By Sim Chang-hyun
Ride-hailing services like Uber, Lyft, Grab, etc. have had an innovative impact on the conventional taxi industry. They have improved the quality of transport services by competing with taxi companies. They contribute to the development of IT technology through their apps, which also make other businesses grow such as those processing transport data.
They also pose a great challenge to regulators over the world. In particular, the ride-hailing services have been changing the relationship between companies and workers.
There are three players in terms of employment in the ride-hailing service compared to two in the taxi industry. They are ride-hailing services, service providers and service users. As a platform, a ride-hailing company becomes more than just an employer in relation to service providers, the actual drivers.
The company does not hire the drivers, and the drivers are not obliged to provide a ride-hailing service with a labor force as employees. Instead, they pick up and drop service users as agreed via the respective apps.
Can we argue that the drivers are not completely employees? The answer is no.
In 2015, the service providers of Uber and Lyft filed a complaint to the court in California. It attracted nationwide attention as to whether the court would decide that drivers are considered as employees.
The question at issue was whether the companies have the right to control the drivers. If so, they would be classified as employees rather than independent contractors, as the company had argued.
In the end, Uber and Lyft each reached settlements with their drivers though the California Labor Commissioner’s Office, agreeing that a driver for the ride-hailing service Uber would be classified as an employee, not an independent contractor.
More recently, there has been a major development in the issue. On May 1 this year, the Supreme Court of California ruled in a case between Dynamex v. Superior Court of Los Angeles County that it will now be harder for employers formally to classify their workers as independent contractors rather than employees. Dynamex is a courier and delivery company based in Kent, in the state of Washington.
Then how about Korea? Unfortunately, no company has yet reached the level where drivers’ employment status has been challenged in a court, because ride-hailing services are still struggling here.