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In the News

The Gig Economy - US court rules Uber and Lyft workers are contractors

Graham Watson

14th March 2023

News from the USA, where the California appeals court has ruled that Uber and Lyft can continue to treat their workers as self-employed contractors rather than employees. It's significant for the company because the costs of employing the former are lower than the latter because they don't have to offer sick/holiday pay among other things.

However, it has the capacity to generate stakeholder conflict, because it may mean that employees are less invested in the company decreasing their engagement with it, and making them less willing to go above and beyond the terms of their employment contracts.

Please read: US court rules Uber and Lyft workers are contractors (BBC news)

Background on the Gig Economy

The gig economy refers to a labor market in which temporary, flexible jobs are the norm, as opposed to full-time, long-term positions. Workers in the gig economy typically work as independent contractors, freelancers, or temporary employees, rather than as traditional employees with benefits and job security.

Uber and Lyft are two examples of companies that operate within the gig economy. These companies are ride-sharing platforms that allow customers to request rides from independent contractors who use their own personal vehicles. Drivers can work for these companies on a part-time or full-time basis, and they have the flexibility to set their own schedules and choose which rides to accept.

One of the key benefits of the gig economy for workers is the flexibility it provides. Drivers for Uber and Lyft can work as much or as little as they want, and they can choose to work during times that are convenient for them. However, the downside is that they do not have the same protections and benefits as traditional employees, such as health insurance, paid time off, or job security.

Uber and Lyft have also faced criticism and legal challenges related to their classification of drivers as independent contractors, rather than employees. Some argue that these workers should be classified as employees and entitled to the benefits and protections that come with that status.

Overall, the gig economy and companies like Uber and Lyft have disrupted traditional labor markets and provided new opportunities for workers seeking flexible employment options. However, they have also raised questions about labor rights and protections for workers in this new economic model.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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