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Food-delivery platforms in Europe are offering couriers extra benefits in the hope of averting costly legislation on employment rights
By Adam Clark Wall Street Journal Dec. 30, 2020 8:14 am ET
An Uber Eats worker stands by the Spanish Steps in Rome. Gig-economy companies are hoping a labor deal struck in Italy can provide a model elsewhere. PHOTO: ALBERTO PIZZOLI/AGENCE FRANCE-PRESSE/GETTY IMAGES -----------------------
BARCELONA—Gig-economy companies in Europe, under pressure over employment rights, are looking to strike labor agreements that give workers some benefits but stop short of making them employees.
Uber Technologies Inc. and Amazon.com Inc.-backed Deliveroo are among a number of food-delivery businesses seeking to secure deals with workers and unions in the hope of averting legislation that could force them to treat delivery drivers as employees, potentially upending their business models.
The effort follows several legal judgments across Europe challenging the companies’ view that drivers and couriers are independent contractors.
In the U.K., Uber is appealing to the Supreme Court to overturn an earlier decision that drivers using its app effectively work for the company, while Swiss courts have forced Uber Eats to stop using independent contractors in the Geneva area. Instead it has started using third-party employees, a first for the company.
An Uber Eats rider collects an order in London, where the company is fighting a legal decision that effectively classified its workers as employees. PHOTO: DAVE RUSHEN/SOPA IMAGES/ZUMA PRESS ---------------------- Gig-economy companies say reclassifying workers as employees would add to costs, reduce workers’ flexibility and result in lost jobs. Following the Geneva move, Uber said only 300 couriers were given contracts, costing 1,000 others their jobs.
Instead the companies are championing a recent labor agreement with a small right-wing union in Italy as an alternative. Under a deal agreed in September, a group of companies including Uber and Deliveroo promised couriers in Italy €10 per hour spent making deliveries, equivalent to about $12, as well as equipment and insurance. That’s above the typical €7 an hour minimum wage but comes without holiday pay or sick leave.
The companies struck the deal, which covers all of their food-delivery workers in the country, after the Italian government threatened to regulate the sector. The companies say the deal doesn’t add to costs for their customers.
Larger unions have said the deal leaves workers worse off than if they were treated as employees, but it remains in force. The companies say they are interested in pursuing similar arrangements elsewhere, including in France and Spain.
While Uber and Lyft Inc. offered drivers in California modest benefits after winning a state vote to keep workers as independent contractors, the Italian deal goes further by introducing collective bargaining for independent contractors.
President-elect Joe Biden has said he wants to introduce collective bargaining for contractors, and the Independent Drivers Guild—a New York-based drivers’ group—called for states to offer such arrangements to gig workers following the California vote.
In Europe, the next battleground is Spain, where the government hopes to finalize a new gig-economy law in the coming weeks. The companies are pushing an Italy-style deal that would avoid workers being reclassified as employees.
The industry also backed government proposals in France to introduce charters of agreed working conditions, while ruling out full employment rights.
“We do believe gig workers should have access to more social rights but not necessarily under a strict labor regime,” said Sacha Michaud, cofounder of Barcelona-based delivery app Glovoapp23 SL, which operates as Glovo across Europe and in parts of Africa.
In Spain, Glovo, Deliveroo and Uber say they are willing to offer workers a deal that would pay minimum rates—plus bonuses for working in bad weather—but doesn’t include benefits such as paid vacation.
Deliveroo said it wanted to improve social protections for workers in Spain and elsewhere, without risking their flexibility.
]Delivery workers in Malaga, Spain, protest for greater inclusion in debates over the country’s new gig-economy law. PHOTO: JESUS MERIDA/ZUMA PRESS -------------------- Some delivery drivers are supporting the companies’ efforts in Spain.
“We want to work as independent contractors and have the flexibility to work as many hours as we want,” said Badr Eddine Hilali, head of the Asociación Autónoma de Riders (Autonomous Riders’ Association), a couriers’ group that works with the platform companies. “A contract of 40 or 30 or 20 hours doesn’t interest me.”
