Jeremias Prassl's HUMANS AS A SERVICE: THE PROMISE & PERILS OF WORK IN THE GIG ECONOMY
HUMANS AS A SERVICE:
THE PROMISE AND PERILS OF WORK
IN THE GIG ECONOMY
by Jeremias Prassl
Oxford University Press. 2018. 199 pp.
(republished from PBA WC Law Section Quarterly No. 135, 9.2018; fns omitted)
In this new book, British law professor Jeremias Prassl analyzes the gig economy with a focus on the workers who actually labor in the gig workforce – and with an eye on the dignity and rights of such workers. Prassl accepts that new forms of business enterprises, like Uber, Lyft, and Taskrabbit have changed the nature of business, but he rejects the proposition that work itself needs to be examined differently. He shows that models of work in the gig economy find predecessors in the history of work relationships. As a result, caution is required in the analysis of whether the gig economy has truly changed the nature of work. Prassl, after showing that the purported innovation of platforms reflects old models of work, that enterprises like Uber retain control over its workers, and that much gig economy lingo is in fact “doublespeak” that clouds the critical analysis, argues that familiar Anglo-American precepts of employment law should apply to work in the gig economy.
Much is to be learned by the workers’ compensation specialist from Prassl’s book. He explains the nature and economics of the gig economy; how gig economy enterprises disingenuously seek to rebrand work as some innovation, the better to ward off regulators; and how laughable the idea is that most workers in the gig economy are autonomous entrepreneurs. Prassl also explains in detail that gig economy enterprises resemble the commercial labor intermediaries that have been with us since the 19th century, abetted in the present day by advanced communications. On this point, Prassl asserts that, just as other labor intermediaries are subject to employment law, so should gig workforce enterprises. Prassl concludes his book by emphasizing that the wealth of enterprises like Uber comes at a societal cost – it is fine, for example, to create fleets of independent contractors to prowl the streets en masse 24/7, but when unemployment or injury occurs, it is the taxpayers who will likely pay the cost.
Prassl’s book is, to my knowledge, the first by an employment law scholar to comprehensively take on the issue of work in this specialized sector of the gig economy. His insights and manner of argument will be familiar to the lawyer-reader, but this book is also a manifesto at once exposing and rejecting a modern example of the unsatisfactory commodification of labor. For me, the analysis brought context and will inform my reasoning as a judge – and as a member of the public. In the sections that follow, I have tried to summarize the critical points of this essential book.
The critical gig workforce issue in workers’ compensation, of course, is whether the worker laboring via a commercial labor platform intermediary is an employee or an independent contractor. Invariably, the worker in these relationships is unilaterally assigned the independent contractor label. For example, if an individual desires to use the Uber app to accept trips, he must enter into a non-negotiable agreement stating that he or she is an independent contractor. Of course, this device is hardly some innovation. As Prassl correctly remarks, “Independent contractor status is nearly always the easiest way of wriggling out of responsibility.”
Prassl notes the majority rule (prevalent in Pennsylvania), that mere unilateral designation does not answer the question in most jurisdictions. Courts, he correctly points out, will examine whether the alleged employer has retained control over the worker. Prassl, in this context, addresses the new legislative schemes promoted by industry lobbies to avoid such judicial scrutiny. This is legislation (most recently enacted in Tennessee in the context of “marketplace contractors”), “that simply stipulates that employment law does not cover gig-economy workers.” “[D]etails vary across jurisdictions,” he remarks, “but one common goal emerges: to deny workers’ employment status and insure that platforms are defined as mere intermediaries.”
Control of the relationship is, in any event, key in the Pennsylvania workers’ compensation analysis, and has been the subject of several non-workers’ compensation gig workforce cases in the U.S. In two California cases (dealing with wage and hour laws), courts have identified control, while in a notable Pennsylvania FLSA case, dealing with Uber limousine drivers, control was not found.
