Deliveroo. (Photo: Shutterstock.com)

A new report this week from a business and human rights group says Uber and meal delivery service Deliveroo are prime examples of companies in the gig economy that are misclassifying workers in order to cut costs.

The latest annual Corporate Legal Accountability Briefing from the London-based Business & Human Rights Resource Centre states that large gig economy platforms like Uber Technologies Inc. and Deliveroo are mislabeling workers as “independent contractors” rather than employees so that the companies can avoid paying the workers a minimum wage, overtime and sick pay.

A spokesperson for Deliveroo, which is U.K.-based, told Corporate Counsel that the report “is deeply flawed” and failed to consider the flexibility that workers gain by being self-employed. The report ignored many workers' preference for the flexibility “to decide whether, when and where they work, and that is their number one reason for riding with Deliveroo,” said the speaker, who asked to be identified only as a spokesperson.

San Francisco-based Uber did not respond to requests for comment, but has previously denied misclassifying its workers. General counsel at Uber and its ride-hailing rival, Lyft Inc., have recognized the risk in cases over this labor issue.

Phil Bloomer, executive director of the business rights group, sees the issue differently. Bloomer said in a statement, “The gig economy is the frontline in the battle for the future of labor rights” as companies boost their profits at the expense of workers' minimum rights and wages.

“New strategies including legal challenges are emerging to combat this abuse,” Bloomer said. “These cases have implications for everyone, as 'casual' and 'flexible' working models spread to a range of industries.”

The report, titled “The Future of Work: Litigating Labour Relationships in the Gig Economy,” analyzed recent lawsuits and legislation from around the world. It found that 2018 “was a year of victories and defeats. Workers face huge legal costs of a lengthy court battle, while profit-making companies are using their 'deep pockets' to crush legal challenges by systematically appealing unwelcome rulings and/or settling out of court to avoid worker status classification.”

Earlier this month, Uber agreed to pay $20 million to settle five years of litigation over classifying its drivers as independent contractors.

The U.K. report calls on companies to classify their workers as employees entitled to full labor rights and protections, to drop forced arbitration clauses from their contracts, and to “introduce human rights policies with proper remediation to live up to their responsibilities under the United Nations Guiding Principles on Human Rights.”

The report also calls for legislative reforms, including incentives for business to classify these workers as “employees.”

But the Deliveroo spokesperson said, “Courts across Europe have consistently concluded that riders working with us are self-employed. It is worth noting that the U.K. High Court expressly considered this question in the context of the European Convention on Human Rights.”

The spokesperson added, “The answer to ending the trade-off between flexibility and security will not be found in the courts.”

Deliveroo's answer? The spokesperson suggested, “Governments can and must help companies who are creating well-paid work in the on-demand economy to offer greater security without compromising the flexibility that riders value most.”

In fact Deliveroo recently commissioned its own study of the gig economy by Public First, a policy consulting firm in the U.K. That study found that workers are choosing gig jobs over traditional employment in search for flexibility and higher earnings.

It predicted the gig economy has the potential to more than double over the next five years, and concluded, “This new way of working is here to stay.”