If it is appealed and eventually decided by a court whose decisions are binding precedent -- and the first stage appeal from the Labor Commissioner's ruling would be a state trial court, which is not such a court -- then it would have broader effect.
OTOH, its likely a guide to how the Labor Commission would rule on similar cases brought by other Uber drivers, so, in a sense it signals an effect in California, without having a direct effect on any other worker.
ISTR reading about a Florida decision that found the same thing with regard to Uber drivers, and IIRC there are a number of other labor complaints and lawsuits pending on similar grounds.
Minimum wage (probably including time you're available but without a fare), overtime, payroll tax, workers comp... and back-pay for all that for the last few years? Enormous, I'd imagine.
IF they financially survive the back pay, etc, then numerous policy changes around pages 8 to 10 or so of my scanned copy of the judgement can be applied to mostly patch around the issues.
The requirements that uber enforces on its (now) employees would pretty much have to be wiped to make it more of a contractor relationship than an employee relationship. No more banning 2-door cars or 11 year old cars, no more banning tips, no more auto-filtering out all less than perfect records, drivers would have to negotiate fares not uber, no more background checks. Basically uber does a traditional hiring process without actually hiring, whereas they'd have to move to a traditional contracting relationship. Uber forbids contracting relationships in their ToS, its specifically forbidden to hire a subcontractor. Clauses like that really set off labor boards and the IRS about "fake" contracting.
Specifically, uber would have to let the end user decide not to accept a ride in my new 2-door Yaris or my wife's 2004 Prius rather than denying for me. Also if riders consistently give me 1 star because of my HN posting habits or whatever, they'd have to let the riders decide to not accept me rather than autofiltering out all sub 4.6 or whatever grade-inflated score they use. They couldn't run a background check on me to join the service, MAYBE they could get away with running it and putting the result semi-anonymously online for the rider to make a judgement. They would have to let me set the minimum fare I'd demand, which actually sounds pretty nice for drivers rather than existing "yes/no" take it or leave it, and tips would have to be permitted.
Possibly they could spawn off a "union" or professional organization that only allows members to join that passed a background check and then only allow members to advertise themselves as part of the union. Like my roofing contractor or my unionized electrician.
There's a widely held belief, that is completely wrong, that a contractor is just an employee who is treated like dirt in exchange for more money than an employee gets; essentially a gambling relationship. The actual legal position is considerably more complicated and is not concerned with popular beliefs.
Wait a second. I understand that they will have to let drivers negotiate rate but as a contractor why can't they enforce that you must have certain type of car? E.g. I did contracting for financial firms in NYC and certain ones expected me to wear business formals (including a tie) whenever I worked in the office. Why can't Uber have similar requirement that you must have car with certain features?
Real contractors don't have dress codes (beyond some obvious OSHA or contracted model-type positions). This is more an indication of a fake contractor relationship with the financial firm than an indication of how contractor relationships operate. My contracts with roofers and electricians and plumbers have never specified their make and model and body style of their truck.
Another point I didn't mention was they were very unhappy that the company and the contractor were in the exact same line of business, this is often an indicator of problems. A company that makes dispatching middleman software for the taxi industry couldn't possibly care less about what an end user of their software wears while at work. On the other hand, a company that's a stealth taxi driver employer is going to get all out of whack about employee dress codes, even if they call the employees "contractors".
"Do it exactly how we say" is classic employer relationship. "Produce this documented contractual end result" is more typical contractor relationship.
I'm not saying that wearing torn jeans and tee shirt to a financial contract job is wise, in practice dressing that way is probably a good way not to get renewed. Dress codes are for employees and if they're happy with the risk reward ratio for turning contractors into employees, well, that substantial and expensive legal risk is their problem. Maybe for "image" and marketing reasons it really is financially worth it for them.
I think Uber can maybe weather this storm but I wonder how this will trickle down to the smaller personal service players like TaskRabbit/Caviar/Luxe etc who employ independent contractors.
If the IRS determines the same, Uber will be on the hook for back taxes and penalties for all of its US drivers. I don't think Uber can weather that storm.
There's a lot of nuance there however and a big if (on a federal determination).
Its also not in the IRS's best interest to put Uber out of business. Even assuming the worst it seems likely that there would be some sort of compromise brokered that would allow Uber to stay operational. They've got a pretty big war-chest to work with.
> Its also not in the IRS's best interest to put Uber out of business.
Why? Uber has shown they're a terrible company when it comes to following regulations. If anything, I would assume the IRS would take a more critical eye towards them, allowing Google's self driving vehicle program to get a head start.
Disclaimer: My opinion is "self driving cars are the future, but f* Uber"
Why? Uber has shown they're a terrible company when it comes to following regulations.
Look the IRS is a revenue generating organziation. Saddling Uber with a 100 billion dollar tax bill will get them a bankruptcy proceeding and $0. Finding a way to collect some percentage of what's past owed and then having them pay, at least, payroll taxes moving forward can bring hundreds of millions of dollars into the IRS's coffers.
I'm not a huge fan of Uber's business practices either but killing them does the IRS no good.
And if Uber's entire business model is predicated on them avoiding taxes, then killing Uber doesn't matter to the IRS.
If most corporations can avoid taxes other than payroll, why would Uber be any different? They're a tech company! Their only expenses are HQ/on the ground labor, server/storage operating expenses, and whatever real estate they have in the US (with most of it in SF).
> Saddling Uber with a 100 billion dollar tax bill will get them a bankruptcy proceeding and $0.
