Gig Stocks Fiverr, Uber Hit A Wall As Biden Labor Sec Marty Walsh Aligns With UK & Europe

Gig Stocks Fiverr, Uber Hit A Wall As Biden Labor Sec Marty Walsh Aligns With UK & Europe
  • Comments by labor secretary Marty Walsh may signal and end to the relentless abuse of American workers by gig platforms.
  • Actions of the Biden office aligns with EU moral leadership to prevent citizens facing labor conditions that matches that of China and other countries where slavery is common.
  • Fiverr, Uber, Lyft, DoorDash, PeoplePerhour run the greatest risk in future and current compliance with employment changes.
  • Fiverr shares dropped by more than 3% after the news which is merely the tip of the iceberg.

“America is back” and so is the moral consensus on the rights of employees not to be exploited. Speaking up on cases where gig workers are not treated respectfully, Walsh told Reuters that there are some cases where these workers might be treated with respect, yet in many cases they should be classified as employees. He pointed out that these companies are making good profits, however that the success need to trickle down to the workers too.

US, EU and UK government actions are aligned:

At an OECD and G7/G8 level, governments seem to be in one accord: the fast and furious abuse of labor and side-stepping of responsibilities through grey areas in the law will be brought to a halt. Companies that conveniently misclassify workers as “contractors” may soon need to change how they operate.

  • Spain: The Supreme court ruled that certain gig workers are to be treated as employees.
  • Italy: The court decided that riders must be treated as full-time employees with all the associated rights.
  • Netherlands: The court held that Deliveroo drivers are employees and should be treated as such.
  • France: The French court rejected an appeal by Uber, insisting drivers are employees.
  • Belgium: The Belgian labour court is taking action against Deliveroo.
  • UK: The Supreme court ruled that gig workers are entitled to minimum wages and holiday pay, stating that Uber exercised all the necessary control measures over the actions of people to class them as employees, refuting the assertion that they are self-employed contractors.

A broader response to government action with more to come?
Regarding Uber, an analyst noted that “You cannot roll into any city, bypass the local transportation and employment laws, and claim that because we’re a cool SF based tech platform, it is acceptable”. Concerning Fiverr, an analyst noted: “How can an Israeli tech outfit in Tel Aviv market to a German business, using workers from Spain, Greece or India, processing this as a US transaction, bypassing any responsibility to payroll taxes and leaving workers with no protection against fraud, abuse and other areas where employment law seeks to strike a balance? Who are these people to think that they can get away with this in the modern world?” 

Fiverr berated for worker abuse:

So far, Fiverr was lucky in the sense that it dodged the type of workers that are represented by unions and interest groups. Uber was less fortunate as it ran into taxi associations much earlier, who were sufficiently funded to take on illegal practices. Yet it was argued that Fiverr exercises much more control over essential elements of the workers’ role than Uber and that it is rather exploitative of the current pandemic and people’s need to work from home. A whistleblower who spoke out against what he called “militaristic abuse of a customer department and management unit based in Tel Aviv, Israel, which totally disregards the rights of workers in a desperate attempt to hold onto customers.”

The worker who represents a prominent media agency says that “After a client gave us a 5 star review, he went and hit us with a chargeback. Fiverr provided no support until we took the matter into our own hands and dealt with the client. Even after the client returned the money to Fiverr, they did not acknowledge this and pretended that it was dealt with as “compensation”. They first compensated us and then rescinded their decision when we dared to speak up about worker conditions and treatment. Claiming that it was a compensation rather than a customer payment, does sound like fraud and raised suspicion about the level of ethics deployed by the Tel Aviv office”. The agency owner went on to explain that “The total lack of ethics and readiness of Fiverr customer service representatives to ditch a worker who face adversity, together with the lack of interest from Micha Kaufman to get involved to do the right thing, is alarming. These people show zero loyalty to those who helped to build up their platform”. 

A Perfect Storm: Where to next for Gig corporations?

The impact: For the next few months, some gig companies may still have leeway as the long arm of justice takes time. Once new unified regulations gain traction at an OECD and G7/G8 level, companies may well face a situation whereby they are left with a skeleton of countries where labor laws are laxed, or to start treating people as employees in countries like the US, UK and Europe at large, should it seek to retain their skills.

  • In the case of Uber and Lyft, they are geographically constrained for a standard service. Fiverr, on the other may be able to slash workers from countries with a solid legal system and still service American and European businesses with “talent” from India and Pakistan. But in reality, the “PRO” services launched at Fiverr, which relies a lot on American and British talent in the areas of video production, voiceover, translation, marketing and PR / advertising services – these will be heavily affected if suddenly the workers are considered employees.
  • Back pay may need to be paid for several months, if not years, to those who went without holiday pay which could impose a financial burden on Gig companies. For example, in the UK, now that the court reached a decision, Uber needs to negotiate with workers on a settlement that is retroactive. If Fiverr, Lyft and even Airbnb would face a similar situation in the near future, the financial impact for shareholders could be severe.
  • Professional associations may get involved: Members of the American Institute of Architects (AIA), Chartered Institute of Marketing, American Marketing Association and Association for the Advancement of Artificial Intelligence (AAAI), as well as those belonging to numerous other associations have been exploited by freelancing platforms for years. They may now speak up in favor of worker rights.

The EU stance on the gig economy:

Whether or not this is to expand the tax base, or genuinely stand up against modern slavery, the tide has turned also at an EU level. European Commission president Ursula von der Leyen recently presented her Agenda for Europe as a European Commission presidential. She observed that “digital transformation brings fast change that affects our labour markets.” She committed at that time to “look at ways of improving the labour conditions of platform workers.” Following that, in collaboration with the Jobs Commissioner, Nicolas Schmit, Margrethe Vestager, Executive Vice-President for A Europe Fit for the Digital Age, launched the first stage of the European Commission’s consultation of social partners on how to improve the working conditions for people working through digital labour platforms.

Update – 11/05:

The Fiverr share price continued crashing by a further 7% and went as low as 167.18. Although the company turnover is hundreds of millions, it reported a “loss” and failed to issue any warnings in relation to legal risk it may face given the new stance governments are now taking on the gig economy and appropriate classification of workers. Uber is also down by almost 3% although many would argue it is less exposed than Fiverr.

Slave Drivers Beware – Change is coming:

In an age of corporate responsibility, technology companies like Fiverr who are feeding off the highly educated workforces in the US and Europe make no contribution when these workers need medical treatment or pensions. They are also feeding of well-established markets to sell their services. But what do they give back to customers and workers? Uber may be different in the sense that it typically targets less skilled workers, affecting less professions across the board. Just like technology giants were held responsible in the US and Australia for putting news publishers and journalists out of business, so will employment law hold companies to account for stripping workers of their rights at a time when they are vulnerable to the winds of change. Finally, Airbnb who sought to  force it’s distorted social views on home owners who are cash-strapped, may also be required to fall in line with a new reality. With America back on the global stage, it is time once again for change – this time, to deal promptly those among us who sought to execute a scaled sneak attack to enable their ambitions for modern slavery.