São Paulo Labor Judge Rules Uber Must Pay Full Employee Benefits to Drivers
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I understand that there is a need to protect those drivers (and other gig economy workers), but trying to bend the law's definition is not the right way to do it. This will get reversed as all other cases did.
That said... our laws get bent a lot, specially by tech companies, for example often I see offers for "Flexi" jobs, that is euphemism for registering the worker legally in one job, but paying him outside the legal framework for another job, this is obviously illegal, but is wildly popular, because our labor laws are waaaaaay too much.
The law establishes that to be considered an employee/employer relationship, there needs to be a level of control from the employee's journey/hours, etc.
That control simply does not exist between Uber and Uber drivers and that is why it is considered that they fail the legal employee definition.
Obviously there is disagreement, as with everything in Law, but in this case you really need to bend the definition to make it fit the requirement.
As I said before, I fully agree that Uber drivers and other gig workers need some protection, but I also fully agree with the ruling that they do not fit the current legal objective definition of a employee/employer relationship. It simply does not.
We need new laws for those cases, or to change the legal definition (which is unlikely). Judges giving those rulings is basically having judges creating laws, which is not how it is supposed to be (by the way, Brazil does not have Common Law, so other rulings do not have the same power as in US/UK and other Common Law states).
Labour Justice is its own court in Brazil. They have their own structure that only judges labour issues and they are usually very protective of employees. My guess is that this is just a form of protest by the first instance judges that do not agree with the ruling.
This, unfortunately, is very common in Labour cases in Brazil (at least it was when I stopped being a lawyer there about 3 years ago).
I hate the idea of closing it off to people that just want to side income.
They try to incentivize drivers to work during off-hours, but can't specify shifts and have their workers remain classified as ICs.
This would make Uber less useful for the workers that want to dip in for an hour or two.
Net utility from the change might still be positive as I suspect these days most drivers work something closer to full-time / shifts, but I'd want to see more data on this.
In California, this is one of the tests of whether someone is an independent contractor or an employee — who dictates the hours worked.
I wouldn’t be surprised if this ends up biting many drivers in the hurt. Uber can easily say “You want employee benefits? No problem. We tell you when to work, and you probably won’t like your schedule.”
And the crappy schedule may not be because Uber is being ornery — it may just be when they need drivers.
A significant fraction of taxi drivers (>25%) are self-employed. They own their own vehicles and set their own hours of work.
In many cases, they're actually obliged by the terms of their licenses to take fares (actually less independent than Uber drivers). The fares they charge are set by their licensing authorities, rather than being negotiable.
You also have to keep in mind that full time minimum wage jobs are more commonly available in the market than jobs with very high flexibility, so we may want to preserve their availability for people who need that.
That may even be what the people driving full time are after. Even if you're driving 40 hours a week, if it means you get to do it in weird slices around your kids' schedules, that could be worth the lack of benefits.
But require them and you end up scheduled in inflexible 8 hour contiguous blocks and you might as well be working at Walmart.
That's a weird expectation, because millions of people work jobs as employees without fixed schedules, and in areas with similar rulings, this doesn't happen with gig workers.
It's already present at 30 hours a week/130 hours a month in the US.
It doesn't necessarily mean that the market for side income jobs is closed, it just closes those jobs and businesses which are nonviable if they're required to pay their employees a reasonable wage.
Oftentimes this is a necessary side-effect of what (I believe at least) is good legislation. A minimum wage of $7 might close off a job to less qualified people who want to work for less, but on-net I think is a good policy.
If you want to help people who can't command high wages, lower their taxes and make it up from people who have more money. Or give them a UBI to much the same effect. Don't take the money out of opportunities for even worse off people, that's ridiculous.
There's some weird obsession of hoping that businesses (or the free market) are going to solve all of the problems of society. That's clearly not the case, but instead of the government stepping in to address those issues, they hope that creating things like earnings floor mandates will solve the problem. Those patchwork implementation generally end up having unintended (or in the case of minimum wages, actually intended and racist) consequences.
I don't have a good replacement mechanism that keeps benefits tied to employment and isn't complex and likely prone to other perverse incentives. But at the very least, we should be clear about what the incentives end up being.
Which is why I think the right answer is to decouple things like healthcare from employment.