OTOH, it will also discourage future violations of the same kind, because people don't generally start businesses to lose the time and resources poured into it just for the joy of denying the IRS taxes. So, even though it may not be optimal on a narrow view, it may be desirable on a longer view. Corporate tax evasion is motivated by profit, and as long as it is more profitable to break the law and make a partial settlement later, businesses will be encouraged to do it. It if it is catastrophically not profitable to do that, the incentives are different.
I don't think the IRS cares that much about losing the income from Uber. On the other hand, killing Uber would send a strong signals to other companies to follow the law.
Doesn't tax debt have seniority to all other creditors? So if Uber went bankrupt because of back taxes the IRS would either receive all back taxes in full with the remainder going to the other creditors/investors or they would receive all of Uber's assets and everyone else would get nothing.
Theoretically, if this is the first driver to report Uber for misclassification, then the contractors have been paying the correct amount in self employment taxes.
Über will be on the hook for penalties for the misclassification, but there is reason to believe that the drivers knew that they were classified as contractors and no imminent tax bill is due.
Of course it will affect them. It will be a huge factor in whether or not they get funding, or an additional round of funding, etc. All of a sudden the business model isn't profitable unless they can go into higher-margin businesses.
I wonder -- if Uber converted drivers in California to employees and dealt with the increased costs (passing them on to riders) but also prevented the now-employed drivers from driving with competing services (Lyft) -- whether the company wouldn't actually become even more valuable than they already are. If you are driving for both services but Uber comprises 80% of your volume and Lyft 20%, it's an easy decision to make. Given that the real asset for all these sharing economy companies is their elastic work forces (drivers and cars for Uber, residents and homes for Airbnb), the CLC may have just created an entrenched monopoly without realizing it.
Beyond that there is a really interesting debate as to whether sharing economy jobs are an end-run around minimum wage laws, rendering such laws meaningless for certain industries going forward. If the majority of workers are turned into 1099 consultants, but are doing effectively the same jobs (drivers, delivery people, etc) that employees did in the past, what does that mean for society?
There are a lot of downsides to drivers for this potentially, even beyond preventing them from driving for competing services. They also may be forced into working certain hours, which would be horrible for many Uber drivers who aren't doing it full time. I'm worried!
> Beyond that there is a really interesting debate as to whether sharing economy jobs are an end-run around minimum wage laws, rendering such laws meaningless for certain industries going forward. If the majority of workers are turned into 1099 consultants, but are doing effectively the same jobs (drivers, delivery people, etc) that employees did in the past, what does that mean for society?
Please excuse my demeanor, but it means that if the "sharing" economy is really the "tech companies sidestepping worker/labor protections with no repercussions", then society is screwed.
What does it say about what the Uber drivers think about "worker/labor protections" that they are willing to work without those protections of their own free will?
Labor protections are in place to ensure workers can support themselves. To subvert those regulations pushes quality of life down for a populace.
Walmart is guilty of this to a lesser extent, as while they categorize their workers properly, they pay them so little that they have company-provided documentation on how to collect social benefits to supplement their income, which means we're subsidizing Walmart's labor costs directly.
This will be less of a problem as the minimum wage rises across the country, and companies are held accountable for proper worker classification.
Wal-Mart just follows legal framework. We can certainly lobby our legal representatives to change that legal framework, but it's questionable whether raising the wage floor minimizes social benefits payout.
"Increases in the minimum wage are essentially a shift from corporate profits to low-wage employees," he says. "And we know that low-wage employees spend more of their money. They're going to spend essentially every penny they get, so that increased demand is going to result in more economic activity and potentially more jobs."
George Osborne the UK's Conservative Chancellor certainly does he has explicitly stated that the minimum wage needs to rise to reduce the in work benefits bill circa £12 billion.
We could achieve the same benefit through a public safety net such as a guaranteed basic income. There is nothing inherently wrong with paying social benefits or redistributing income. Bringing employers into the mix through a minimum wage just distorts the market by preventing price discovery and making people whose labor is worth less than minimum wage effectively unemployable.
What happens when increasing automation leads us to permanent structural unemployment?
How many years until Uber moves to self-driving cars and this entire article is meaningless?
The real minimum wage is $0: when you can't find a job.
I think arguing about the minimum wage is ''fighting the last war'' and not facing the real problems in the future that will force societies to evolve to survive.
> What happens when increasing automation leads us to permanent structural unemployment?
A social safety net funded by a tax on automation.
> I think arguing about the minimum wage is ''fighting the last war'' and not facing the real problems in the future that will force societies to evolve to survive.
We agree here. The real problem is, how will we equitably distribute productivity as automation continues to work itself up the stack? Allow the owners of automation and software to soak up the majority of income? Probably not. It'll either be basic income or guillotines.
Your first point is refuted by your second point...
According to you, Walmart employees cannot support themselves, even though we have a raft of labor protections. Walmart is not subverting any labor laws, as far as I can tell.
As to your point about minimum wage: how does increasing the cost of labor ensure that more people will have work? When you are unemployed, you cannot support yourself.
The bottom line is that when two parties enter into a contract voluntarily, that should be the end of the matter.
> As to your point about minimum wage: how does increasing the cost of labor ensure that more people will have work? When you are unemployed, you cannot support yourself.
Increasing the cost of labor ensures labor can support itself. If a job doesn't exist, the social safety net steps in and ensures you can survive. That's how every other first world country works.
As a citizen, you have basic rights. As a corporation, you do not. A citizen is entitled to survival, a corporation is not entitled to cheap labor.
> The bottom line is that when two parties enter into a contract voluntarily, that should be the end of the matter.
That is a very black and white view; real life has a certain nuance that just isn't captured by blanket statements like this.
You'll miss things if you limit yourself to a single level of abstraction: while it makes sense to the two parties to look at it like that, there is also a larger-scale, societal interest that certain sorts of contracts not be allowed. Thus, society makes rules about contracts and employment. For example, we ban slavery, indentured servitude, and child labor because as a society, we've determined that those are exploitive (even if you can get children who would willingly work for you, or people who would sell themselves to you).
