In 2008, Uber was created by Travis Kalanick and Garrett Camp on a snowy night in Paris, which became one of the most popular ride-sharing apps of the twenty-first century (Bales, 2017). Uber gave people the chance to be their own boss whenever they want, but it also gave drivers harm as they were unable to receive the benefits and protection under the state and federal law. This was the issue the case “Are Uber drivers employees? ”discussed.
In this case, the stakeholders are drivers, Uber, and the court. The Uber drivers wants to have benefits as legal employees and do not want to be treated as independent contractors, yet they feel that most of the decisions are being made by Uber. If court rulings indicate that Uber drivers are employees, the company will be subject to pay Canada Pension Plan, employees’ compensation premiums and insurance expenses. Overall, if such a ruling is concerned, it will make it challenging for Uber to use its current business model that is based on low prices for customers (Owram, 2017).
However, Since the mid-nineteenth century, court has a “control test” to determine a worker should be classified as an employee or independent contractor. Unfortunately, the federal government does not have a statutory scheme distinguishing employees from independent contractors, so many states and agencies are using their own version of the control test. Therefore, it led to indeterminate results in different states across the country, even the different countries (Bales, 2017).
Human Resource Implications
In Canada, the legislation that comes to play can be found under the Canada Revenue Agency. It includes the degree of control that Uber and the drivers have in the business. If Uber has lots of control, then the drivers can be classified as employees by Canadian law. However, Uber claims that it exercises very little control over its drivers. They can accept or decline rides, they can choose to work or not and they work without supervision. The only requirement is that the driver reviews remain above the set standard. But, there are some drivers arguing that Uber’s algorithm exerts far too much control over their lives to be viewed otherwise (Hawkins, 2018). In addition, when an individual has the freedom to work on their own terms, they can be classified as an independent contractor under the Canadian law.
Canadian law also considers the owner of the tools used in production. When the worker also owns the tools, they fall under contractor status. In this case, the drivers come with their own cars and phones. Uber only provides the app and the clientele.
Canadian law points out that in a contractor relationship, the worker may financially profit or lose depending on the nature of the work or industry. In this case, the workers fall in a state of contraction. The drivers are never guaranteed on the number of rides they will have or the amount of profit they will earn. The company takes responsibility for compensating unsatisfied customers.
The law also takes into account the importance of the worker to the business. In this case, the drivers are very critical to Uber as without them the company cannot earn any money. Uber disputes and claims that the app is the most important aspect and not the drivers. Taking this into consideration, the workers fall under employee status (CBC News, 2019). Contractor status is further applied because the drivers are free to hire other drivers to do the work for them. Although many do not do that, the flexibility of the company further shows that they have created a contractual relationship with the drivers (Munroe & Howard, 2017).
Nowadays, according to CBJ News in 2019, a landmark ruling in the U.S. by the California Labour Commission, Uber is an employee, not a contractor due to the ruling which determines that Uber is “involved in every aspect of the operation”, which is the latest in a host of legal and regulatory challenges facing Uber in the United States and other countries, including Canada. Although Uber is still portraying that they are just a neutral technology platform, the Labor Commission says Uber controls virtually all the tools drivers use and monitor their approval ratings. Additionally, if a driver’s rating falls below 4.6 stars, Uber can discontinue work with the driver.
Strategic Management
Uber and the drivers can use a third party to mediate the case, which can be completed by using a national agency to help bring the two sides to the agreement. Mediation can help bring amicable solutions, rather than going to court. When drivers are considered as employees in Uber, Uber need to pay about forthy billion currently (CBJ News, 2019). If Uber does not want this happens, they need to negotiate with drivers and give some benefits to them, such as paying for drivers’ car insurance since it is the most important aspect on the driver’s side.
Strategic human resource management entails the recruitment, deployment, motivation, retention and engagement of employees. To achieve that, a company has to take into consideration the external market, corporate culture, the business strategy, competitive advantage and corporate culture (Schwind, Wagar, Uggerslev, Fassina & Bulmash, 2016). In this case, Uber has to consider the fact that its entire business strategy is centred about the affordable services to customers. That means if it has to pay lots of premiums to drivers in terms of benefits and insurance, it will not be able to expand to new markets. The company should obey the law (Schwind, Uggerslev, Wagar, Fassina & Bulmash, 2016) and explain that to its drivers in the process of negotiation. At the same time, the company highly relies on drivers to offer its services, thus, it must be willing to give up something to make the drivers happy. It can give them higher percentages to cover insurance expenses. In a mediation, having a two-sided perspective will help the company resolve the issue.