Though I agree healthcare is the one thing that would probably be better off not tied to employment.
The entire concept of "benefits" came out of regulatory arbitrage to avoid 20th century wage controls or because of differential tax treatment. It's an anachronism that should cease to exist.
People are, in the large, morons. That goes double when it comes to money and health.
Remember: we are in this situation right now with freelancers, gig workers, etc. If you're worried about creating an army of uninsured, they already exist.
They're not, and constantly assuming they are is incredibly patronizing.
And if they are, aren't the people deciding all of these things for everybody also "people"? Clearly then we shouldn't rely on their decisions because people are morons.
> That goes double when it comes to money and health.
So give a tax credit to individuals for having a minimum amount of high deductible health insurance but structure it as a "tax" for not doing so, which triggers loss aversion and causes people to buy it to avoid the "tax". It changes nothing for the people who were already doing the math and it catches the "morons" you were worried about.
Not having employers provide health insurance doesn't necessarily mean a free-for-all.
For example (IIRC) the Swiss system unbundles this, but it's obligatory to buy insurance, so that you are not free to be selfish "moron" (i.e. to pay nothing until you get sick, and then your neighbors pay so as not to have people dying in the gutter).
The other that comes to mind is life insurance. Some people can't buy individual life insurance at any price due to preexisting conditions but they can get a group policy from their employer (up to certain limits) with no questions asked.
It would be better than employer-provided insurance, especially if people weren't being discouraged to buy high deductible plans, because it would cause patients to be price-sensitive for routine non-emergency care, which would bring down overall costs in a major way. (Which is why the ACA doesn't do that -- the industry doesn't want lower costs, because that's their revenue.)
> Some people can't buy individual life insurance at any price due to preexisting conditions but they can get a group policy from their employer (up to certain limits) with no questions asked.
I'm not sure why it's supposed to be a good thing that people can force other people to subsidize their life insurance after the risk of early payout is already known. It's like letting someone's family buy life insurance after they've already died. That's not insurance, it's charity. Insurance is what you get if you bought it before the risk came to light.
This is one of the most callous and uncaring things I’ve ever read on this terrible website. Congratulations.
If the law instead was sloped, offering a partial benefit equal to hours/40, this wouldn't happen. (To avoid creating an incentive for mass overtime, the law would allow for over 100% benefits.)
Strange, I'm from Europe and I'm proud of this decision.
>Brazil's labor laws treat the "workers" as stupid people, unable to negotiate good terms by themselves.
No, it just treats them as regular people that deserve the same rights as everyone, but which (as poor people in need of work and individuals) don't have the same negotiating power as a multionational employer to enforce them...
The unions keep wanting stronger labor laws, but these tend to apply in practice only to high-class workers in very unionized professions, while everyone else is lucky to even get a job at all, because the obligations our labor laws create are so insane that most smaller employers need to use legal loopholes just to be able to pay the bills at the end of the month (one of the most common ones is asking workers to open a personal company and paying their company for "services rendered" instead of the worker - labor courts hate this, but they know if they closed the loophole half of the country would be out of a job the next week)
The corporations keep trying to make labor laws weaker, but they tend to do so in ways that screw over the lower-class workers while the high-class, unionized workers are able to maintain most of their privileges.
It's a terrible situation. To make it worse, our legislative representatives and a large part of the electorate are very much infatuated with the (false) idea that our labor laws actually "protect" all workers, which makes it very hard to reform them. They are kind of a sacred cow to a lot of Brazilians. I don't see it getting better any time soon.
(I'm a US-raised Brazilian who currently lives in Brazil, by the way)
"You have to understand, most of these people are not ready to be unplugged. And many of them are so inert, so hopelessly dependent on the system that they will fight to protect it."
About our labor laws: They were created by a populist and fascist (I mean in the literal meaning, guy admired Mussolini) government, they are very, VERY, VEEEERY rigid and extreme, to the point Brazil has more "informal" workers than "formal", thing is, "informal" is just euphemism for illegal, basically the labor laws are so bad that most of the population work illegally.
I am 33, and I NEVER, had legal work, never found one, and thus for example I can't get unemployment benefits and many other rights.
