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This Attorney Is Suing the Pants Off the Sharing Economy—For Its Own Good

"This is inevitable. How bad do you want it to be?"

 

Boston-based lawyer Shannon Liss-Reardon was already suing Lyft and Uber for (in her eyes) illegally classifying drivers as mere outside contractors rather than employees, allowing the companies to skirt minimum-wage laws and deny basic benefits. Then, just this week, she filed additional complaints against three more “sharing economy” companies: Shyp, Washio, and Postmates.

Liss-Reardon is the same woman who beat FedEx in court after the corporation tried making contractors of its delivery drivers. She did it again to strip club owners who didn’t want to classify dancers as employees, and forced Starbucks to change its tipping policy. But, she tells us, she’s not out to sink Silicon Valley. She insists that all of this is for startups' own good.

 

Shyp just announced that they’re reclassifying all of their “contractors” as employees. Do we have you to thank for that?
They said they hadn’t seen our suit yet. That’s possible, since we just filed it on Monday and they made the announcement Wednesday. But, of course, we’re thrilled by the news either way.

So that’s one less case for you to worry about?
Oh, we’re going ahead with the suit. Now it will just be about recovering back pay owed. These couriers had to foot a lot of expenses out of pocket that they shouldn’t have.

In legal terms, how can you tell who is a contractor and who is a real employee?
It‘s not a completely bright line, although in the case of these particular companies, it’s not even close to ambiguous. One of the things courts look at is the degree of control that a company exerts over the people working for it. When I see lists of rules and standards and the company terminating people who don’t follow them, that’s not how you interact with a contractor.

But contractors have rules they have to follow.
Sure, but you get rid of contractors for a material breach of contract, not at the company’s discretion. And you have them finish out the obligations of that contract, and then you just don’t hire them again.

So if you can fire someone, you must have hired them first?
You could say that. One of the other considerations is whether the worker’s services are the core of what the company provides. FedEx is a delivery company and the drivers perform that. Uber and Lyft have tried to claim they’re not car services, but the courts rejected that. Anytime you see a company set up a business model based on contractors, that should be a red flag automatically.

Because it’s such a convenient arrangement for them?
Right. And you know, this is for these companies' own good. They face real risks if they declaim responsibility to their employees. Shyp and Instacart don’t have to worry about that compounding liability, but a company like Uber that wants to dig in its heels and fight this for years, they’re going to end up owing a lot more later. This is inevitable, so how bad do you want it to be?

But some of these companies walk all over the law just as their way of doing business, and it doesn’t seem to have hurt them.
Companies do tend to think they’re too big to be taken to task. And yeah, they can hire expensive law firms and drag this out, but that doesn’t change that this is going to catch up with them.

Not for nothing, but: Why should this time be different?
I don’t have any expertise in things like taxi regulation, so I can’t comment on why [Uber has] done so well there. But I do know employment law, and these laws are real, and the courts do enforce them. In front of a jury any company is vulnerable.

The jury is a particular problem for them?
They have no control in that situation. Their fate is entirely in the hands of 12 people, and that’s not a good position. And when you hear the real stories of drivers rather than just the glowing marketing language Uber puts out, it doesn't look good. I’ve got a client who told me a story about a six-hour shift where she made $20. These companies aren’t sympathetic defendants.

What about their old standby counter: That it’s not going to help any of these workers if you shut the company down?
These suits aren’t going to kill the companies. Silicon Valley is really onto something with new ways to deliver services more efficiently, and that’s great. And a lot of workers like the flexibility of doing this stuff part-time, and that’s great too. You can’t tell me they can’t adjust their business model to account for more overhead when you look at the kind of money they’re making. They’re not really creating jobs right now anyway. If you can’t guarantee at least minimum wage, that’s not a job.  

 

 

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