These sorts of laws are what make us a society. For an example of a what happens without them, take a look at Somalia.
The bottom line is that one cannot completely enter into a voluntary contract with these entities, as there is an imbalance of power wider than the Grand Canyon.
Tell me, how many Uber drivers are able to negotiate with Uber on the cut Uber takes?
Unfortunately this means that power differentials between employer/employee will be highly exploitable.
Should people be allowed to sign contracts to enter into slavery? How about two criminals entering a voluntary contract to never betray each other. Would testifying against a criminal partner then be a compensatable contract breach?
Current US law says no. If two parties have unequal leverage (you need a job to survive, the company does not need you) there is an implicit structural coercion. That suggests it's not possible for two parties to actually "voluntarily" enter an agreement, as one is being coerced by bills/kids/health insurance, without an equal balance on the other side of the scale.
It means they want a paycheck, and Uber will give them one. People driving for Uber are generally not particularly well off (they are not in poverty either, but they are not in a position to debate with employers). That means Uber is taking advantage of them, in precisely the same dynamic as factory workers and business magnates around the turn of the 20th century. What you're advocating is to REVERSE a full 100 years of progress in the field of labor rights. Why exactly is this good? So that startups can keep 'disrupting'?
You do know that taxi drivers are not and have never been employees, right? If anything, Uber will (inadvertently) bring more labour protections where there were none.
Currently the National Taxi Workers’ Alliance does not have any collective bargaining rights as they represent a non-traditional workforce. Taxi cab drivers are not covered under the Fair Labor Standards Act which protects workers’ safety and grants overtime pay.
Historically the exploitation of workers has lead to the workers organizing and protesting for better rights in various ways. Usually involving in the formation of unions and creation of legislation ensuring rights for the employees. Or revolution, armed insurrection and stuff like that.
Honestly, the fundamental situation is not new, only the particulars are novel.
> If you are driving for both services but Uber comprises 80% of your volume and Lyft 20%, it's an easy decision to make.
And if you are looking for a ride and Uber has 80% chance of having the closest available car then you are probably willing to pay a premium to use their service.
The workforce becomes significantly less elastic if Uber drivers are ruled to be employees. Uber would have to pay them at least minimum wages. They'd face wrongful termination suits if they ended their business relationship with a driver. Many drivers might also drop out of the workforce if Uber had to be their sole employer - one of the big draws of becoming an Uber driver is that it's a way to earn extra money without giving up freedom.
Uber has standards for their drivers, listed in the linked complaint. Vehicles have to be specific model years, specific models for Uber Black etc., and well maintained. Can't ask for / accept tips.
That doesn't really rise to the level of specifying how a work product must be produced (one of the main differences between employees and contractors), only some prerequisites. (They won't even let you drive if you don't have a >2004 4-door vehicle)
You can probably make an argument that "you have to get good ratings" encompasses all sorts of informal but well-understood job requirements. IIRC, Uber has recommended all sorts of "tips" for getting good ratings - give a bottle of water etc. They also set things like minimum acceptance rates for incoming requests.
"The most useful part of the Uber guide for its drivers will probably be the advice on how to maintain a high score. Here's what Uber recommends:"
Offer passengers bottled water, chewing gum, snacks, mints and phone chargers.
Keep your vehicle clean and well-maintained.
Dress appropriately.
Open the door.
Offer to carry bags.
Take the best route.
Be nice.
Pick up the right rider.
Don't ask for a five-star rating.
"That doesn't really rise to the level of specifying how a work product must be produced (one of the main differences between employees and contractors),"
Can you please cite any case law for this proposition?
PS there is a ton of caselaw on what it means for a taxi driver to be an employee or not, and this isn't in there :)
>Also, and this is important, driving on Uber Black generally requires a local limousine license, commercial insurance, and a pretty nice car (or finding an employer who already has those things).
How many Uber Black drivers are employees of black car cab companies? Does that factor into this? My impression was that this was more about UberX than Uber Black
There are a lot of people who view jobs as things that are given to someone rather than a free agreement between two parties (cue "power imbalance" objections); extending this out is how you end up with nonsense like businesses owe the rest of us because we allow them to produce products or services and turn a profit.
So the Uber hate comes about because the idea is they are cheating. The drivers' POV is not considered; Uber holds Job Giving Magic and they have to be fair with that power. Proving a service that is in demand is not enough- They have to constantly thank us that we permit them to offer us their service. That's the idea.
No. Just no. Those who consider jobs to be things that are given to someone tend to be the types that believe that the company should be able to do whatever they want.
And a free agreement between two parties really cannot be reached with such a power imbalance. How many Uber drivers are able to negotiate on the cut that Uber takes of the fares?
And no, providing a service that is in demand is not enough. Just because their service is in demand is no reason whatsoever to not comply with the law.
Your first paragraph confuses me- Progressives don't tend to see jobs as being a matter of trade, but more like what people with power dole out to people without. They certainly do not view companies as being allowed to do whatever they want.
Uber like any company or individual wants to get maximum value for its spend. Uber is offering $X to drivers. The drivers can opt to take $X, or to not. If enough drivers don't take $X, Uber will increase $X until enough drivers accept the pay. What is wrong with any of this? This is how YOU operate in your daily life.
The law is wrong in many ways. Don't get lost in the fallacy of appeal to authority.
I'm curious to read this argument. For all the hand wringing over Uber drivers as 1099 workers, they seem to be the very definition of contractors. They provide their own equipment, keep their own hours, NEVER have to work if they don't want to and 0 consequences for working or not working specific hours, etc. What is it about them that makes the employee like? Anyone know?
