Slate - Uber Drivers and McDonald’s Franchise Owners Have a Common Enemy

Legal director Sandeep Vaheesan and chief economist Brian Callaci co-authored this article on the common denominator in disadvantages of workers within different industries.

You wouldn’t normally put Uber drivers, poultry growers, and the owners of fast-food franchises in the same economic category, but they actually operate under similar work arrangements. They are all subject to employment-like control by large corporations, but without the protections and rights an employee would have, such as being paid a minimum wage. In other words, they bear both the risks of owning a business and the burdens of having a job, but lack the benefits of either. Meanwhile, their bosses at Uber, Tyson Foods, and McDonald’s get to have their cake and eat it, too. They control people who work for their business empires without assuming the duties and responsibilities of being employers.

Such business models cast a long shadow in today’s economy, but their rapid growth was not inevitable. In the 1960s and 1970s, corporations waged a successful campaign of lobbying and litigation to change the interpretation of antitrust laws that then protected independent businesses from domination and control by large corporations. Change is possible now. The Biden administration, specifically the antitrust and labor agencies, should use its authority to rein in these one-sided arrangements, which run afoul of historical and popular understandings of independent work and entrepreneurship.

There are two closely related business models here. The first, exemplified by Uber, uses restrictive contracts to directly control workers while denying them employment rights by misclassifying them as independent contractors. The second, exemplified by McDonald’s, uses similar contracts to allow corporate headquarters to place a third-party middleman between itself and its workers. McDonald’s outsources the operation of most of its restaurants to “independent” franchisees operating under its tight control. While the workers who take your order and make your Big Mac are somebody’s employee, they have no employment rights under McDonald’s, the corporation that effectively controls their wages and working conditions.

The point of these franchise contracts is not to deny franchisees themselves from having employment rights (although they can have that effect). Instead, the aim is to distance large companies from responsibility for the wages and working conditions of frontline workers. In the cases of both Uber and McDonald’s, real control of the business rests with corporate headquarters, which minutely prescribes prices, routes, operating hours, and virtually all other meaningful aspects of the business through contracts, or “vertical restraints,” in the parlance of antitrust law.

Read the full article here