Others say the companies pose a false choice between flexibility and employment.
“The Italian model is what the companies want because it offers them more benefits and less for the workers,” said Dani Gutierrez, a spokesman for Riders X Derechos (Riders for Rights), an independent couriers’ group that supports employment status for couriers.
“‘Flexibility’ is what they say you have. We don’t work when we want, we work when they let us, which is very different,” Mr. Gutierrez said, referring to the lack of guaranteed minimum work and the pressure to work evenings and weekends.
Gig-economy companies in Europe may struggle to avoid their workers being classified as employees unless they change their business models or can show couriers enjoy genuine freedoms of self-employment, said Valerio De Stefano, a labor-law professor at the Belgian university KU Leuven. This could include providing more transparency around their algorithms and financial data on labor costs, he added.
European countries often have labor protections incorporated at a constitutional level, which could hamper efforts to carve out a new category of independent contractors in the law, he said.
A friend of mine posted a video of a delivery vehicle bringing his order from a restaurant on Castro St. in Mtn View. He lives a few blocks away. You have to go out to get the food as it doesn't dance up to your door and ring the bell.
My thought was people, kids, homeless, crooks, etc. will jump on and ride those and wait for them to open up to get what is inside.
Arm those robots with with something to prevent that.... they might be very useful for private security, especially with how the SF DA lets criminals out with a cookie these days.
Peer-to-Peer, Gig and On-Demand Economies | Stock Discussion ForumsShare
Albertsons is laying off employees and replacing them with gig workers, as app platforms rise By Eli Rosenberg The Washington Post Jan. 6, 2021 at 4:11 p.m. CST
The grocery chain Albertsons is laying off delivery workers and replacing them with gig and contract workers, a change that labor advocates and union representatives say is a direct result of the new California law that companies such as Uber, Lyft and DoorDash sponsored last year.
It declined to give an estimate of how many positions would be affected but said workers would be offered the ability to continue to work.
The news about Albertsons’s grocery brands Vons and Pavilions, which was first reported by Los Angeles news site Knock, was greeted with a chorus of outrage from liberals and labor advocates in California, who have long warned that Prop. 22, the ballot proposition that gave gig companies the ability to deny workers protections such as the state-mandated minimum wage and overtime by classifying them as contractors and not employees, would result in job losses and give employers even more incentive to limit the compensation and benefits available to workers.
“This is exactly what we were afraid of when app companies started pushing for a special carve-out from labor laws,” said Caitlin Vega, a labor advocate who works closely with California’s legislature. “If you create a subcategory that has fewer rights and wages, you’re going to shift from traditional employment to this new category of work. And that’s going to worsen the inequality that we already face.”
Albertsons declined to comment on whether its decision was influenced by Prop. 22.
“This decision will allow us to compete in the growing home delivery market more effectively,” the company said in a statement. “Since the COVID-19 outbreak, our eCommerce business has risen to new heights and has become more strategically important to Albertsons Companies.”
Unionized delivery workers will not be laid off in the shift, Albertsons said.
Some of those workers are insulated by a contract that protects them in some ways from encroachment from gig and contract workers.
“In the process of doing organizing and negotiations, the issue of use of third-party apps was a huge issue with our members,” said Jim Araby, an official with a chapter of the United Food and Commercial Workers in Northern California, which helped unionize workers at some Safeway stores in the Bay Area in 2019 (Albertsons owns Safeway).
The delivery workers his union represents make $17 to $22 an hour, have access to employer-paid health insurance, vacation time, sick time and 401(k) benefits, and do not have to use and maintain their own vehicles for their work, he said.
DoorDash, meanwhile, does not count the time workers spend in between deliveries; workers protected by minimum-wage requirements have this time counted, making wage comparison impossible. The company said its workers make an average of $22 an hour nationwide when not counting this downtime. Drivers are also eligible for some health insurance subsidies through the Affordable Care Act when they work 15 hours or more a week, DoorDash spokesman Taylor Bennett said.
Albertsons’s decision had nothing to do with Prop. 22, Bennett said in a statement. He didn’t offer any more details.
