independent contractor.

Both Uber and Airbnb already have ties to the incoming administration. Peter Thiel, an adviser on Trump’s transition team, is an investor in Airbnb. And Mr Kalanick, Uber’s chief executive, was recently appointed an adviser to Mr Trump’s business policy forum. Silicon Valley’s biggest start-ups have a seat at the table at last.

New York guild promises to strengthen Uber drivers’ rights

One of the ways Uber has tried to head off potential labour issues this past year is by lending its support to a new type of labour organisation: the guild. Falling somewhere between a formal labour union and a trade association, the Independent Drivers Guild for Uber drivers in New York City, launched in May, has been pioneering a different model of representation.
The guild has already signed up roughly 45,000 Uber drivers since it was launched, says Jim Conigliaro Jr, founder of the guild and the general counsel at the Machinists Union District 15, which is closely affiliated with the Independent Drivers Guild. The guild draws most of its financial support from Uber and it is free for drivers to sign up. It is planning to shift to a voluntary dues system soon, which will offer extra benefits such as life insurance.

Big issues for the guild so far have been tipping, which Uber still does not allow through its app, and “deactivation”, which refers to when Uber removes drivers from the system. Working with the guild, Uber has agreed that a committee of five Uber drivers can be the ultimate arbiter over whether drivers are reactivated. This is a step forward from the previous system, under which drivers had no recourse to become reactivated.

In the long term, however, the guild’s ambitions are much bigger. It hopes to work with Uber and the Freelancers Union to create a centralised portable benefit fund that would help all independent contractors access better options for healthcare and retirement.
Because Uber drivers are independent contractors, and not full-time employees, they are not eligible in the US for employee protections such as union membership, the right to collective bargaining and healthcare or pension plans.
“This excluded class of worker is growing, and they don’t have access to unions,” says Mr Conigliaro. “I think it is important for unions to pivot, and to have another lane where they can bring workers up, and raise the floor for workers regardless of their classification.”