It is on this issue that Prassl’s book is especially insightful. In explaining the gig economy, and how gig economy enterprises work, he shows that the latter do indeed retain control, often in a subtle manner. “To deliver tightly curated products and services to customers, gig-economy operators accurately shape the entire transaction by means of close control over their workforce[,] from setting terms and conditions and checking relevant qualifications, to insuring proper performance and payment. Gig-economy apps do not only make it quick and easy to find workers and tasks; user ratings also provide quality control and feedback, and digital payment systems render the entire transaction cashless.” “The reality of work,” Prassl thus asserts, "is often a far cry from the freedom and independence of genuine entrepreneurship.”
The author observes, “most platforms contractually insist that they are not service providers, but mere marketplaces facilitating transactions between independent entrepreneurs and their customers.” He rejects this proposition, though at once stressing, as do most observers, that the gig workforce is attended by a broad heterogeneity, thus making generalizations difficult. He acknowledges, for example, that if an established plumber simply uses TaskRabbit to “grow her business,” such a process does resemble simple matchmaking.
Still, “when we look at platform work as a whole…, the entrepreneurship narrative is much more difficult to sustain.” Pertinent to the workers' compensation analysis, “many platforms’ business models are explicitly premised on tight control over their workforce, subject to constantly changing and increasingly onerous terms – the very antithesis of facilitating entrepreneurship.” Indeed, Prassl rejects the proposition that gig workers are autonomous at all. He stresses, in this regard, the role of consumers’ anonymous feedback following each task. He depicts this “algorithmic control” as a sort of tyranny: “Rather than merely signaling quality …, the real point of rating algorithms is to control workers – both on a day to day basis and by locking them into a particular platform’s ecosystem.”
The author compares the business model of many platforms to aspects of Frederick Taylor’s “Principles of Scientific Management.” Taylor, of course, was the architect behind assembly lines and making them perfectly, even inhumanely, efficient: “Today, Taylorism is back in full swing, resurrected under the guise of the on-demand economy, with technology and algorithms providing a degree of control and oversight of which even Taylor himself would not have dreamed.” An example is the Uber rule that drivers are compensated only when the app is in use; time in between rides is not compensated, even if the driver is in his vehicle and standing by for work.
Prassl provides further examples of control which are not widely known to the public. For example, some ride-sharing apps frequently, and intentionally, keep their drivers without information about passengers’ destinations until the trip has begun. True independent contractors, on the other hand, would presumably have open access to such information and “be free not to accept unprofitable work – such as a short local ride after a long wait in an airport queue.” Meanwhile, Uber tells its drivers to dress appropriately, and customers, for their part, can complain if a different route was chosen than that which they wished, and feel disadvantaged as a consequence. Taskrabbit obliges workers to wear bright green t-shirts with the company logo and also exerts control via its “general conditions of use.”
Prassl claims, “Even when platforms do not set a wage rate, they still exercise significant control over how much the worker is paid. Many operators insist that no cash changes hand directly between consumers and workers in order to keep full control over all aspects of fees, invoicing and payouts.” Control over wage levels, he explains, is essential to the on-demand business model.
Control is also exercised via platforms’ ability to sanction workers. According to Prassl, “algorithmic ratings are backed up by a series of incentives and sanctions. Well-paid or otherwise attractive requests are reserved for those with higher ratings, while low ratings trigger a series of ‘performance standard probations’ with workers confined to low-value tasks – or simply fired.…” Of course, what most of us would call a firing is, in the doublespeak of the app-based intermediaries, “deactivation.”
The author argues that the gig economy’s promises of self-determination and freedom are false. Platforms, he says, use their superior bargaining power to force workers into signing away “some of the most basic freedoms that a genuine entrepreneur might enjoy – from sending in substitutes and soliciting new customers to bringing in disputes before a court.” As to the former, TaskRabbit imposes a duty on taskers to “personally” perform any work, because taskers must go through the TaskRabbit vetting process; as to the latter, Prassl accurately identifies the mandatory arbitration clauses that are ubiquitous in gig economy agreements.
