Travis Kalanick Isn't the Only Reason Uber Is Obnoxious

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Uber CEO Travis Kalanick at TechCrunch Disrupt on September 8, 2014, in San Francisco. Catherine Ruckelshaus writes that it’s not just Kalanick who needs reform, it’s the very business model that Uber relies on. Steve Jennings/Getty Images for TechCrunch

Uber's "bad boy" CEO Travis Kalanick has dominated the news cycle in recent days.

Headlines have focused on the company's many problems, including rampant discrimination, spying on regulators and stealing technology from other companies.

The coverage has also veered personal, with Kalanick's tantrum aimed at a driver and subsequent apology becoming breaking news in March.

But all these stories about Kalanick miss the larger picture. It's not just the man who needs reform, it's the very business model that Uber relies on.

Uber is built on a rocky foundation of swindling its own workers to make a buck. From the get-go, Uber turned to a manipulative, centuries-old tactic: deny workers "employee" status and label them "independent contractors" instead. Other companies engaged in app-based shopping, cleaning, delivery and care-giving soon adopted Uber's playbook.

Uber's business model also includes barring workers' access to the courts. Not only must Uber drivers agree to be independent contractors in order to be hired, they must also agree to take any claims they may have to arbitration—not to court.

Workers also must agree not to pursue their claims as a class of workers, but individually. The result is that lawsuits filed by Uber drivers seeking unpaid minimum wages bog down in individual, one-by-one decisions that allow Uber to pay off individual drivers and continue its illegal practices unabated.

Related: Uber doesn't have a PR problem, It has a culture problem

The tactic is popular with other powerful companies, such as Fox News, which was able to claim public deniability about the sexual harassment occurring in its workplaces because of the forced arbitration provisions.

Uber has layered on another level of protection against treating its workers as human beings entitled to the protection of core labor standards.

The famously well-capitalized company has—in conjunction with other transportation companies—successfully lobbied to pass laws that carve out "transportation network company" drivers from employment protections. Within just two years, these laws have been enacted in 24 states.

To be sure, Kalanick himself is a problem. His company's meteoric growth is based in large part on his ability to "pull a fast one" on Apple by tagging consumers' iPhones even after the Uber app was deleted, skirt public safety and privacy rules, run roughshod over his competitors and generally operate lawlessly.

The New York Times exposé this week sums it up:

Mr. Kalanick has openly disregarded many rules and norms, backing down only when caught or cornered. He has flouted transportation and safety regulations, bucked against entrenched competitors and capitalized on legal loopholes and gray areas to gain a business advantage.

But just as time might be running out on Kalanick as Uber's CEO, so too might time be running out on the business model itself.

Related: How Uber could end up as Silicon Valley's most spectacular crash

First, businesses in the on-demand economy are ditching the Uber business model, finding that what's good for their workers is also good for business. Companies like Managed by Q, Munchery, and Hello Alfred treat their workers as employees, to give some examples.

Second, a growing number of decisions by agencies and courts are finding that Uber is an "employer" and that its workers deserve core labor protections. As seen in excruciating detail in a recent London labor tribunal decision, Uber unilaterally sets the fare, dictates the customers to be picked up, deactivates drivers without notice and sets strict specifications as to the type of cars the drivers must use. Agency decisions in California, Oregon, Alaska and New York have made similar findings.

Developing a talented and stable workforce used to be a point of pride for corporate leaders, who saw their employees as an extension of their business. As a leader in the transportation industry, and more broadly in the ever-growing gig economy, Uber can and should pay drivers a fair wage, label them "employees," allow them access to the courts and in general treat them with the deserved respect.

If not, the company is in for a lot more than just the personality makeover of a short-tempered CEO.

Catherine Ruckelshaus is general counsel and program director at the National Employment Law Project.

Travis Kalanick Isn't the Only Reason Uber Is Obnoxious | Opinion