David Santos had never worked as a bike messenger before he signed up in
September with UberEats, the lunchtime meal-delivery service Uber launched
in Manhattan last spring. Santos, 36, started out making deliveries on
his days off, but when he lost his job as a porter at a homeless shelter
in Brooklyn in October, he began riding full time for Uber and has worked
almost every day since.
On a recent freezing morning, Santos and about 15 other bike couriers waited
outside a van in the West 40s for the lunches they would deliver across
midtown over the next four hours. They would be paid $15 an hour plus
$1 per delivery, and would be done by 2 p.m. Santos would then switch
to UberRush, a courier-service app for businesses and consumers, and continue
making deliveries until 8 p.m., earning an 80% commission on each one.
He pulls in around $600 a week, more than he made at the shelter. He also
loves being on his single-speed LaFleur bike, and thinks nothing of riding
the 15 miles to Manhattan from his home in Yonkers to make deliveries
But Santos is risking everything he has with each ride. Uber bike couriers
do not receive safety training. Few of them on that cold morning were
wearing helmets. And most important, Uber bikers are pretty much on their
own if they go flying over their handlebars or get hit by a bus. The company
does not provide workers' compensation for a job that is considered
among the most dangerous in New York.
"I try not to think about that," Santos said.
Like most of the dozen other Uber couriers interviewed for this story—not
counting those still on their parents' health plans—Santos also
had no health insurance. (None of those interviewed had private disability
or accident insurance, either.) "I ride safe," he said. "I
take care of myself."
The work that bike messengers do is so dangerous that most traditional
courier companies in New York can no longer afford to hire them. Workers'
compensation premiums for bikers have quadrupled since 2008, to between
$30 and $40 for every $100 in payroll. A foot messenger, by comparison,
costs a company about 50 cents per $100.
That is one reason seasoned bike messengers—those famed and feared
Olympians of the streets, celebrated in movies like
Premium Rush and the Travel Channel reality seriesTriple Rush—have largely faded from the scene, replaced on company payrolls
by messengers who walk their wares to customers.
Uber and other
app-based delivery services, like Postmates, Zipments, DoorDash and Caviar, have in some ways spurred
a revival in the bike-messenger trade. Uber, which began rolling out UberRush
in 2014, now has 600 bike couriers in New York. But those operations are
flourishing, traditional couriers say, by flouting the law.
Uber does not pay workers' compensation insurance because it classifies
its couriers as independent contractors, who are considered to be in business
for themselves and are not covered by state and federal labor laws. (For
basically all of its New York drivers, Uber pays workers' comp through
the Black Car Fund, which was established years ago for the hired-car
industry.) Traditional courier companies, by contrast, are required to
hire messengers as employees and to pay workers' comp, unemployment
insurance and other fees.
Furthermore, by classifying their couriers as contractors, neither Uber
nor other on-demand companies have to pay minimum wage—a potential
issue for foot messengers, who don't necessarily make enough deliveries
in an hour to earn $9 in commissions.
The independent-contractor model for drivers has come under attack, most
notably in a massive class-action suit against Uber that will go to trial
in California in June. In the meantime, traditional couriers have been
seething as state agencies turn a deaf ear to their objections and these
new ventures gain market share, sometimes at the older companies'
expense. Their complaint—voiced all the time by owners in the highly
regulated yellow-taxi business—is that Uber and the others have
been allowed to play by different rules.
"They are hiring foot and bike messengers as independent contractors,
not employees, and the New York State Department of Labor has forbidden
this practice for years," said Robert Kotch, owner of Breakaway Courier
Systems, a 28-year-old company with 300 employees.
Kotch was making his case against his app-based competitors in an unlikely
setting: while riding his 30-year-old Italian racing bike through midtown
traffic to pick up a lunch order for UberRush. (A
Crain's reporter on a Citi Bike struggled to keep up.) The 58-year-old former
messenger, who has a degree in economics from Oberlin, likes getting back
on the street, but he wasn't making deliveries for fun or profit.