The gig economy enterprises deride critics and regulators for their supposed hostility to entrepreneurship. The same derision is accorded those who presume to question the integrity of the gig enterprises’ supposed innovations in work which, with their apps, they have rolled out. And, of course, it is difficult to be against entrepreneurship and innovation. Who, after all, wants to be a Luddite?
As foreshadowed at the outset, however, Prassl identifies earlier models of business and work that, he says, are precursors to platform intermediaries in the gig economy. He characterizes as myth the idea that the gig economy is all innovation. Prassl declares, “the innovation claim is essential to sharing-economy doublespeak. It is designed to keep regulators in general, and employment law in particular, at bay.” While modes of communication are innovative, he explains, the labor undergirding the work that is ultimately undertaken is not innovative at all. To reiterate, “the very business model of the gig-economy – matching a large supply of on-demand workers with ever waxing and waning demands for work – can be traced back for centuries….”:
Low-skilled tasks instead of complex jobs; powerful intermediaries controlling a large workforce; hybrid arrangements between open market and closed hierarchies: The gig economy is just the latest (and perhaps the most extreme) example of labor-market practices that have been around for centuries.
The first precursor should be of special interest to the Pennsylvania lawyer. Our statute has, in this regard, from 1915, always excluded from the definition of “employee” homeworkers who undertake piece work in the assembly of “articles or materials” – usually clothes and similar items. Prassl identifies as a precursor to gig work such processes (also called “outwork” and the “sweated trades”), noting that the practice “involves an entrepreneur organizing the production of a wide variety of goods [like clothing and lace] by breaking down the manufacturing process into individual steps….” The author state that such work arrangements were common during the last two centuries in most industrialized countries. The model, notably, was not limited to manufacturing: “Early service industries, such as dockworkers unloading ships … were often organized along similar lines.”
The second precursor is the “labor broker,” a term – and an occupation – that has existed for over a century. Prassl draws similarities between current platforms and such early “labor broking” intermediaries. Prassl identifies a whole series of labor recruiters in England a century ago. The author states, “technology apart, the essential features of most intermediaries’ business model were identical to platforms’ and apps’ digital work intermediations in the on-demand economy: They acted as a broker for a set of tasks, exercised tight control, and took a cut of workers’ earnings.”
In the past, notably, those undertaking homework, and waiting to unload ships, would not be paid for their time unless they were in the midst of their labor. Uber drivers of the present day are similarly not paid for their time between rides. Uber and the commercial labor intermediaries of the past both relied on the labor of crowds.
The author asserts that these early business models “debunk the on-demand economy’s claim to innovation, at least as far as work is concerned. Employers have long experimented with each of the elements we saw, from putting out work to powerful intermediaries to recourse to casual labor.”
Prassl, as he concludes his reflection on this historical phenomenon, ventures that these workers, past and present, should not be referred to as gig workforce members at all but, instead, “taskforce” members.
Prassl also deals with the oft-discussed issue of how to identify the employer in the gig economy. This is an issue quite critical to the author because, as foreshadowed above, he believes that traditional tenets of employment law should apply to these new relationships: “on-demand work [should be brought] back into the scope of existing employment law rules, ignoring platforms’ attempts to misclassify workers as entrepreneurs and accurately ascribing employer responsibility.”
The author recognizes the reality that more than one employer may exist for a gig workforce laborer. “The solution,” he states, “lies in adopting a more flexible approach to determining who should be responsible…. In legal terms, we can analyze employers’ powers – and the law’s control over them – as ‘functions of the employer.’” A solution “could be to decree that the platform is responsible as the employer under all circumstances, as is the case with labor-outsourcing agencies in some jurisdictions.”
