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Opinion

A safety net fit for the sharing economy

By Arun Sundararajan

Arun Sundararajan headshot article

Governments need to pay as much attention to modernising labour policy as they do to embracing the technology itself.

Try using the legal vocabulary of the last century to describe the kind of work that people do now, and you discover it can be a fruitless task. Yet that is what the courts are being asked to do in legal actions now unfolding in several US states. As one judge noted: “The jury in this case will be handed a square peg and asked to choose between two round holes.”

Last week, Uber appealed against one such ruling. Like other peer-to-peer platforms, the smartphone-based taxi service sees its business as facilitating transactions between customers and independent providers, rather than employing people to provide a service itself. But the California Labor Commissioner disagreed, classifying the company’s drivers as employees — who have to be reimbursed for expenses such as fuel, vehicle depreciation and bridge tolls under California law.

Thousands of people who make a living on “sharing economy” services such as Uber have joined class-action suits claiming, on similar grounds, that they should receive benefits that are reserved for full-time employees. Start-ups that rely on a large pool of smartphone-toting casuals working irregular hours may find that their business models are no longer viable.

Read the full article as published in the Financial Times.

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Arun Sundararajan is a Professor of Information, Operations and Management Sciences, NEC Faculty Fellow, and Doctoral Coordinator of IOMS-Information Systems.