Reason for that is these jobs are extremely rare, because it is ludicrously expensive to offer them, in some fields of all money a company spend in personel, 95% go to government (usually it is around 60%).
---
Now the second subject, is Uber relationship with Brazil, basically government so far been very hostile to Uber, and tries everything to screw with them, thing is, Uber (and competitors) here been a blessing, not just because it meant "cheaper cabs", but because it was only thing that could rid of Taxi Mafia.
Here in Brazil we have not only strong medallion laws, but often there are corrupt politicians in the Taxi Mafia, where they find excuses to not grant medallions legally, so they can sell them in exchange of bribes and favors, before Uber existed this got to a point where Taxi drivers would kill competitors on the street for some reasons, for example picking up passengers in an certain area without permission from the Taxi Mafia was a reason for that person to be killed.
We were the last country in the Americas to abolish slavery, only 60 years before Vargas created the framework to our current labour laws. Before that there were laws but they were seldom followed.
Of course the laws could use a reform (they are often confusing) but we have many good worker rights that we shouldn't give up.
Brazil has tons of structural economic problems since its inception ever since the Portuguese came over. Saying the labor laws are to blame is completely wrong.
Most of our labor laws are there for middle-class people to look at them and think "wow, aren't our labor laws great?" while most actual lower-class people can't get jobs that actually follow the labor laws because most people who employ them aren't able to both pay the bills and deal with all the financial obligations and regulatory uncertainty our labor laws create.
Employers typically have way more financial and legal ability to negotiate themselves a better position versus one individual employee.
[1] OECD numbers are available from OECD's Taxing Wages 2020 report: https://www.oecd.org/tax/taxing-wages-20725124.htm
As for retirement, inflation will probably eat that.
I'm sure the commenter above was including something else, which is what I'm curious about, given that as far as I can tell the highest marginal federal tax rate I can find is only 27.5%, and average effective rates far lower, but I don't know what other costs people might incur.
If Brazil is in fact a higher tax country than most of the wealthiest countries in the world, I'd love to know more.
Universities are also free.
When your family is very poor, this situation makes it impossible for the student to keep on trying. Sometimes parents can't keep paying for the preparatory course, or worse, the student may have to forfeit it's dreams of studying in favor of working and helping with household expenses.
As seen in [0], most people studying in free universities are actually in a pretty good financial situation.
Sometimes, people from very poor families manage to study for free, but this is rare and often newsworthy [2].
In my humble opinion, I don't think universities are really free. There are many financial costs associated with studying in a public university.
[0] http://www.brasil-economia-governo.org.br/2016/06/15/como-as... [1] https://g1.globo.com/pb/paraiba/noticia/2020/01/29/paraibano... [2] https://diariodonordeste.verdesmares.com.br/metro/estudante-...
Source: http://www.guiatrabalhista.com.br/tematicas/custostrabalhist...
> and then pay 50% of everything that you make in taxes for this wonderful protection
For non-salary labour costs to make up a large amount relative to salary is a very, very different argument.
Total taxes paid by the employee for an average Swede is closer to 25%.
The highest marginal rate for someone on an average salary in Sweden is around 48% for the total tax wedge, but someone on the average is not paying that marginal rate.
For the same categories the total tax wedge for the US is 24%, and the total tax ~18% (for comparison the marginal rate for an average earner in the US in the same category is 40.8%)
Source: OECD Taxing Wages 2020
The 95% figure is for hourly employees and counts worst-case expenses over their raw hourly rate. In every other country vacations (including weekends!) are just counted as employee income and in that spreadsheet it's accounted as some sort of tax. Every country's overhead rate would go up if you accounted things in this absurd way.
The FGTS is a really stupid scheme that should die but ultimately goes into the employee's pocket, so it's also a form of income and not a tax. (It's a kind of mandatory savings account.)
Income taxes disproportionately hit labor in a world were capital is becoming more and more concentrated.
> and then pay 50% of everything that you make in taxes for this wonderful protection
about employees.
I don't see how corporation tax is relevant to that.