Ride-sharing platforms are a good example of “on-demand business models where the functional concept of the employer clearly identifies the platform as the employer.” In certain scenarios, however, he admits that the employer-assignment task is more problematic: “what if a generally independent tradesperson wants to advertise her services through Taskrabbit?”
In any event, Prassl asserts, “we should be more flexible and adopt a functional concept of the employer. Those responsible for controlling one or more employer functions will have to comply with the regulations applicable to their options.”
In the final parts of his book, Prassl seeks to answer the question, “what are the implications of the on-demand economy for consumers and markets?” He asserts that society bears a cost: “Both as consumers and as taxpayers, we are all potentially liable for the real cost of on-demand services.” The modest prices, and the labor conditions, that make them possible have a price-tag.
The social costs are broad ranging. As examples only:
• Taskrabbit, at least at one time, had clients agree to indemnify it for almost every eventuality. For example, if a worker laboring through Taskrabbit is found to be an employee, the client, that is, the consumer, agrees to indemnify Taskrabbit for things like workers’ compensation benefits.
• Platforms frequently disavow responsibility in tort, and hence costs are spread to its drivers, victims, and the public. Uber, for its part, in one death case, declared that it was a “mere online platform,” and that it had no responsibility in a case where its driver, between jobs, ran over and killed a toddler.
• Without the applicability of anti-discrimination laws, minority passengers are without protections and have reported instances of mistreatment. Platform intermediaries in the ride-sharing business in response have suggested that they are not in the transportation business, and its drivers are contractors whose fidelity to equal treatment laws and regulations is outside their control.
Social costs also include those imposed directly on workers, items which are often off the radar screen. The author explains that, in addition to direct losses, like tax revenues and social security contributions, “taxpayers are also subsidizing gig-economy platforms indirectly. Traditional employers have a number of legal obligations towards their workers even when they are not economically active. In addition to paying an employee’s salary, companies usually have to provide a host of benefits, such as sick pay or parental leave. In the gig economy, these costs are borne by the workers themselves – which, in reality, often means that they have to fall back on the welfare state.”
Prassl makes a convincing case that the growth (and seemingly out-of-proportion valuation) of platform-based commercial labor intermediaries has come not so much from innovation, but from familiar strategies and phenomena. These include:
1. Arranging workers as independent contractors, a hoary and often facile cost-saving device;
2. Avoiding regulation (often illegally, as with Uber’s epic confrontation with and fining by the Pennsylvania Public Utility Commission); and, in general,
3. Taking advantage of the general phenomenon of the “fissured workplace,” under which tasks that used to be handled within a single firm are fragmented into units, often to the disadvantage of workers at the bottom of the economic hierarchy.
Those of us who work as workers’ compensation lawyers can easily appreciate these aspects of the gig economy.
Practically, it is important for the Pennsylvania lawyer to recall that each litigated case (not many have surfaced so far), must be assessed on its own facts. As Prassl notes, gig work is attended by “heterogeneity” (many systems and conditions exist) and the business model of many platform-based commercial labor intermediaries change overnight. In any event, whatever agreement has been unilaterally imposed on the worker must, in the pivotal analysis of control, always be compared to the actual conditions of his or her labor.
Prassl also makes his case that, while the digital age has revolutionized communications, work itself has not changed. Is this not intuitive? As a professor, I still have occasion to give an F to a student who has lightning-quick access to unlimited resources but who has still refused to do the work of study. As a judge, I encounter lawyers in court who have every innovative scheduling and research digital resource, but who have failed, inscrutably, to do the work of case preparation.
Those who perform work in the gig economy should not be left to share the scraps generated out of the machinations of 21st century commercial labor intermediaries. To the contrary, as Prassl correctly advocates, the scales should be rebalanced and “specific standards should be established to address unequal bargaining power in [our] world of flexible work.” One aspect of that rebalancing is to ensure a worker’s disability support and medical care in the event of work injury. Those injured in gig work should not be inhumanely jettisoned – as if their labor is just some mere commodity, to wit, “humans as a service.”