After years of debate over classifying workers together as entrepreneurs rather than employees, Uber CEO Dara Khosrowshahi presented his vision for a new way of delivering healthcare contract workers recording full-time hours.
Drivers should be paid health care benefits commensurate with working hours, he said in an interview with CNBC’s “Squawk Box” on Friday. Uber is ready to create a system to pay for these benefits too, he said.
This suggestion comes as Uber and other gig economy companies face increasing pressure to provide health care and other protections for their workers, including in the form of legal action. of the Attorney General of California. The coronavirus pandemic has heightened the burden and the risk that concert workers assume by interacting with customers without the financial protections that come with full employee status.
Khosrowshahi said the new model would allow Uber to be a “point of entry” into workers’ earnings where they could choose to get health care benefits by working more hours or give up some of these benefits by working fewer hours. But rather than having a threshold at 8 p.m., for example, Uber would pay benefits on a sliding scale of hours worked.
“I think this system of if you don’t work 40 hours, you are not full time, if you work 40 hours, you are full time, and then there is this difficult break between the two, is the old world, “said Khosrowshahi. “If you put in hours, you should get a minimum income based on the hours you work and you should get health care based on the hours you work. And if you have the haves and have-nots based on a particular number hours worked, it doesn’t make sense … in a technical and advanced world. “
Khosrowshahi said that Uber would put money into a fund based on employees’ hours of work. This fund would pay workers’ health care benefits and the minimum wage. He said Uber is targeting “generally comparable” health care to what workers would receive as full-time employees.
“What we are essentially looking for is this flexible access or exit ramp,” he said. “You want to work, you get the benefits, you don’t want to work, you don’t.”
Uber is now facing a lawsuit from the California attorney general and three state city attorneys. Lyft is also a defendant in the case, which alleges that the companies denied workers key privileges by wrongly classifying them as entrepreneurs rather than employees. The lawsuit was filed under California’s new law, Assembly Bill 5 (AB5), which sought to provide stronger protections for workers, particularly in the concert economy.
But Uber has always fought against the bill and argued for a new way of thinking about classifying workers. In a letter to President Donald Trump in March, Khosrowshahi argued for a “third way” to classify workers other than contractors or employees, in order to maintain the flexibility he said workers enjoy while offering additional benefits.
The letter also asked concert workers to have access to unemployment benefits allocated in response to the coronavirus pandemic. Although these funds were eventually included in the bill, some concerted employees have always had difficulty accessing these benefits or proving their eligibility.
Uber had to postpone its goal of achieving EBITDA profitability by the end of the year due to the impact of the pandemic on ridership. The company posted a net loss in the first quarter of 2020 of $ 2.9 billion after seeing gross bookings in its core business segment, Rides, drop 5% year over year. But Uber’s title climbed nearly 10% after hours on Thursday, as Khosrowshahi told analysts on the company’s earnings call that Uber had started to see signs of recovery. Trip volumes have increased in the past three weeks and its food delivery service has exploded, he said.
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