Edit: it appears that the critical factor they considered was whether or not the driver could have operated their business independently of Uber. They said they could not. They also cited the fact that Uber controls the way payments are collected and other aspects of operations as critical to showing employment. http://www.scribd.com/doc/268946016/Uber-v-Berwick
I've had a quick read, the argument seems to be that because the driver is needed to fulfil Uber's rides that they become indistinct from Uber as a business itself; so they're employees.
They make some references to Case law for a Yellow taxi case back in 1991. (at least that was my reading!)
That's true for services like https://www.upwork.com, too, though. Upwork offers to match people with specific skills to people who need to hire them. Upwork helps track the work being done, and collects the clients' payments, passing them along to the workers minus a percentage.
I think providing a service to connect buyers and sellers should be able to be distinct from having employees.
It's a very fair point. I would add that since you seem to be able to be a driver for Uber/Lyft, etc. simultaneously, that would seem to suggest contractor as well.
Sure, but I'm not sure what conclusion that helps us draw in regards to a contractor/employee distinction.
The former is saying a business cannot exist without employees performing critical functions (I'm not saying that this is de facto truth, but just phrasing the argument).
The latter is saying that without a business, you don't have employees/contractors, which makes sense, but seems obvious and inconsequential.
I think it's more like "You can't have one without the other, therefore they aren't just contractors".
A ride-sharer / driver needs the platform and the platform needs the driver, fundamentally. It's not like most contracting where it's not the end of the world if all the contracts end.
Yes, and McDonalds has a business of connecting people who want hamburgers with people who are making hamburgers.
As one can quickly see that line of argument is exceedingly thin. In order for it to make even a little sense it would have to be rephrased to something more like an argument that Uber's business isn't providing rides, but connecting people who need a ride to an independent business that offers rides to people.
But McDonalds employees aren't also choosing to possibly flip a burger for BurgerKing in the same shift. One can quickly see your line of argument is exceedingly thing. The fact that alternatives exist and many drivers do operate for multiple services at the same time, shows that there is an independent business.
That argument has some merit to it, in the abstract, but this decision was regarding a Plaintiff who did not and had not ever driven for any other service, and that issue wasn't presented as a defense.
Which was entirely the plaintiff's choice, was it not? If I'm a contractor and I choose not to solicit jobs from a particular customer base, does that somehow mean that those other jobs didn't exist? If anything, the fact that some drivers do this and others do not shows some for of "managerial" skills that were cited as nonexistent.
Uber, represented in the hearing by high-priced attorneys, did not apparently bring up the idea that the Plaintiff could have (or should have) worked simultaneously for other car service apps. Presumably there were legal reasons why that argument wasn't compelling.
But taking a step back, though it does seem to be a vaguely mitigating factor, maybe, in the abstract, the fact is that this woman wasn't a contractor by the legal definition.
The law doesn't say that employee/employer relationships are determined by what could have happened in some alternate universe. There are full time employee plumbers and carpenters and programmers, and contractor plumbers and carpenters and programmers. They use multi-part tests and precedent to determine which is which.
The determination was that this woman was -- in fact - an employee, it was not a hearing to determine a hypothetical scenario.
Somewhere in California there may be an Uber driver with a fact pattern that makes them a contractor, or not, but it'll take more cases to figure that out.
Hm.. I do see the distinction there, but it seems to have interesting consequences for other industries that operate with a contractor model. If this woman could be deemed an employee by essentially contracting for only one customer base, couldn't contractors in other industries essentially become employees without ever being formally hired by restricting their customer base?
Of course this is assuming a similar situation with an organization that aggregates customers and connects them to contractors doing the work. The specific example that I saw elsewhere in the thread was the contracted chicken farmers[0]
> I do see the distinction there, but it seems to have interesting consequences for other industries that operate with a contractor model. If this woman could be deemed an employee by essentially contracting for only one customer base, couldn't contractors in other industries essentially become employees without ever being formally hired by restricting their customer base?
Yes. infact that happens quite a lot (subject to jurisdiction).
Many builders I know are very concerned about hiring the same contractor too often as they might accidently become an employee (and hence have to pay taxes on them).
I build software applications for a living. I do not have required shifts. I do not have a uniform. I am not provided with all of the tools that I use to build said applications.
These things have nothing to do with my status as an employee or contractor as you'd never guess which one I was based on these facts.
Given your statement, your employer might be able to classify you as a contractor as long as you would stay on given the lessened benefits and self employment tax.
In software, the tools are a big determination, i.e., do you provide your own laptop? You might be a contractor. Are you given benefits such as reasonable vacation days? You might be an employee.
Mis-categorization of employees is a big issue for the IRS and few "contractors" are informed or in a position to threaten to challenge it.
In the software business, I've had an employer who gave me an employment contract and then just decided to write me checks like a contractor each month until I raised a fuss.
> Yes, and McDonalds has a business of connecting people who want hamburgers with people who are making hamburgers.
I don't know for McDonald's, but for many fast food companies that's absolutely true: the main company (the brand) only sells the franchises, and the franchisers actually own and operate the restaurants. However, the main company holds very tight control over the experience (prices, branding, inspections, menus, ...).
Indeed, the court's argument was "if Uber didn't exist, the drivers wouldn't be drivers", as in "drivers are NOT independent".
So, if Lyft and Uber and a hypothetical third all had similar business models, and a driver could find people to drive on more than one platform they would be considered independent contractors. I assume Uber wouldn't allow an Uber driver to also be a Lyft driver (citation needed).
