|From: Glenn Petersen||2/3/2021 10:04:11 PM|
|Gig economy companies have a new adversary: The FTC|
The FTC's settlement with Amazon marks a new chapter for the agency.
February 2, 2021
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."
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||2/19/2021 7:46:24 AM|
|A big blow for gig companies in the UK,:|
Uber dealt a major blow in the UK as top court rules its drivers are workers
PUBLISHED FRI, FEB 19 20214:54 AM EST
UPDATED FRI, FEB 19 20216:40 AM EST
Ryan Browne @RYAN_BROWNE_
-- 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.
What happens next?
The Supreme Court ruling potentially jeopardizes Uber’s business model in the U.K. Though it only concerns drivers involved in the 2016 case, in theory it is applicable to other drivers using Uber’s app.
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.
|RecommendKeepReplyMark as Last ReadRead Replies (2)|
|To: rogermci® who wrote (827)||2/22/2021 6:59:21 AM|
|From: Glenn Petersen|
|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 DoorDash DASH 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.
DoorDash Inc., Uber Technologies Inc.’s UBER -1.03% Eats and Grubhub Inc. GRUB -0.77% can charge restaurants up to 30% of every order—a chunk many owners say dents profits even as more orders come in.
A new crop of services is promising online ordering at a lower cost to eateries, by letting the restaurants arrange more deliveries themselves.
Chipotle Mexican Grill Inc., CMG 1.15% Shake Shack Inc. and a growing number of chains have acknowledged the cost of app-based delivery orders, and many say they intend to address it. Local governments from New York to Seattle have enforced rules capping delivery-app fees, in an effort to rein in restaurants’ costs while the health crisis keeps people home.
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
|RecommendKeepReplyMark as Last ReadRead Replies (1)|
|To: Glenn Petersen who wrote (828)||2/22/2021 11:02:45 AM|
|From: Kirk ©|
|Can you imagine if the post office, FedEx or UPS charged for delivery based on the value of what was shipped?|
You hear stories of people ordering a cup of coffee, milkshake or a small burger and fries that is delivered with some "samples" taken from it. My guess is the drivers were paid as a percentage so the fee and tip didn't pay for their gas so they ate a few fries or sipped some of the milk shake. The restaurants would probably do much better charging a fixed delivery fee added to their regular prices (perhaps based on miles driven) where they let the drivers keep the whole fee. I'd order MORE to get over the delivery fee just as when I get Chinese takeout now I order enough for a couple of meals so I can justify the time to drive and higher cost vs cooking my own food.
|RecommendKeepReplyMark as Last Read|