“DoorDash has always supported local economies, and as e-commerce and delivery have become even more important for many businesses during these challenging times, we remain committed to helping brick-and-mortar local merchants reach consumers with the best of their neighborhood,” Bennett said.
The move adds fuel to the debate over the future of work that has been unfolding in California — and being watched closely around the country — in recent years.
In 2019, legislators in California passed a bill, AB5, that sought to crack down on worker misclassification — the practice whereby companies classify workers as contractors instead of employees to avoid higher labor costs associated with the category. The bill applied to workers across industries but was written specifically to address misclassification at gig companies such as Uber and Lyft. The companies have long argued their workers are self-employed and thus do not merit extra protections.
Contractors are not entitled to protections such as minimum-wage requirements, overtime rules, workers’ compensation should they get injured on the job, and unemployment insurance, while employees are.
Uber, Lyft and DoorDash helped bankroll a more than $200 million ballot initiative in 2020 to thwart the California bill, formally exempting them from classifying their workers as employees, arguing that their proposal would help empower workers who enjoy being contractors.
The experience of Albertsons workers should serve as a warning for the future of employment across the country if app-based companies continue to find ways around labor laws, labor advocates say.
“It comes as no surprise that these kind of business models are going to be drawn on by more and more companies who are seeking lower labor costs and being released from basic workplace standards and responsibilities,” said David Weil, a former Labor Department official and Brandeis University professor who is an expert on worker-classification issues. “More and more delivery drivers will lose the protections and benefits of employment and be required to work in these independent contractor setups where they’ll be paid less, exposed to greater risks on the job and have no access to basic social protections like unemployment insurance.”
For Democratic legislators in California who had lost their battle against some of Silicon Valley’s powerful players, the news about Albertsons’s layoffs amounted to an “I told you so” moment.
“We warned that this was an effort of corporations to replace good middle-class jobs with jobs with no protections,” said Southern California Assemblywoman Lorena Gonzalez, a Democrat. “And we have exactly that today. We have workers making minimum wage along with health-care benefits and from that to a situation where those jobs are being done by people making sub-minimum wage with no health care and no protections, period. It’s what happens when we allow corporate greed to go unfettered.”
Prop. 22 gave companies confidence that they could contract out work that was previously reserved for employees with secure pay and benefits, without facing the risk of being sued for misclassification, said Chris Benner, a University of California at Santa Cruz professor who has studied app-based delivery work.
“The fact now that they [Albertsons] are moving to this model, except for a small subset of their delivery workers who are unionized in the Bay Area, just underscores the problematic nature of this sort of insecure delivery work,” he said.
The FTC alleged that Amazon failed to pay its Flex drivers the full amount of tips they were owed, amounting to a deceptive business practice. | Photo: Chip Somodevilla/Getty Images ---------------------------------
Gig economy companies know that President Joe Biden's Labor Department is going to be a problem for them. But the FTC's commissioners are signaling that they hope to take on the Ubers and Lyfts of the world, too, using any authority they have to defend workers being harmed by the notoriously opaque gig economy.
The FTC's settlement with Amazon over its Flex tipping practices on Tuesday marks a new chapter for the agency, which has not historically taken serious action against gig companies or in defense of workers. But in its complaint, the FTC alleged that Amazon failed to pay its Flex drivers the full amount of tips they were owed, amounting to a deceptive business practice.
Amazon agreed to pay $61.7 million to refund the drivers, a small price tag for a company that just reported its first $100 billion quarter. But beyond the dollar amount, the settlement is a serious signal to the gig companies that the Biden administration will scrutinize their business practices from all angles, and the FTC may be their next opponent in the upcoming regulatory wars.
Acting FTC Chairwoman Rebecca Slaughter told reporters that the case shows that the FTC under her leadership will bring "cases that tackle today's pressing problems."
"Here that means not only protecting consumers but also workers in the fast-growing area of the gig economy," she said, calling it an "an important step in ongoing work to ensure that companies who use gig workers treat them fairly and honestly."