This makes sense, and is similar to determining if ANY contractor is an employee. One determinator is if the "contractor" has multiple "clients". If a contractor only ever has one client, and is with that client for an extended time they are more likely to be found to be a full time employee instead.
Isn't the difference here that a contractor "could" have multiple clients. The fact that some might opt not to do that doesn't seem to have a significant impact on how they should be classified.
It's not the only factor but it is one. I guess it ultimately depends on the country / state / court.
Others factors generally include things like how you get paid (do you bill the client, or are you on payroll?) or the nature of your work (projects and deliverables, or day-to-day operations, etc).
Of course many of these things favour classifying Uber drivers as contractors, but there's enough of a gray zone for a court to rule they are full-time employees.
One wonders if some enterprising Craig Newmark type person will set up a service offering fewer guarantees but charging a small fixed fee on each transaction, much as Craigslist does with job postings.
What's the difference between a McDonald's franchisee and an Uber employee? This ruling would seem to indicate a franchise "owner" is nothing but an employee of McDonald.
A franchisee exercises management control that can affect profit and loss, can subcontract work performed,etc. The lack of these features are among the things cited as making uver drivers employees rather than contractors, so I don't get how you can say that this ruling would make McD franchisees employees.
For one, the franchise contains multiple people so there is most definitely managerial work going on. I also imagine franchise owners possess some freedom in how they manage stocking and of various supplies, and might be free to choose suppliers.
A McDonald's franchisee has much more discretion in how they operate their business. They choose who to hire, how to manage them, where to run ads etc. They do have less freedom than someone running an independent restaurant, but it's very far from Uber's situation.
Is a Uber driver allowed to hire other drivers to do his job? A franchise owner can have multiple McDonald restaurants at the same time and hire workers. If no then they are not the same.
Does Uber allows people to hire others to drive Uber cabs or not? that's the question here if you want to compare McDo with Uber. If I become a McDo franchisee, I don't have to flip sandwiches.
In addition to the other responses, McDonald's franchises require substantial investment on the part of the franchisee. You have to plop down hundreds of thousands of your own money, which represents entrepreneurial risk. This was found to be missing in Uber's case (according to the ruling) since there is precedent that bringing your own car doesn't qualify.
Additionally, McDonald's (or similar) locations are independently managed to a certain extent, that's why ads always say "at participating locations".
You might be interested in how California is dealing with the franchise relationship as well[0] There are specific rules about that relationship that separates it from an employee.
> I'm curious to read this argument. For all the hand wringing over Uber drivers as 1099 workers, they seem to be the very definition of contractors. They provide their own equipment, keep their own hours, NEVER have to work if they don't want to and 0 consequences for working or not working specific hours, etc. What is it about them that makes the employee like? Anyone know?
The ruling is embedded on the page.
The case law they cite:
"In addition, even though there is an absence of control over the details, an employer-employee relationship will be found if the [Defendants] retain control over the operation as a whole, the worker's duties are an integral part of the operation, and the nature of the work makes detailed control unnecessary."
I think the GP was looking for a little color on the 21 page legal document. Without legal expertise, quite difficult to understand I would imagine. Which is what the GP inquired after.
Its frequently an issue of dispute, though some of the items cited for Uber drivers don't apply -- e.g., the Uber no-tipping rule -- so the cases are not precisely analogous.
The document is embedded in the article and answers all questions. I can't copy&paste, but the main argument seems to be an existing legal theory that says s/o is an employee if they perform an "integral part of the business" of their employer. There's a taxi corp precedent and pizza delivery is also mentioned.
The ruling points out that this isn't as important as it appears. The example given in the ruling is that of a pizza delivery person. A delivery person is considered an employee of a pizzeria even if they are required to provide their own car and pay for their own gas and insurance.
Also, Uber provides drivers with an iPhone (though they don't have to use it).
I read the whole thing. There are a couple relevant sections but this one stands out to me as the best succinct summary of the argument:
"Plaintiff's car and her labor were her only assets. Plaintiff's work did not entail any 'managerial' skills that could affect profit or loss. Aside from her car, Plaintiff had no investment in the business. Defendants provided the iPhone application, which was essential to the work. But for Defendant's intellectual property, Plaintiff would not have been able to perform the work."
That's a pretty solid line of reasoning, to be honest. Note that for those unfamiliar with the subtleties of legal jargon, the words "but for" have a specific meaning that relates to causality. In other words that last sentence roughly translates to "if not for the existence of the iPhone app there would be no distinct or independent business here."
In addition, earlier in the ruling they address the fact that mere ownership of a car has historically not been considered the same thing as owning specific "tools" required to perform a job, and it cites the fact that previous precedent for delivery drivers that they are employees, and merely owning the car and paying for gas does not change that.
You're correct that it doesn't have some wildly divergent meaning from plain English, but it is in fact a legal phrase that has a lot of history and specific meaning behind it:
I don't follow the argument that the driver can't affect profit and loss. Every driver can decide when and where to drive, and these two factors have a considerable impact on the income.
Yes and shift workers can take more shifts, or fewer shifts, in many situations. That doesn't make them entrepreneurs. There's a distinction between income and profit from a business, and simply deciding to work more or less often isn't an entrepreneurial activity.
But with Uber/Lyft, there's a lot more ingenuity involved in deciding when, where and how to work. It's not just a simple question of working longer hours.
It's essentially the difference between hourly work and piece work. Making things into piece work and trying to get out of labor laws is an old trick that the authorities have thought of already.
Aren't the drivers rated? That would mean the drivers can, by driving badly or be rude, negatively affect their income. At the same time a really good driver might be able to make bit more.
Where can I see the raitings of a waiter before I get seated? What restaurant will let me choose which waiter serves me?