A year ago, Kotch wrote to the Labor Department that the "use of independent
contractors as foot and bicycle couriers" had been banned in New
York since the 1980s. He added that Breakaway was "losing customers
and employees" to "disruptors" like Uber because they could
charge lower rates and pay higher wages by avoiding "all mandatory
Had the state reversed its policy, he asked, and could his company adopt
this practice, too?
Kotch never heard back. So he wrote to Attorney General Eric Schneiderman—and
was told there was no interest in pursuing the matter because nobody had
filed a complaint. Deciding he would do the complaining, Kotch signed
up with Uber. He would document the ways the company treated him as an
employee and get government to act.
"I want to hold Uber to account," he said, "even if nobody
KOTCH'S NEW CAREER began in September with an orientation session at an old warehouse building
on the far West Side, where some 60 attendees were told how to work Uber's
courier apps and warned not to solicit tips from customers. There was
no safety instruction, nor any suggestion to wear a helmet, he said.
"Can you imagine sending 60 people out on the street like that?"
Kotch asked, moments after dodging a black limo that had swung across
lanes to make a U-turn.
In 1994, Kotch created a safety course for bikers that began, "You
are accepting a job in which you could be dead by this afternoon."
Crash rates, he said, went "way down." Breakaway has not employed
bike messengers since 2013, when the company converted about 100 of them
Courier companies have good reason to be safety-conscious: The fewer accidents
they have, the better deal they can get on their workers' compensation
policies. Uber, by contrast, may have an incentive not to give safety
instruction: Providing training could be seen by regulators as one indication
that the workers are employees, not independent contractors.
Experts say that skipping training as a strategy for preserving independent-¬contractor
status would not be unique to Uber. But the company's critics call
it ill advised and dangerous.
"Its disregard for the safety of its workers is especially problematic
in high-risk sectors like transportation," said Sarah Leberstein,
senior staff attorney with the National
Employment Law Project, a labor-rights advocacy group.
Sharing-economy experts, however, say that Uber is part of larger changes
taking place in the way people work and that new models need to be found
to protect workers.
"We have to look at the objective of different labor protections,
then look at the solution, and think about whether the solution fits this
new world of cloud-based capitalism where you're not necessarily working
full-time," said Arun Sundararajan, a professor at NYU's Stern
School of Business.
Uber did not respond to questions about safety training. The company maintains
that it is not a transportation employer but a technology company that
provides logistical solutions, giving people the freedom to work whenever
When asked about the lack of workers' compensation coverage for its
couriers, the company pointed to a recent $130,000 donation it had made
to the nonprofit Bicycle Messenger Emergency Fund, which sends $500 to
any messenger in the first week of a job-related injury. And as it does
for its drivers, Uber carries $1 million in liability insurance on all
bikers, which would cover a collision with a pedestrian.
The state also provides protections. A biker injured in a crash involving
a vehicle would be covered for up to $50,000 in medical expenses and lost
wages under New York's no-fault insurance law. His luck could run
out, however, in the event of a catastrophic accident.
"You're going to exceed $50,000 in medical bills," said Daniel
Flanzig, a partner at Flanzig & Flanzig, a law firm that focuses on
bike crashes in the New York area. "Workers' compensation could
last years, if not a lifetime of benefits."
Experts say it's not surprising that Kotch was never able to interest
government agencies in going after Uber.
"It's a big issue to tackle," said Shannon Liss-Riordan,
a Boston lawyer who is leading the class-action suit against Uber in California
that will soon go to trial. "Different state governments are looking
at it and deciding whether they might do something."
Even so, app-based courier companies are in her sights. Liss-Riordan has
a national class-action suit against Postmates pending in federal court
in California charging the delivery company with misclassifying workers
and violating labor laws. The plaintiffs include two foot couriers who
worked in New York. And she has spoken to Uber couriers who say there
are times they make below minimum wage.
