Gigged Read online

  This gray area makes it difficult to understand how to classify employees and easy for companies to push the limits of the independent contractor classification. And it’s tempting to push it to the point of what might reasonably be seen as cheating: to call workers “independent contractors” while still exercising employment-like control that doesn’t give them the true autonomy to benefit from being their own bosses. The IRS estimates that companies misclassify millions of workers in this way.1

  David Weil, who led the US Department of Labor’s Wage and Hour Division during the Obama administration, recounts a typical scenario: “Week after week, it seemed, I was witness to an investigation from our district offices involving the incorrect classification of all types of workers: janitors, home health aides, drywall workers, cable installers, cooks, port truck drivers, and loading dock workers in distribution centers. In one telling case, construction workers went home at the end of the week as employees only to be informed on the following Monday that, perhaps by the magic of some unknown force, they had become ‘member/owners’ of hundreds of limited liability companies, effectively stripping them of federal and state job protections.”2

  Why didn’t gig economy companies just reclassify everyone as an employee to avoid an accusation of misclassification? There’s no law preventing companies from offering employees the same type of flexibility that they offer their independent workforces. But a 2015 analysis by Fortune determined that if Uber were forced to do so, it would cost the company an additional $4.1 billion each year (a spokesperson told the magazine that the costs would be hard to calculate, as the business model would likely change). According to court documents from a 2016 lawsuit with the ride-hailing company Lyft, the company would have owed its drivers in California alone $126 million for the previous four years of work if it had hired them as drivers (Lyft disputes this number, saying that the amount assumes all of its drivers would be considered employees, even though many drove fewer than 60 hours over the four-year period).3

  These were not the unit economics for which investors had signed up. Zirtual, a company that provided virtual assistants, said one reason it laid off hundreds of workers in 2015 was because it had switched from independent contractors to employees (the company was acquired soon after the switch). “All of these on-demand shared economy companies that have been built up all have independent contractors,” its cofounder told Bloomberg. “Their model will be destroyed if they have to move contractors to employees.”4

  Gig economy companies were often left doing the equivalent of verbal and technical gymnastics—attempting to manage workers using strategies like creative quizzes without crossing over into treating them like employees. Pulling it off required a carefully orchestrated series of nods and winks. “We had to be very indirect about it,” Katie Shea, the former New York City general manager of the now-defunct gig economy cleaning company Homejoy, explained to me. “We had to be like, we can’t tell you what to do, but we can tell you that other cleaners who have done this have gotten five stars.”5 All of this seemed necessary to avoid what gig economy companies saw as archaic laws—which had been put into place long before anyone had imagined they’d find work with a smartphone.

  * * *

  After passing the cleaning company’s quiz, I and other potential cleaners were invited to an orientation session on the sixth floor of a grubby building in Midtown Manhattan. About 20 people sat in a tiny room with cheap plastic school desks. They’d all been screened by phone. Most were African American, and many were dressed for an interview in blazers and black slacks.

  A New York City manager whom I’ll call Carol (not her real name) ran the orientation and adopted the tone of a grade-school teacher, frequently asking for class participation in order to keep attention. She played a video from an exemplary worker. “I like being a contractor with [the company] because it’s being my own boss,” she said. “Who doesn’t want to spend time with their family?” The cleaner explained that she likes to leave behind white lilies, which she purchases herself, when she finishes every job.

  “So what did we learn?” Carol asked the class.

  As people responded, she rephrased and repeated their answers.

  “You can work on your own, you’re an independent contractor.”

  “She’s passionate about her job.”

  Carol chirpily stated the obvious. “It’s easy to find people to do physical labor, but what we want is people like [her].”

  As Carol introduced the class to the app that would manage their schedules, “the lifeblood of your business,” she continued to sell the job. One of the great things about it, she explained, was that we could work in any of the 37 cities in which the company operated: “If you want to get out of New York in the winter and go hang out in Miami, you can do that. If you want to take your kids on a Disney World vacation and pick up a few jobs along the way, you can do that.” None of those vacation days would be paid, of course.

  “What makes [this company] different?” Carol asked.

  A man in a neat white shirt toward the back of the classroom raised his hand. “There’s an open schedule, so you can work when you want.”

  Carol responded with a question. “Do you know Uber?” she asked. “We’re like Uber for the home.”

  She started another video, this one in which the featured cleaner had a British accent. “Being an independent contractor, for me, it just means freedom and flexibility,” a version of the previously featured woman explained.

  Next Carol flipped to slides that explained how the cleaners would be paid. Clients would leave feedback, she told us, something we could “print out and hang on the fridge” if we wanted. But also, those ratings would impact our pay.

  Workers started at $15 per hour, which is not a bad wage if you’re not counting the time that it takes to travel between jobs or the cost of your cleaning supplies. With about a week’s worth of good performance, that could jump to $17. The highest paid cleaners—those who worked the most hours and got the best reviews—made $22 per hour. Carol explained that because of this rating system, it was better to do a good job than to take as many jobs as possible.