I argue that because I don't get a choice of waiter, their actions have relative little consequence apart from the current transaction - I am not much more likely to come back because I may not get that same waiter - and customers have very limited information. Not so with Uber.
Can't the same driver provide rides using any other app besides Uber? Lyft, or some other guys that show up? He could have all the apps installed and hop between them, right?
They could. This driver didn't, if they had it might have been relevant to the decision perhaps. If anything that does seem like the one small hole you could poke in this situation on Uber's behalf.
Both Uber and Lyft actively discourage this activity though. Knowing how Uber's data mining team works, they have probably already built models to identify drivers who do this and send fares to them less frequently.
Yeah, too bad the taxi business is rife with semi-legal business tactics (or outright illegal ones like slashing a competitor's tires). Local cab companies have gotten away with it for years because the scale is small enough at the local level that no single company stands out, but Uber is perpetrating these schemes on a national level. I expect them to get smacked down at some point.
If they had to pay for the iPhone app, then they would have made an investment into the business. If a rival came along, then they could work without the need for Uber.
I think there's a very good argument for Uber having to treat the drivers as employees. They are dependent on Uber and Uber sets the amount they will earn. They would more likely be contractors if the drivers set their own rates and Uber would choose who they wanted to drive. Doesn't Uber also try to restrict who they can drive for too? Additionally, Uber's business relies entirely on the labor of the drivers. Uber also supervises the employees in-part by the rating system.
In terms of buying their own equipment - this is not an uncommon thing in many trades. Mechanics have to buy their own tools. Many machinists buy their own tools.
Truth is there is a lot of gray area here but I can see interpretation both ways. I do hope the drivers in California take this opportunity to organize as quickly as possible and begin collective bargaining with Uber.
I'd set Uber's value at less than one billion if this happened.
In my own opinion, the only reason Uber drivers are contractors is because it's cheaper for Uber, there is no other real reason behind this one. Their internal policies regarding drivers are acting like they are employees anyway, they don't even decide of their price. Otherwise where is the limit between employee and contractor ? Just every company you see could switch all their employees as contractors to reduce their costs.
They [...] keep their own hours, NEVER have to work if they don't want to and 0 consequences for working or not working specific hours.
Not true. I know someone who drives for Uber. Just last month, he was suspended because he did not want to drive during low-demand hours (when he literally loses money). Uber drivers are, in fact, required to (a) work when they don't want to and (b) work specific hours.
I've heard a lot of termination notices from Uber, but that doesn't sound right. Are you sure he wasn't turning down rides from outside of surge? Uber doesn't like it if you have a low acceptance rate. If anything, Uber wants you to work when there's surge to help drive prices down. Also sometimes Uber just makes shit up when the real reason for termination is something else. (Low rating, safety)
Why would that matter? I would totally "fire" (i.e. terminate the contract) a contractor that didn't work when I needed him/her to (i.e. that didn't get the job done). Why would Uber need to be any different?
The scenario you bring up is a 2-party scenario between a client (the passenger) and a service provider (the driver) while Uber claims to be in a 3-party scenario where they are a software-based logistics service in-between the passenger and the driver. Their entire legal argument is resting on the claim that they are merely facilitating the scheduling and the payment of the ride.
Incidentally, if it were a 2-party scenario where you required a specific contractor to be available on demand, you would probably be their legal employer. A mandated, regular schedule is indeed one the main tests when distinguishing between an employee and a contractor. I have worked as a software contractor in the US for over almost 15 years and the employers, especially the larger ones with proper HR departments, have been careful to define my work in terms of skills and deliverables, not hours worked.
A 3rd party logistics service can do the same thing. If my business is to connect customers with web developers, but one particular developer turns down nearly all the jobs I offer him, I'm going to stop wasting time sending him offers.
If I don't weed out people to make the connections as efficient as possible, I'm not doing very well at my job of handling the logistics.
Considering that Uber eventually is going to replace them all with self driving cars I think it's only fair that the people who help making Uber so valuable gets part of the spoils of being in a company that grows this fast. I am assuming this also means healthcare.
Because in an economic downturn an enormous 1099 based workforce would cause serious shock to the economy as they do not qualify for unemployment benefits to smooth the transition as it did in the last downturn. For examples, take a look at what happened in economic downturns prior to the creation of said benefits. It's a lot more complicated than libertarian idealism unfortunately.
Actually, the citizens of California enacted the laws; the bureaucrats are just enforcing them. Uber has the right to appeal if they feel the bureaucrats are enforcing the laws incorrectly. The judicial branch reviews Uber's complaint and will decide one way or the other.
>It's amazing how far away bureaucrats can tell others what's best for them.
It is absolutely amazing how people of today totally ignore history and historical context. It has been years and years of struggles to enact labors laws to give employees some very small amount of power in the extremely unequal employee/employer relationship. You're acting like the time of The Jungle and the Triangle Shirtwaist Factory fire were the good old days until pesky governments got involved and ruined everything.
The US, comparatively, has labor laws that don't give much power to the employee (see: at-will employment).
That's not compensation. A job is not compensation.
And just because it's "consensual" doesn't mean that it's not against the law. Otherwise should McDonalds be able to circumvent health codes and minimum wage because it found people willing to work for that? Of course not.
> Considering that Uber eventually is going to replace them all with self driving cars
Definitely not going to happen in the near future.in 5/10 years maybe, but it looks like Uber is racing to make as much money as possible before the legislator cracks down on it. If the the decision of the commission is confirmed, they'll have to change their business model ASAP. They can do it, they have a shitload of money.
Contrary to popular hacker news belief, lobbyists don't magically fix problems like this.
If they did, Google/MS/etc wouldn't keep getting sued and complaints everywhere.
