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Freshfields TQ

Technology quotient - the ability of an individual, team or organization to harness the power of technology

| less than a minute read

Why employment law is crucial for the gig economy

Uber has settled two class-action lawsuits brought by its U.S. drivers for $ 100 million. The drivers ‎claimed to be employees, Uber argued that they are freelancers. Why does this matter? In many countries employees are entitled to minimum wages, health care benefits, protection against dismissal and paid holidays - while freelancers do not enjoy such rights. Employees' rights cost money and companies of the gig economy may suffer a nasty surprise if their "freelancers" are actually employees. But it is often possible to structure a business model in such way that freelancers cannot claim employee status. It may be surprising but it's employment law that decides the success or failure of a gig economy business!

Uber has survived a major threat to its business model, settling two legal suits brought by drivers who sought to be classified as employees instead of independent contractors. The ride-hailing firm will pay up to $100 million to the 385,000 drivers, but their employment status will not change.