  She continued to explain the gig. Cleaners would get a $50 referral fee for signing up a friend and a $5 bonus for repeat business if a client requested them specifically. Though Carol didn’t acknowledge it, this slide of her presentation came with the warning that “attempting to remove customers will result in immediate removal from the platform.” You may be your own business, but these are not your own clients.

  Slowly she started to roll out more of the bad news.

  Those bright blue roller bags stacked at the back of the room? They had everything cleaners needed to get started, including a vacuum cleaner and a mop. But their cost—$150—would be deducted from checks, which meant working five jobs at the starting rate for free (a spokesperson for the company told me it has since stopped this practice). Carol did what she could to keep the conversation about supplies in “independent contractor” territory: “These are optional to take; this is your business, you are responsible for supplies.”

  Along with cleaning supplies, the bag held branded blue marketing materials, including cards cleaners could leave behind with their names on them, a checklist of tasks completed, and, Carol’s favorite, branded stickers to put on the toilet paper after cleaners folded the ends into triangles.

  Not only would the startup get its cleaners to distribute marketing materials throughout houses, it would also get them to purchase those marketing materials.

  Later on in the orientation, a man in the front row raised his hand to clarify: “So if we run out of supplies, we have to buy them?”

  Carol didn’t elaborate or offer any sort of apology, but rather answered him without hesitation as though the answer should be obvious. “Of course.”

  More bad news: If a cleaner canceled a job between 2 and 36 hours in advance, his pay would be docked $15. If it was between 0 and 2 hours in advance,
his pay would be docked for the cost of the job. It seemed harsh, but the company didn’t really have another sound way of making sure cleaners showed up. It couldn’t, and didn’t, have supervisors to reprimand or coach its cleaners—to do so might suggest the kind of relationship that would make them employees. On the upside, customers were managed similarly: If they canceled within those same time windows, the cleaner got the extra amounts.

  What about an emergency? asked another candidate. Carol’s response: “You can dispute that through the help center.” Something about the way she said it gave me the impression that the help center might not be so helpful.

  It was time for another test, which members of the class took by navigating to a hyperlink on their mobile phones. As Carol left the room to grade the tests, she told the cleaners to pull their desks into small circles and “teach each other something.” A mother who worked full-time at the parks department and wanted to pick up extra jobs on the side said she had worked as a housekeeper before, and her advice was to always ask the customer before doing anything, because people always have different ideas about what is right and wrong. A man who used to work at a gym had some tips about squeegeeing windows. A young girl who used to work at Old Navy taught her group about crocheting. The key was to “make a pretzel.”

  Did she have any cleaning experience? “Too much experience,” she said. She also had a journalism degree and had completed half of a nursing program before running out of tuition money.

  When Carol came back into the room, she dismissed two people who hadn’t passed the test. Were there any questions? There were: What if we find an infestation of bed bugs? What if we’re cleaning a home when someone is doing something behind their spouse’s back that we feel uncomfortable with?

  Carol responded that we were getting into a lot of “what if” territory, and, returning to her class participation schtick, asked what the cleaners thought they should do if they ran into a problem. The answer she was looking for was “navigate to the help section of the app.” There, we would find answers to common complaints, such as “I feel uncomfortable or unsafe” (remove yourself from the situation and call the police) and instructions for what to do if a customer locked them out of the home by accident, or if they wanted to dispute a fee the company had taken from their pay for missing a scheduled cleaning or other violations to the terms of service.

  “We’ll call you!” shouted a woman wearing a skirt in the front row.

  “Don’t call us,” Carol automatically corrected.

  * * *

  Uber was extremely shrewd at finding new ways to manage independent contractors through its app. “Employing hundreds of social scientists and data scientists,” wrote the New York Times in 2017, “Uber has experimented with video game techniques, graphics and noncash rewards of little value that can prod drivers into working longer and harder—and sometimes at hours and locations that are less lucrative for them.”6

  One strategy was its surge pricing model, which made rates higher during busy times in order to encourage more drivers to work during those periods. According to a case study published in the International Journal of Communication in 2016, Uber used this model to request that drivers work during particular hours, sending them messages such as:

  Are you sure you want to go offline? Demand is very high in your area. Make more money. Don’t stop now!

  UBER ALERT: Happy hour demand is extremely high right now! Log into your app and take advantage of the extra earnings. #UberOn.

  We also want to remind you that we predict New Year’s Eve will be the busiest night of the year. With such high demand, it will be a great night to go out and drive!7

  Surge pricing encouraged drivers to work at certain times. The way that Uber routed jobs to drivers encouraged them to take every request, regardless of how profitable the ride would be. Uber’s minimum fare at the time of the study was around $5, which after Uber’s commission meant that for short trips drivers would take home around $3, before accounting for expenses like gas and oil changes. Because drivers had few details when they decided to accept an Uber rider, they couldn’t avoid these short trips.

  They also had no way to know, before they accepted a job, whether it would lead them far away from a city without any hope of finding a fare for the way home. And once they accepted a job, Uber strongly discouraged them from canceling it. If they canceled too many trips, Uber would deactivate them.