Isn't Uber concept similar to AirBnB ? DOes this mean AirBnB users are also at risk of being classified as employees of Airbnb ? Uber, you drive your own car. Airbnb, you rent your own apartment.
well it depends, some taxis in California are union, TPAC pretty much hates Uber, so what better way to kill the competition. So do hotel staff unions feel threatened by AirBnB? doubtful, the numbers are just to small. The threat to AirBnB is politicians who want tax money
Uber customers are paying the driver for a service, AirBnB customers are renting an asset - they break down differently from my understanding of the law but IANAL
I'd say no. If AirBnB hosts provided housekeeping during the stay it'd probably be comparable. AirBnB's business model is closer to a rental car than a driver service.
I wouldn't think so. In AirBnb, the hosts retain control over availability, pricing and make decisions. In addition, while you use AirBnb to book, you book from a person (moral or physical) directly.
In essence, AirBnb is just a broker.
With Uber, you don't rent Wissam's driving services for 20 minutes or hire Samantha to pick you up at SFO. You hire Uber and they dispatch a faceless anonymous cog.
No. AirBnB, from my understanding, doesn't require AirBnB users to provide X features. If AirBnB required users to offer high-speed internet, a personal TV, and a separate way in and out, then you start going down the path Uber went, which is part of what caught Uber up here.
For Uber to fall into AirBnB status, you'd be able to rate drivers, and drivers could request to pick you up, and you'd choose a driver amongst those available. That's not what happens. Uber would have less control.
There is much more involved here, but the decision is fairly easy reading.
4) Uber alone sets prices, and tipping is discouraged, so there is no mechanism for driver (as "contractor") to set prices.
5) Plaintiff driver only provided her time and car. "Plaintiff's work did not entail any 'managerial' skills that could affect profit or loss."
6) Drivers cannot subcontract (presumably negating Uber's position as a "lead generation" tool for contractors).
AirBnB is facing an entirely different challenge - residential vs commercial zoning, hotel taxes, impact on the normal rent market, etc. I'm seeing laws coming up either seeking to regulate & tax them as hotels, or outright ban them as in santa monica: http://www.npr.org/sections/thetwo-way/2015/05/13/406587575/... Clearly a residential rental market isn't sustainable when you can easily earn at least double with short term rentals.
I think no on the basis that Airbnb hosts set their own price.
That said I'd be interested to know the break down between host involvement/room etc and "entire place" because Airbnb seem to have sold a lot on the host element and there's arguably a major commitment to the guest by a live in host. Also things like superhosts [0] which clearly aren't employees but come a bit closer to blurring the lines.
I think the ebay seller analogy mentioned might be best though - Airbnb hosts set the price freely, approve/reject at will, can make individualised offers, earn trust and Airbnb - like ebay - call out without employing (and supposedly without endorsing) highly trusted hosts.
There is a fair amount of case law in regards for drivers as opposed to other professions. Taxi's, pizza delivery, trucking etc. I'm not sure how or if this flattens out to other sharing economy type businesses.
Exactly. This is the equivalent of Netflix mailing DVD's and transitioning to streaming. If Uber can pull it off they'll survive the regulatory assault.
Not necessarily. As other people have pointed out, Uber's business model, margins, and valuation are based on shifting their costs onto their drivers (especially the capital costs of vehicles).
Switching to driverless raises the question of who owns the vehicles they'll be using, and if they're the ones owning the vehicles in their fleet that represents a major shift in capital expenses and ongoing maintenance costs.
Good point about ownership of the vehicles. Maybe it's more of an "insurance" policy in case their regulatory battles go poorly.
I think if cities and states had to choose between Uber with people (more jobs) and Uber with autonomous vehicles (less jobs) they would or should pick the former.
> I think if cities and states had to choose between Uber with people (more jobs) and Uber with autonomous vehicles (less jobs) they would or should pick the former.
As much as cities and states can regulating employment rules, and taxi rules, they can also regulate rules for use of autonomous vehicles. So, when it comes down to it, they don't have to choose a regulatory regime that makes either of those options viable.
"regulatory assault" is a funny term to apply to the Uber situation where Uber ignores existing regulatory frameworks only to then whine when regulators do what regulators exist for.
I was being loose, or casual with my wording. I don't believe that Uber is being targeted, however disruption is part of their model, and that normally involves choosing which rules to obey and forcing the rules you do not want to obey, to change.
They probably wouldn't if these were applies globally. Thankfully (for them) each country, state, district etc. has their own sub contractor vs. employee threshold.
Thanks for the breakdown. Sounds like a solid explanation. I wonder what other states/nations will do. This could affect the business model of Uber dramatically by increasing their costs and liabilities.
> This could affect the business model of Uber dramatically by increasing their costs and liabilities.
All those costs are precisely why Uber wanted contractors instead of employees. The real problem is that hiring actual employees is way more costly and risky than hiring contractors.
Exactly. Independent contractors set their own pricing. If Uber would allow the drivers to set their rates and then "hire" who they felt was best for them (and then markup the price to the customer for their own profit) only then would the drivers be in control of payment.
This is how every other independent contractor works.
It's a different situation though. I've never seen any employee ever working for two companies in the same "shift". I see lots of Uber drivers taking Lyft trips.
Riders set the rates with demand based pricing and drivers choose which one gives them the best opportunity at each trip request. That's a unique situation, so a comparison to "every other independent contractor" misses the point here.
Riders do not set the rates of "demand based pricing". There is a set floor price for a car ride with uber. If no one is riding the price is still set in stone. Increasing prices based upon arbitrary percentage utilization does not make it a 'free market'.
Rates are variable, and drivers choose when to drive. I've taken several rides where the driver only works during "surge" hours. What am I missing here?
