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California Case Threatens Uber's Business Model, Future Of Freelance Economy

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California Case Threatens Uber's Business Model, Future Of Freelance Economy

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California Case Threatens Uber's Business Model, Future Of Freelance Economy

California Case Threatens Uber's Business Model, Future Of Freelance Economy

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NPR's Kelly McEvers speaks with David Plouffe, former adviser to President Obama and current board member of the company Uber, about the growth of the freelance economy.

KELLY MCEVERS, HOST:

Uber is on a charm offensive. The company that lets you order a ride with an app says its business model is good for drivers. They can work whenever they want as independent contractors and make extra money in an economy where wages are still pretty flat. Critics say Uber drivers are getting a bad deal because they don't have the same benefits and protections as regular employees. A jury here in California could decide whether Uber's business model is legal at all next year when it hears a class-action suit brought by drivers.

Earlier today, I talked to David Plouffe. He ran President Obama's campaign in 2008, and now he is a chief advisor at Uber. And he says many Uber drivers like the flexible schedule.

DAVID PLOUFFE: I know from my political days, when you talk to Americans about their lives, where they often take the conversation, is, they don't have enough money, and they don't have enough time - so to be able to fit work around the rest of your life - your kids, taking care of your parents, your core job, your additional schooling - where there's no schedule at all. I think that's why so many people are flocking to drive on the platform.

MCEVERS: But for some people, this is a full-time job. And yet they are still considered to be independent contractors without any kinds of benefits. I mean, why is that?

PLOUFFE: Well, I do think, you know - over 50 percent of our drivers here in the U.S. drive less than 10 hours a week, forty percent of those - less than eight. And that continues to decrease every month. But again, let's compare it to a traditional transportation. Ninety percent of taxi drivers in the United States are independent contractors.

MCEVERS: As we said, Uber is currently facing a class-action lawsuit from drivers here in California. They say they absolutely should be considered as employees, which means they should get benefits. If a jury sides with them and reclassifies all of these drivers, is Uber prepared for this?

PLOUFFE: Well, first of all, this was three drivers who got connected with a plaintiff's attorney. I think if you talk to the vast, vast majority of Uber drivers, they like the classification because it gives them maximum flexibility not just day-to-day and hour-to-hour, but they can sign up and do this for three months when they're home from school or when they've lost some hours. And then if they decide to stop doing it, they can stop doing it. So we're very confident in the legal case. We don't control schedule. We don't control hours. There's no set route. There's no set uniform. So we're very confident in our business model.

MCEVERS: Understood. Let me ask the question again. If the jury does side with these drivers in this case, is Uber prepared? I mean, what if you lose?

PLOUFFE: Well, first of all, I'm not going to speculate. We're just very confident in the legal case and our business model. If you compare it to other cases in this space - very clear.

MCEVERS: I mean, Fortune magazine did an analysis of this case and estimated that, you know, if these drivers were classified as employees, it would cost Uber upwards of $4 billion to pay the benefits that they're asking for. I mean, is Uber prepared for that kind of cost?

PLOUFFE: Well, again, you can ask it many different ways, but I'm just not going to engage in speculation because we're very confident in the case. But let's talk about, you know - there is a big downside for drivers. One of our growing - most fast-growing demographics are stay-at-home parents. They drop their kids off at school. They drive for a few hours. If they lose that schedule flexibility and we say, our busiest time is bar closing time, so you need to be out, you know, between 11 p.m. and 3 a.m., that's going to take that opportunity from a lot of people.

MCEVERS: I mean, let's game this out. Let's think about this in the future. If this kind of work expands, you'll have all these independent contractors out there in the economy and companies less and less responsible to pay for their benefits. So then who is responsible to pay for them? I mean, are we really in a climate right now where people want to see the government spending more money on social programs?

PLOUFFE: Well, it's an interesting question. I think we should be careful not to accelerate this trend prematurely, meaning, if you have, 10 years from now, a lot more people, let's say, not having traditional employer-employee relationships, then of course policymakers need to step back and say, how do we need to adjust for that? I mean, truthfully, our model is largely based on people in an employee-employer relationship, working for one company for a very long time. Obviously our economy's changed well before platforms like Uber. So I think that's an interesting question, and I think that's a debate for policymakers to engage in. And we'll certainly be involved in it.

MCEVERS: David Plouffe is a board member at Uber and also the company's chief advisor. He was also a former campaign manager and advisor to President Obama, and he joined us from Uber's office in San Francisco. Thanks so much for your time.

PLOUFFE: Thank, Kelly.

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