> Brazil's labor laws treat the "workers" as stupid people
This has nothing to do with stupidity, intelligence or anything like that. This has to do with leverage. A multi-national giant corporation like Uber has a lot of leverage over Brazilian workers. If Uber treats them like figurative slaves and gives them too little money, workers have very little they can do against this. It is government's responsibility to protect people from this power imbalance. Yes Uber should have a freedom to charge/pay whatever market accepts and workers should have freedom to negotiate their own benefits. But at the same time Uber needs to implement a minimum care for their workers, and if not government should be able to enforce them to do so.
If people continue to drive for Uber, doesn't that mean the app is still a net positive for them, or do you believe people would pay to work?
Your comment is a great example of what the parent comment is saying, the belief that people are too damn dumb and they need protection.
This is by definition the opposite of what "outcompeted" means.
If the drivers get together, they might be able to negotiate 15$ per ride, leaving 5$ per ride for Uber. However, it might be hard for the people to do that, so the government can step in to improve conditions for riders by negotiating for them as a block.
The primary way they could pay drivers more is by charging higher fares. But then there is lower demand for rides, so they need fewer drivers, so some of the drivers lose their jobs. If you think that's a good trade off then take it now -- quit and go do something else. It will cause the remaining drivers to be able to command higher compensation.
Everybody wants to be the one to get paid more and not the one who loses their job, but some of them will necessarily be wrong.
Given that people fall for scams that take money in return for a fake promise of employment, yes, I do.
Aside from that, what is your limiting principle? Where is the power imbalance line between an employer and employee too much for this principle to bear?
Of course, people born in those places can theoretically vote with their feet, although most people seem to find that much easier said than done.
https://obamawhitehouse.archives.gov/sites/default/files/pag...
This is likely where the comment of laws treating the workers as stupid people comes from - Brazilian labour laws are very rigid with an amazing amount of restrictions around negotiating different benefits, working hours, etc. If, however, you earn a higher salary then you fit into a different category of labour laws and are allowed more flexibility. The thinking seems to be "if you earn under this amount you probably didn't receive a good enough education to know what is good for you". Sometimes that may be true, but it is a very dangerous line of thinking.
What the GP is criticizing is that they see this as a power move to increase government income through taxes. The underbrush is that this money is then stolen by corrupt government officials (it's common perception in brazil that that's just the way the brazilian government works).
In this light, Uber is just the sucker-du-jour who gets to be "screwed over" in the latest corruption ploy.
Uber's perspective in this type of matter is that there are a large number of drivers who don't do ridesharing full time or even on a consistent part time basis (for example, one's free to do it once or twice ever). An apt comparison might be someone who sells stuff on craigslist - yes you can do it full time, but people often do it for just extra cash, without considering it a "job" per se. So you can see why Uber might not like to restrict driving opportunities only to those who are willing to commit to a full-time employment arrangement.
With all this said, I'm all for having drivers who are effectively working full time hours to be able to earn a reasonable income. I'm not too familiar w/ the state of lobbying in Brazil, but my understanding is that Uber is going to be lobbying in the US for a third employment category and one of the talking points of that proposal is to work towards income improvements for drivers. The position that drivers are not employees goes both ways: if they are considered Uber's clients, it behooves that Uber should do its darn best to provide the platform with the best payouts in the industry, lest drivers would flock to a better paying competitor.
I would love to see a single cite of a successful negotiation by a driver with ride-sharing services regarding matters of pay or pricing. Negotiation is not possible in contracts of adhesion.
There's a massive power asymmetry between a mega international corporation and an individual.
It has nothing to do with 'intelligence' or 'competence'.
Surpluses go to the power. If employees had power, they'd be able to 'negotiate' better terms on their own, they never well.
At the 'low end' of the labour market, we have to have some kind of regulations or else they would get paid the 'bare minimum to survive' and an entire economy of accommodation, food, services would pop up around that system. Maybe like favelas?
So the issue is: 'where do we draw the line?' - which is really hard.
Hmm, ok that's quite a view. I would say that nearly all works are certainly unable to negotiate good terms by themselves.
The only workers that can negotiate their own terms are the small minority that are very highly skilled and in demand... laws like this are trying to help the vast vast majority who have NO power because the employer can just replace them with anyone else at the drop of a hat.
It does so via push notifications in India, so does its rival Ola but news report says that funds weren't distributed to the drivers properly[1].
[1]https://www.huffingtonpost.in/entry/uber-ola-hyped-relief-fu...
