To start this article it is important to define what we mean by a gig firm. The “gig” economy is defined as getting very short term contracts as opposed to longer term contracts or a permanent job. Very short term is defined in minutes or hours as opposed to days. An example of this type of work would be deliveries or ride share driving. Therefore a gig firm is a company such as Deliveroo, Uber, Airtasker etc.
Around the world there has been a big discussion with courts and various levels of Government involved discussing and making decisions about who the contractor actually works for. The theory is that the gig firm contracts a human for a short period to do a specific task: deliver takeaway or a person to an address. It might be that the human is then contracted for several tasks per day.
In London for example, the gig workers have won a case in the courts that states that they are actually employed by the gig firm. In California, a similar decision has been made by the State’s Supreme Court which makes it harder for the gig firms to argue that the contractors work for themselves and not the gig firm. By arguing that the contractor is not fully employed by the firm means that the State wage laws do not apply.
In some respects doing a short term contract is no different to a longer term one in that the same principles apply. It is up to the contractor to agree terms with the gig firm before any work is started. If those terms are not agreeable, then it doesn’t make sense to accept the work. In Australia there is also GST (Goods and Services Tax) to be figured in to the pricing either by the gig firm or the contractor – and the Australian Tax Office is like a dog with the bone on this subject.
Back in California, the bigger gig firms have collaborated on a letter to the Governor and several State officers to lobby the courts to backtrack on the decision. The firms who collaborated were Uber, Lyft, Instacart, DoorDash, Postmates, TaskRabbit, Square, Total System Services and Handy Technologies. They hope that there is weight in the volume of revenue and gig workers involved.
The business model used by these companies is designed to generate a large volume of low value tasks and having strict wage rules means that the price of the task would have to rise – and that would reduce the volumes of tasks posted because people have got used to specifying a low value request. What the gig economy has done is devalue one sector of the employment market by driving prices down. I was at a startup hub the other day and saw two new apps being developed by school children that moves the gig economy down the age range and ensures that children are trained to accept very low value jobs!
Heading back to California again, the California Labor Federation immediately responded to the letter with the following statement: “With income inequality at an all-time high and millions of working families struggling to survive in this unfair economy, why would our state’s leaders intervene to protect big corporations from paying the wages owed to their workers?”
The issue is whether the worker really is working for the gig firm, or whether they are technically a sole proprietorship with short term agreements between them and the gig firm. That is the nub of the issue that the gig firms and the Governments are fighting over. I think this argument will have a long journey to its destination and I think raising the price of each task and therefore the amount to be earned is a good thing. Humans must be valued for their skills and work effort.