  Then there were “guaranteed fares,” hourly wages that Uber offered to some drivers when it wanted them to work during rush hour or big events. At these times, Uber would pay a higher rate, similar to surge pricing, but drivers often had to commit to working in advance. “[The] language of opt-in or RSVP buffers the narrative of freedom and choice that Uber promotes to its drivers, while simultaneously masking a hierarchy in which select drivers are invited to earn more based on opaque criteria,” the case study explained. “Drivers have the freedom to drive at ‘flexible’ hours at lower rates, but their flexibility is tailored to and dependent on demand as well as on the viability of base rates.”

  All of this made it difficult for a driver to understand how much he or she would make in a given week. Adding to this confusion, Uber changed fares frequently and without warning. For a long time drivers were paid based on a percentage of the total fare, so when fares dropped, they earned less per mile. In Kansas City, where Abe lived, one seasonal price cut, in January 2015, lowered the price of a 19-mile trip from the airport to downtown from about $38 to $22.8 The company made similar price reductions in 47 other cities around the same time. It offered “guaranteed earnings” to counteract the rate cuts.9 But to earn those guaranteed wages, drivers needed to accept 90% of ride requests and be online 50 out of every 60 minutes worked.10 Essentially, they had to work for Uber exclusively—which hadn’t been part of Uber’s initial pitch of independence.

  Also missing from Uber’s pitch were the expenses. In May 2014, Uber advertised that its UberX drivers (those without a luxury sedan or SUV) made more than $90,000 in New York and more than $74,000 in San Francisco (“UberX driver partners are small business entrepreneurs demonstrating across the country that being a driver is sustainable and profitable,” the company wrote on its newsroom blog).11 The advertised income led the perhaps overly credulous Washington Post to conclude, in a headline, “Uber’s remarkable growth could end the era of poorly paid cab drivers.”12

  But Uber’s estimation of its drivers’ wages didn’t include the significant cost of doing business, a cost that caught Abe, the Uber driver in Kansas City, and other Uber drivers by surprise. Uber drivers buy gas and spend money on insurance and car payments, and the company doesn’t reimburse them. “I wasn’t counting on expenses being all this much,” Abe said. “An oil change at least once a month, car washes—you don’t have to get a car wash, but if you’re picking up someone in a dirty car, it’s not professional—everything, the gas, air fresheners, they just add up really fast. I didn’t realize at first, but it’s literally less than minimum wage, after expenses.” Abe calculated that driving cost him about 58 cents per mile (adopting the IRS’s 2015 estimate for deductions related to business-related driving). In some cases, Uber charged customers 80 cents per mile. Then it took a commission that generally ranged between 20% and 30% and charged the passenger a booking fee that effectively made its commission higher. “It took me awhile to realize that the money I was making wasn’t all mine,” Abe said. “They trick you.”

  Internally, Uber had estimated what its drivers were actually taking home after they’d paid for gas and other maintenance costs, and the result painted a much less sexy picture than the one it presented publicly. After its pricing model leaked to the press, Uber shared its internal calculations for drivers’ wages minus expenses. On average, it estimated they were making $10.75 per hour in the Houston area, $8.77 per hour in Detroit, and $13.17 in Denver, which was slightly less than Walmart’s average full-time hourly rate in 2016.13 Based on the pricing model
data, BuzzFeed determined that gas, insurance, and other costs of doing business amounted to about 22% of full-time drivers’ gross pay in Denver, 24% in Houston, and 31% in Detroit.14 Wages in all three markets cleared the minimum-wage, but not by much. And unlike a minimum- wage job, driving for Uber came without any paid breaks or benefits like health insurance. What it paid could change any time.

  As Uber was pitching its company as a way to start a mini-business, internal presentations (which would eventually also leak to the press) showed that it considered the biggest competitor to its gig-based jobs to be McDonald’s.15 In January 2017, the company agreed to pay the Federal Trade Commission (FTC) $20 million to settle charges that it misled prospective drivers by exaggerating how much money they would make.16

  Some drivers were still content with the service, despite the gap between its advertised opportunity and its actual pay. It was still work, and as Uber advertised, it could fit between other commitments like school or caring for children. Other drivers, who had signed up to finance their cars through Uber, felt that Uber had made it impossible to quit. As the company lowered rates, a bigger and bigger portion of their per-mile earnings was automatically deducted from their checks to pay for the car they’d acquired to do the job. “I just felt like I was trapped, like I was an Uber slave,” one driver with such a set-up told The Guardian. She had ended up living out of her car. “It’s just been a domino effect,” she said. “It’s really ruined my life.”17

  To someone like Abe, who had joined Uber believing it would make him independently wealthy, the reality of working for the company was especially disappointing. He wasn’t trying to make a full-time living by driving for Uber (more than half of workers in the gig economy use it as a source of supplemental income18), but he still wanted to be treated fairly. As with GIN, the pyramid scheme that had cost him thousands of dollars, he felt as though an organization had misled him with a promise too good to be true. And as with GIN, he didn’t plan to stay quiet about it.