"We've started to hear from UberRush couriers in New York,"
she said. "We are looking into whether they have claims we can bring."
Buck EnnisKevin "Squid" Bolger is a longtime courier who now
works for himself under the LLC Cyclehawk.
THERE WAS A TIME when government agencies did crack down on companies that called their
bike and foot messengers independent contractors rather than employees.
It was in the late 1980s, and courier companies were the target.
Back then, the industry was enjoying a boom that at one point filled the
Yellow Pages with 60 pages of courier ads. Bike messengers, who emerged
as a force with the 1980 transit strike, had become ubiquitous with the
spread of beepers. Dispatchers could signal them to call in for another
pickup, which made bikers easily twice as productive as walkers (if they
didn't get stuck waiting for a pay phone).
But messengers filing claims for unemployment insurance caught the attention
of the state Department of Labor and the IRS, which began conducting audits.
"It was an all-out blitz," recalled Paul Gapp, managing partner
at Consultech, which represents transportation companies when they run
into trouble over their use of independent contractors. At the time, he
was consulting for several courier companies, and they quickly came to
terms with the government. "It was a stretch to say a bike messenger
is in his own business," he said.
More and more companies began making that concession. "They got scared," recalled
Bobby Stern, a dispatcher at Quik-Trak Messenger Service who has been
working in the industry since 1979 (and can be seen routing couriers in
Triple Rush). A towering 64-year-old who carries a metal plate in his
head from the night an angry bike messenger clobbered him with a chain,
Stern was a partner at Right Way Messengers in the late 1980s, and he
urged the other partners to resist. "They could have won," he said.
But there were owners who saw advantages in having their messengers be
employees—just as some app-based delivery services, like Shyp and
Munchery, do now. "We wanted to create an environment in which the
couriers saw themselves less as renegades and more like FedEx drivers,"
said Mike Fiorito, who was chief executive of Earlybird Courier, one of
the larger services.
Starting in 1988, Gapp and the Department of Labor set to work on guidelines,
and by 1990 the two sides had reached a verbal agreement. The courier
companies would accept that messengers were employees; the Department
of Labor would allow vehicle drivers to continue as independent contractors.
The most recent version of the department's "Guidelines for Determining
Worker Status," issued in 2014, states that "it is standard
practice that bike and foot messengers are considered to be employees."
Gapp comes down on Uber's side in its classifications. But he also
sees "factors that conflict" with the independent contractor
designation, like the way Uber monitors its workers' performance,
sets payment terms and can terminate its contract with them.
"There are going to be big settlements," Gapp predicted of the
current lawsuits against Uber and other on-demand transportation companies.
"Then they're going to tweak their model to reinforce the independent-contractor
Kotch was not the only one who found it hard to get a response from government.
Asked whether Uber was disobeying the rules, the state attorney general's
office declined to comment. The Labor Department referred questions to
the Workers' Compensation Board, which is charged with promoting compliance
with the law.
A board spokesman responded that someone with a work-related injury would
have to file a claim. If the employer challenged that claim, the board
would decide, on "a case-by-case basis, whether there is an employer-employee
Courier company executives say it will never get to that. For venture-capital-backed
app-based startups, it would make more sense to settle any claims privately
and avoid a legal battle that would threaten their business model.
That model includes cutting prices to spark demand and grab market share.
(The same practice has infuriated Uber drivers and similarly alienates
couriers. Though their 80% commission is about double a traditional messenger's,
they have to work more to keep up.) Uber, of course, can afford to be
aggressive: The San Francisco-based company has $8.6 billion in venture
capital and private-equity backing and a $62.5 billion valuation.
An UberRush delivery for small businesses starts at $5, or roughly half
what a traditional courier might charge.
Buck EnnisJosh Weitzner co-founded Samurai Messenger Service in 2008. Since
then it has grown to $1 million in revenue and about 20 employees.