And outgoing FCC Commissioner Rohit Chopra ripped the agency for its historically "lax approach to worker abuse." "Despite broad pronouncements about a commitment to policing markets for anticompetitive conduct that harms workers, the FTC has done little," he said. "I hope that today's action turns the page on this era of inaction."
A litany of gig companies, including DoorDash, Postmates and Shipt, have been accused of misleading their workers about how much they receive from tips and silently tweaking their algorithms in order to pay lower wages. It's an area that's ripe for regulatory intervention, experts said.
"There's been a lot of allegations of questionable practices in the gig economy space, and so I certainly expect the FTC to continue to try to be more aggressive," said Justin Brookman, the director of technology policy for advocacy group Consumer Reports.
Slaughter declined to say whether the FTC is investigating other companies. But she said that the agency is taking those concerns seriously. "Misrepresentations having to do with income and compensation, however they fall, whether they be tips or base wage or otherwise, could be within the scope of the FTC Act's ban on deceptive acts and practices," Slaughter said.
It's not the first time the FTC has taken on a gig economy company, Republican FTC Commissioner Noah Phillips was quick to point out. Uber in 2017 agreed to pay $20 million to settle accusations that the ride-hailing company misled drivers about the amount they could make. And those efforts are only set to accelerate over the next few years.
Similar battles have been playing out across the country. DoorDash last summer changed its tipping policy following a public outcry over revelations that it was using customers' tips to subsidize payments to delivery workers. And Instacart similarly changed its tipping policy after facing pressure from a group of senators, who urged the FTC to investigate "tip-baiting."
And the FTC could expand those inquiries into the secretive algorithms controlling delivery workers' pay. "The FTC could use its power to go after corporations that have considerable economic power and use it to suppress wages or increase," said Laura Padin, a senior staff attorney with the National Employment Law Project.
The FTC's commissioners are also using the opportunity to push Congress to expand its authority — specifically, they want to dole out bigger fines the first time a company is caught deceiving consumers or workers. There's some scuffling among the FTC commissioners about how that could play out; outgoing Democratic FCC Commissioner Rohit Chopra says the FTC already has the authority while Slaughter and Phillips argue Congress needs to intervene. With Democrats controlling both chambers and the White House, that intervention is likelier than ever.
Ultimately, the Department of Labor and National Labor Relations Board will play a key role in determining the most consequential question at the center of gig work debates: whether workers should be classified as employees, with access to the full range of benefits under U.S. law, or contractors.
"The fundamental change here that needs to be made probably can't come from the FTC because it relates to the way these workers are classified and the rights and protections they have because of that classification," Padin said.
But the knowledge that a government agency is investigating their tipping and business practices could scare some gig companies into changing how they operate. "Before, it was very unregulated," said Lindsey Cameron, an assistant professor at the University of Pennsylvania's Wharton School. "They could do what they wanted to do. Now there's more eyes looking at them from all different directions."
-- The U.K.’s Supreme Court upheld a ruling that Uber’s drivers should be classified as workers rather than independent contractors.
-- Uber insists its drivers are self-employed and that it acts as more of an “agency” which connects them with passengers through an app.
-- The ruling potentially jeopardizes Uber’s business model in the U.K. and has major implications for the country’s gig economy.
LONDON — Uber lost a crucial legal fight in the U.K. on Friday as the country’s Supreme Court upheld a ruling that its drivers are workers, not independent contractors.
The Supreme Court voted unanimously to dismiss Uber’s appeal against the ruling. The decision could have huge implications for Uber’s U.K. business, as well as the wider gig economy.
Friday’s verdict concludes an almost five-year legal battle between Uber and a group of former drivers who claim they were workers entitled to employment rights like a minimum wage, holiday pay and rest breaks.
In 2016, an employment tribunal ruled in favor of the drivers, led by Yaseen Aslam and James Farrar, who claimed they were workers employed by Uber and therefore entitled to certain labor protections.
Uber insists its drivers are self-employed and that it acts as more of an “agency” which connects them with passengers through an app. Uber wants to keep the legal classification of its drivers as independent contractors unchanged, arguing drivers prefer this “gig” model as it’s more flexible — it also benefits Uber from a cost perspective.