Uber is trying to weasel out of this in Switzerland by letting drivers set price but it won't fly.
Depending on companies to self govern is not sustainable even if Uber does not exploit this, the next company will. Such loopholes need to be closed, putting on pressure on some companies is just band aid if they actually change, if not just effort wasted on the wrong thing.
I don't buy regulatory capture as a valid argument either.
To make sure companies do the right thing strong regulations and laws need to be in place, to make sure regulatory bodies and lawmakers are not influenced, people should have more power in government than money does.
Mainly, I do not find it very genuine that they only implemented this policy, likely with extra effort, in one territory. This feels like a play to capture market share and increase growth, even if it doesn't match their existing business model.
Uber and the like claim the workers choose when to work, how much, whether to accept gigs etc. But this is part of the problem: offering gigs at a set rate as take it or leave it is insufficient control. A real contractor would be able to negotiate and adjust this rate.
Uber drivers are employees delivering services core to the function of the business.
Isn't it already built into the system though? If no one drives, surge pricing goes up until someone accepts the ride.
Honestly I see no way individual workers setting the price wouldn't lead to lower prices than you see now. Drivers would have the option to either sit and make 0 money or cut their rate by 10 cents and make some money. The way Uber sets prices pretty much mandates a minimum. If the minimum doesn't cover your maintenance costs, you shouldn't be driving for Uber.
Uber maintains its business isn't transportation - it's facilitating a market place for transportation. Nonsense, say its detractors, you're running a car service.
It's clear that Uber has gotten into some activities that undermine its own story, like loans for drivers to buy cars and insurance.
It's also clear that Uber drivers don't look like regular employees in many ways - like: they decide their own hours; they can refuse trips; they can contract with other, competing ride-share companies simultaneously.
I don't know how people generate certainty in their opinions on this topic.
You don't tell the person building your home how many employees he's allowed to have, and how new his tools must be.
To be clear, I agree with everything you’re saying. However, if I say I’m willing to pay $100 for a website and will deny all counteroffers, is the person who I hire to make my website a contractor or an employee?
So I bill for about 200k USD. My wife gets our medical insurance. I take home about 140k after taxes. If I were an employee, I’d only take home 100k after taxes.
That sounds like a recipe for a race to the bottom that ends in Dickensian sweatshops.
When I think of markets with "as little regulation as possible", Denmark and Sweden don't really cross my mind...
If the trade-off is that the IT guy billing six-figure sums ends up with a bit less cash in his pocket, because he's required to contribute more to the system that takes care of everyone, well... I won't be losing any sleep over that.
Life in a society is full of arbitrary lines in the sand. When is a person allowed to drink alcohol? Where does your lot of land end and your neighbor's begin? How fast are you allowed to drive on this particular piece of road? Why do you consider the tax rate, of all things, to be so arbitrary?
For a functional society, you have to draw the line somewhere. Ideology instead of pragmatism is a recipe for failure. Being pragmatic is not hypocritical.
You’ve constructed a straw man. You say your view is practical and mine is idealistic. I say yours is idealistic and mine is practical because mine will allow people to practice more freely.
Cry me a river. There are tech workers barely getting by because they're being forced into being considered "contractors".
Most places that force these kind of treatments tends to do so only when people have no ability to set their schedule or no realistic prospect of negotiating terms etc. in ways that makes them indistinguishable from employees.
Most of the time there are ways out of this and/or all that ends up being required is for you to be an employee of your own company rather than exploit tax loopholes that were never intended to be used this way. Eg. this is the case in the UK where the dreaded IR35 closed tax loopholes that let people avoid paying themselves a salary for their contracting and instead cut costs by taking out dividends or making their spouses directors etc.. The change did not in any way stop contracting even for a single client, but it prevented people from using it as a way of avoiding tax.
In most of those instances "forcing you pay for things you're not interested in" boils down to not forcing society to take risks on your behalf because people are using contracting as a means to avoid e.g. social service payments and the like.
I'm sure there are places that are exceptions where some people get caught out, and that's a shame, but most of the time these rules benefit far more people, because of the extensive use of "contracting" as a way for employers to get out of obligations with people who have no effective leverage.