"This has always been a competitive industry," said Joshua Weitzner,
37, co-founder of Samurai Messenger Service, a worker-owned and -operated
company with about 20 employees, including a dozen bike messengers. "But
it's different having competitors that expect to lose money."
Traditional couriers cannot cut their prices, noted Joe Halada, senior
vice president at Quik-Trak. Foot messengers, he pointed out, do about
half as many deliveries as bikers, or about 10 to 15 a day. That might
not be enough to earn $9 an hour in commissions, so Quik-Trak, which employs
about 50 walkers, will subsidize their pay, something Uber or Postmates
doesn't have to do.
"Minimum wage puts a floor under traditional messenger-service prices,"
Halada said. "Some of these new companies are able to price their
service below this floor by not paying minimum wage." (One of the
last traditional courier companies to employ bike messengers, Quik-Trak
has 10 left from a peak of 60, and is considering converting them to walkers.)
Postmates did not respond to requests for comment. Asked if it was possible
that some of its couriers make less than minimum wage, Uber did not answer
yes or no.
"We hear every day from Uber partners: Flexibility and the chance
to be their own boss is a key reason they use Uber," a spokeswoman
said. "And most of our partners work with Uber to make money on the
side, using Uber on their own time and to fulfill their own unique goals."
There are weaknesses in Uber's plan. Many of its couriers are inexperienced,
and operating through an app rather than dispatchers, the company can
fall short on customer service, according to veteran messengers who have
moonlighted for the company.
And though the traditional companies report losing customers to the new
players, the damage has been limited. Samurai, founded in 2008, has grown
to $1 million in revenue on the strength of superior service from bikers
who also happen to have a perfect safety record (and relatively low workers'
comp rates), according to Weitzner.
Breakaway, with about $8 million in revenue, has gotten into trucking--moving
goods that can't be digitized, such as doors, construction equipment
Some companies break the law to get by. It's well known that there
are walkers on payrolls who are in fact bike messengers. That has the
problematic effect of increasing workers' comp premiums over the long
run because claims are paid out of a pool that's smaller than it should
be, and rates are then adjusted upward to match.
"They give you the opportunity to 'walk,' " said Big
Al, a longtime bike messenger who now works on his own. He made quote
marks with his hands, which bear the command "LIVE FAST" tattooed
on his fingers. "If they don't know that you're on your bike,
then that's on you."
Big Al, 33, has his own company, Cannonball Couriers, his own clients in
fashion and interior design, a loose network of fellow independents and
no employees. "Our clients like the image—the young, bearded,
tattooed person, passionate about cycling and about the job," he
said. "If people just want to cut nickels into pennies and find the
cheaper deal, they're going to get the service that goes along with
His colleague Kevin "Squid" Bolger also serves his own clients,
under the LLC Cyclehawk. Bolger, 44, who played himself in Premium Rush,
and who sometimes trades jobs with Big Al, uses UberRush to catch work
on weekends and make extra cash. "For me it's perfect,"
he said. "I'm never going to depend on it to pay my bills."
Neither Big Al nor Bolger have workers’ comp insurance, but both
support families on their earnings and qualify for Medicaid.
Kotch still hopes to file a complaint that shows Uber is breaking the law.
He cited the two-hour orientation he attended as "massive wage theft"—attendees
weren't paid for their time—and an example of how the company
treats its workers as employees by training them. During his first day
on UberRush, he spent an hour "engaged to wait" for an assignment—another
indicator of employee status. If one of his own workers had waited an
hour, he said, he would have been owed minimum wage.
Kotch also hopes Uber doesn't shut down his account once this story appears.
"They may want to prove their point and allow me to continue to work
when I want and insist they are only an exchange," he said. On the
other hand, "if they go large on retaliation, it will make for a
A version of this article appears in the
February 8, 2016, print issue of Crain's New York Business as "Uber rushes in".