“We respect the Court’s decision which focused on a small number of drivers who used the Uber app in 2016,” Jamie Heywood, Uber’s regional general manager for Northern and Eastern Europe, said in a statement Friday.
“Since then we have made some significant changes to our business, guided by drivers every step of the way. These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury.”
Heywood added: “We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.”
The U.K. case echoes Uber’s legal fight with Californian regulators, who last year attempted to reclassify drivers of Uber and other ride-hailing services like Lyft as employees to grant them more employment protections.
But voters supported a ballot measure called Proposition 22, which exempted Uber and other gig economy platforms from reclassifying drivers as employees.
The company will now have to go back to the employment tribunal to determine compensation for the group of drivers. But it could face further claims from thousands of other drivers in the country.
It also has major implications for Britain’s gig economy, which is thought to have a workforce of around 5.5 million people. Other companies operating a similar model to Uber’s include Bolt, Ola and Deliveroo.
“This verdict will undoubtedly have far and wide-reaching implications for all gig economy operators and will make it harder for companies engaging people via digital platforms to assert that they are self-employed, despite contractual documentation which may state otherwise,” said Helen Crossland, partner at U.K. law firm Seddons.
Governments want to put people, and business relationships in certain boxes. If it doesn't fit perfectly, they don't let people just contract as they want, they smash things in to the box they decide to put it in.
Peer-to-Peer, Gig and On-Demand Economies | Stock Discussion ForumsShare
Deliveries are going to remain a tough business for both the restaurants and the delivery services until they can figure out a way to pass most of the costs onto the consumer. You would think it would be an easy sell as people are generally willing to pay a bit more for convenience.
Restaurants and Startups Try to Outrun Uber Eats and DoorDash
Big delivery-app fees gnaw at many restaurants; entrepreneurs and eateries pitch workarounds
By Preetika Rana and Heather Haddon Wall Street Journal Feb. 21, 2021 5:30 am ET
Restaurants got customers in the pandemic through delivery apps like DoorDash and Uber Eats, but many eateries now seek lower-cost options; a Los Angeles driver picked up orders in July.PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS -----------------------------
Apps like DoorDashDASH 2.95% and Uber Eats have provided restaurants a flood of customers in the pandemic. Now a host of food-ordering tools, along with some restaurants, are finding ways around those apps and the commissions they charge.
Andrew Wang, founder of the delivery service Spread.PHOTO: ANDREW WANG -------------------------
“The pain over app commissions is not new… the pandemic just exacerbated it,” said Andrew Wang, the founder of Spread, a website that charges restaurants $1 per order and markets itself as a cheaper and more restaurant-friendly alternative to the big apps.
Mr. Wang says restaurants give Spread lower prices for menu items. Restaurants say they typically mark up on popular apps to make up for the commissions that those services charge.
Delivery is an expensive logistical undertaking. DoorDash and Uber Eats have trimmed their losses as orders have surged, but have yet to post a yearly profit. Grubhub has incurred new losses, in part as commission caps weighed on its bottom line.
Some new players say they can steer enough orders to make it worthwhile for the restaurants to organize their own deliveries—as pizza shops and takeout businesses have long done—or to outsource deliveries to a partner. Lyft Inc. LYFT 3.26% has said it is exploring such partnerships with restaurants.
Whether these alternatives can grab market share, or turn profits, is an open question. Makers of the new crop of services say they save both restaurants and consumers money, because restaurants aren’t marking up menu prices to offset commissions and they can charge customers smaller delivery fees.
Sales on third-party food-delivery services are more than double what they were prior to the pandemic, with levels of demand staying high, according to an analysis of credit- and debit-card data from Earnest Research. DoorDash, Uber Eats and Grubhub have registered the biggest growth, though smaller delivery companies such as Chowbus and Ritual Technologies Inc. logged year-over-year increases in December and January, the data shows.
Long John Silver’s LLC, the nearly 700-unit fast-food chain, plans to introduce a system later this year for customers to order directly on the company’s website, with delivery handled by a third-party delivery service.
