The European Union on Thursday warned member states not to over-regulate companies such as Airbnb Inc. and Uber Technologies Inc., in guidelines that would serve the basis for the EU to take to court those countries that don’t abide by the rules.
Home-sharing service Airbnb has faced a frosty welcome in some big European cities including Paris and Berlin, where regulators and hotels have raised complaints. Ride-hailing app Uber has also faced backlash across the region, particularly from taxi drivers, leading courts to block some services in certain cities.
“The collaborative economy is an opportunity for consumers, entrepreneurs and businesses—provided we get it right... We invite member states to review their regulation in the light of this guidance and stand ready to support them in this process," said Industry Commissioner Elzbieta Bienkowska.
The guidelines published by the European Commission, the bloc’s executive arm, provide the EU’s interpretation to existing law and how it should be applied to the so-called “sharing economy.” It issued the guidelines because member states have responded in different ways to the rapidly growing market, the EU says.
The commission is currently investigating Germany, France and Spain over national transport laws that restrict the way companies such as Uber operate.
In its statement, the EU said countries should only ban a company’s activity as a measure of last resort.
The commission suggested member states should deem the web-platform users to be employees based on the nature of the work, whether the users act under direction from the company and whether they are being compensated for their work. EU labor law, such as the right to vacation and health-and-safety requirements, would apply to those considered employees.
Uber has been embroiled in a debate with its drivers in the U.S. over whether they should be considered independent contractors or employees but a recent settlement in two class-action labor disputes will let the company, for the time-being, continue classifying them as contractors.
The EU also urged member states to both simplify and clarify how tax rules apply to those using sharing-economy platforms.
While the guidance is technically nonbinding and doesn’t represent a proposal for new EU-wide rules, it would serve as the basis for the EU’s investigations into member states that don’t comply with the laws. If the EU finds wrongdoing, it could eventually take the countries to court and demand penalty payments.
The commission will continue to monitor the national rules, the EU said.
(Published by The Wall Street Journal - June 2, 2016)