If I was to be an employee, I would (or rather, my employer) be forced to do everything based on the employment law, which has severe restrictions on me as well as on my employer and on the kind of relationship we have, which causes extreme loses to me (as I like to be paid proportionally to returns) + paying more for things I don't want and up until now wasn't required to have.
I've probably got the details wrong but that's the general idea.
There were dozens of rulings like this in Brazil already. They all got reversed in upper instances.
Given that São Paulo is a key City for Uber, according their prospectus Sampa is the second most active city This will be a long ongoing legal battle.
Aside from relying on data collected in a specific locality not under discussion, it doesn't appear to make any sort of assertion regarding what drivers want, contrary to your claim on its behalf. Where are you getting that information? You should cite your sources, so others in the conversation can evaluate them independent of the claims you make for them.
Which was funded by the rideshare companies themselves and which has been heavily criticized for its methods, it should be pointed out.
10 drivers working 1 hour a week contribute less to the platform than 1 driver working 40 hours a week. The study should adjust for the amount of time drivers are on the platform and not just sheer number of drivers. Just counting drivers seems an obviously flawed approach designed to make the part time count seem high.
> "Uber and Lyft covered the costs of the study [...] The study was priced as cost-plus, which covered the costs of the research plus overhead to the university. In total, study costs came to $120,000. [...] Driver earnings for all of our analyses came directly from Lyft and Uber. "
Yeah, real convincing.
[1] https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?a...
Also the social impact is different in different countries. Brazil is the only developing country in the list above. I live in São Paulo, and I can say before Uber, taxi cabs were a thing for rich people. Uber and it's competitors drove costs so low, poor people can now aford rides. I didn't find Sao Paulo stats, but in Rio, app drivers are 3x the number of cab drivers[2].
Uber estimates 1.9mi users might not be able to afford anymore if the law passes, amongst many other claims [3].
[1]: I won't pick specific sources, search 'custo brazil' if you are interested [2]: https://oglobo.globo.com/rio/pesquisa-mostra-que-aplicativos... [3]: https://www.uol.com.br/tilt/noticias/redacao/2020/03/09/nova...
If the financial model is unsustainable because of employment law and the costs required by the law, the business is fundamentally flawed and unsustainable.
This is the most important question!
Is there a way, inside the brazilian legislation, to give them full workers rights but keeping the pricing per km rather than hour?
There really should be...
Sampa is a nickname for the city of São Paulo, in case anyone was slightly confused.
Also let's say you didn't want Uber/Lyft/whoever to dictate your working hours, could you reject the full benefits for flexibility?
one or more these things will happen if this stands
1. Hours will be limited to part time only
2. Rates for rides will explode, which will likely cause a reduction in revenue probably to the point to mass layoffs
3. Drivers will have to sign Exclusivity and not be allowed to work for any other RideShare service
4. Drivers will have to work a set schedule, set by uber
I am not saying any of these are necessary bad but it seems to me that many of the people "fighting for employee status" seem to think that a change in that status means everything about the service stays the same but now they get vacation, paid sick time and health insurance.
That is very very unlikely to be the result
> 4. Drivers will have to work a set schedule, set by uber
> 1. Hours will be limited to part time only
This undermines Uber's contractor argument, I also doubt they would do this.
So yes today Uber, as contractors, will not do that, the second the law requires them to be classified as employees then they will
If the gig economy cannot compete on a level playing field, keeping the benefits stable, it is just a race to the bottom.
I always ask Uber drivers why they are driving. The reasons are alway to the tune of:
* Part-time (sick family member, needs extra cash, etc) * He can drive 14h/day and make bank (up to 5 times the minimum wage) * He is unemployed * Previously worked a blue collar, minimum wage jog with a shitty boss. Makes almost double minimum wage with no shitty boss
The "suffering of others" isn't caused by the gig economy.
Simply removing the gig economy does nothing to help those in need. It serves only to pat yourself on the back and think you are ridding the world from capitalist oppression.
Focus on removing the suffering of others first, and the gig economy will collapse on its own.
At least that's how it functions in the US.
Abolishing slavery certainly nipped the plantation economy in the bud, pretty certain that was a good thing though.
The advantage, though, to the employer paying them is they are paid out of the employee's pre-tax income.