“We didn’t want to continue to deal with these companies,” Stephanie Mattingly, the chain’s chief marketing officer, said of the big delivery apps. “They are the necessary evil for us right now.”
The bigger apps say they are taking steps to help. DoorDash recently started building websites for small restaurants that enable customers to order directly from eateries. Rather than taking a commission, DoorDash charges restaurants a flat fee to deliver orders placed via those sites. Consumers also typically pay apps for the cost of delivery. Uber Eats has started a similar feature. Grubhub said it is building apps for chains and will make similar services available free to independent restaurants in coming months.
All three apps say they have spent millions of dollars to support small restaurants through grants and free promotions. DoorDash said it waived commissions for eateries with five or fewer outlets in the early months of the health crisis. Grubhub said it suspended commissions for independent restaurants for the first few weeks of the pandemic. Uber Eats said it has halved commissions for restaurants doing their own deliveries through mid-this year.
Some restaurants pack Spread’s stickers in to-go orders.PHOTO: SPREAD -------- Spread’s Mr. Wang, who helped Groupon Inc. GRPN 5.63% launch its delivery service, has tried to surf growing consumer sentiment against commissions, designing cartoons and stickers that show the downsides of the bigger apps’ practices. He’s encouraged restaurant partners to pack them into orders.
Half of the 150 restaurants on Spread make their own deliveries, Mr. Wang said. They set their own delivery fees for customers, he said, often pricing lower than the big apps to encourage more orders. The New York-based company works with a partner to complete the other orders.
Fare, a New York-based delivery service started by catering company CaterCow, offers diners a limited selection of eateries to order from—a play to drive volume. Fare’s restaurants deliver themselves, with owners and managers doubling up as delivery drivers. Deliveries are made at preset times during lunch or dinner, which helps restaurants keep costs down.
“It isn’t the best if you want your food in the next 20 minutes,” said Chief Executive Sean Li. The service is a better bet for people who like ordering their meals in advance, he added.
Chipotle is testing a car-side pickup service through its own app, an alternative to third-party delivery apps.PHOTO: CHIPOTLE MEXICAN GRILL ---------------
Similar to Spread, restaurants on Fare often display lower prices for menu items than on other apps because Fare doesn’t charge them a commission. It does charge customers a service fee, similar to the big apps; Mr. Li said customers still pay less overall than they would on apps such as DoorDash and Grubhub.
Fare has partnered with about a hundred restaurants since launching in June last year, Mr. Li said.
Some restaurants are taking on more online business in an attempt to bypass the apps.
Portillo’s Hot Dogs LLC struck a delivery deal with DoorDash in 2017, but began steering some business toward its own app during the pandemic. The 63-unit chain put some idled workers on delivery duty and started handling larger to-go orders.
Portillo’s Hot Dogs reassigned some workers to food-delivery duty during the pandemic and began handling some orders on its own app.PHOTO: PORTILLO'S --------------------
Drivers arrive on customers’ doorsteps in Portillo’s uniforms, and workers are tipped directly. “There is a benefit in controlling the entire experience,” said Nick Scarpino, the Chicago-area company’s senior vice president of marketing.
Large restaurant chains can negotiate better commissions with delivery apps but say they are feeling the pinch of order-handling fees.
Chipotle is among restaurants introducing new pickup services designed as an alternative to third-party deliveries. Customers can pull into a parking spot at the restaurant, tap an app and an employee brings the order to their car. CEO Brian Niccol said many customers prefer to pick up their food themselves.
“It’s faster and by the way, you can avoid the delivery fees,” Mr. Niccol said in an interview this month.
Food-Delivery Apps vs. Restaurants: The Dining Industry’s Covid Divide ----------------------------
Demand for food delivery has soared amid the pandemic, but restaurants are struggling to survive. In a fiercely competitive industry, delivery services are fighting to gain market share while facing increased pressure to lower commission fees and provide more protection to their workers. Video/Photo: Jaden Urbi/WSJ Write to Preetika Rana at email@example.com and Heather Haddon at firstname.lastname@example.org