You're misusing free market. If the gov had set Uber's prices, you'd be correct. This is just Uber's model (regardless of the whole employer/contractor debate). Another competitor is free to come up with a different model where driver's can set the rate.
https://en.wikipedia.org/wiki/Free_market
> A free market is a market system in which the prices for goods and services are set freely by consent between vendors and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.
Uber is a price setting monopoly, the "sole authority" of the price within the Uber "marketplace". Consumers do NOT have any ability to change the price. Nor do any of the Uber drivers.
Taxis never were a free market either. But at least they didn't pretend to be one like Uber does.
You're speaking as if Uber exists in a vacuum with no competitors. And consumers do have the ability to change the price, though not directly. They could go with a taxi, use Lyft, ride a bike, take a bus, buy a car, etc--all factors that influence the demand and thus price for such services.
Lets select "this spot" as the primary arguing point, okay?
Uber has one job. Connect riders with drivers.
The "libertarian" solution is to provide a marketplace where drivers can sell their services to riders. Drivers can compete against each other by raising or lowering prices, while riders can compete against each other by similarly increasing or decreasing the bid.
Uber pretends to do this, but with a distinct difference. Uber sets all the prices. Therefore, Uber is anything BUT a free market.
Maybe you don't get it because you haven't been paying attention to Uber marketing. But I'm not claiming that Uber has no competitors. What I'm saying is within Uber's "marketplace" of "independent contractors", the drivers and riders are in fact helpless to Uber's pricing whims.
Uber is NOT a free market. But they are trying to market themselves as one. This is a distinct reason why Uber drivers have been declared to be employees.
> The "libertarian" solution is to provide a marketplace where drivers can sell their services to riders.
States create solutions. The libertarian "solution" is to do nothing and let the interactions happen organically. This could mean a marketplace, it could mean other things. It really depends on what people want, the locality, technology available, etc. And sometimes people actually want a monopoly and are happy with that. Facebook is practically a monopoly and I don't think people want 2 main social networks.
> Uber pretends to do this, but with a distinct difference. Uber sets all the prices. Therefore, Uber is anything BUT a free market.
I agree that Uber by itself is definitely not a free market place. I'll take your word that their marketing paints a different picture--seems likely.
Dragontamer is speaking as if Uber's competition is external to Uber, which of course it is. Uber sets its price and then offers services in a free market at that price, just like any other company. That makes Uber different from platforms (such as ebay) that facilitate sales but do not set prices.
EDIT: I can't reply to ori_b below yet, but: he's completely right, I interpreted the parent comment as saying something it was not. I'm not sure "free market" vs. "monopolist" is the best way to name the alternatives here, but I agree that Uber does something more akin to setting wages/commissions than creating a "market" for its contractors. Original comment below for context.
> Uber is a price setting monopoly, the "sole authority" of the price within the Uber "marketplace".
Within the Uber marketplace dilutes the definition of "monopoly" into meaninglessness. Uber competes for drivers with Lyft, SideCar, taxi companies, limo companies, and, well, every other company hiring (relatively) unskilled labor. Uber competes for passengers with, uh, again, Lyft, SideCar, and taxi companies.
A free market does not require that consumers have the freedom to choose exactly what price they will pay for a particular product or service. What defines the free market is the ability to choose between competing products and services.
If you are trying to figure out if these are independent contractors or employees, this is the question that is relevant.
Can the Uber drivers, within the Uber marketplace, compete with each other? If yes, then they are acting like independent agents. If not, they are acting like employees.
So, is Uber acting like a market, or like an employer?
It’s more common than you might think. A common example is jobs where 80% of the time they just need someone there, and then someone does piecework at the same time. EX: A night watchman who's also writting essays.
Also, Uber actively discourages this by penalizing drivers who skip to many fares, which suggests they really don't want you to do this.
At some point, Uber promised to pay a minimal hourly wage so if there were no passengers requesting rides, drivers would still make (a bit of) money. The resulting scam was to sign in as a driver, then just sit on your couch, skipping fares while still making a non-zero amount of money.
>A common example is jobs where 80% of the time they just need someone there, and then someone does piecework at the same time. EX: A night watchman who's also writting essays.
But in this case, when a driver takes a Lyft passenger instead of an Uber passenger, they are actively taking business from Uber. This is more like an employee working at a call center, and answering calls for another call center on their cell phone instead of taking the ones that are ringing at their desk.
Yeah, it's a new and interesting situation. And I'm sure Uber will appeal. But assuming this turns out to be final...
As an employer Uber can set shifts for its employees and ban them from taking jobs from anywhere else while on shift.
I wonder what Uber's new privileges with respect to its workers will cost. What benefits are California employers required to pay? Paid vacation? Pay in lieu of notice for termination without cause? Employment insurance contributions? Social security contributions?
It's all going to be a moot point in the end. Transport automation is coming.
Transport automation is indeed coming. This is even worse for Uber as their main asset right now is their network of drivers. When transport automation is mainstream (still pretty far away) these services will create a race to the bottom as the barrier to entry is very low. Bigger wallets than Uber can price them out.
Barrier to entry absolutely is not low with transport automation, and network effect will prevail. Rest assured Uber will happily ditch their drivers for computers at the first possible opportunity. They are investing heavily in this in fact.
Uber's biggest asset is the installed customer base. Uber's drivers are technically their biggest liability... as this ruling well demonstrates!
Hardly. The only way you can possibly launch something like Uber is to adopt the "Act first, apologize later" model.
Companies like Uber face problems most of us can't even imagine, such as regulatory capture by the incumbent taxi industry. Yes, Uber plays dirty, but to some extent I think they have to, because it's a dirty game.
Laws aren't perfect. We would never have progress if we never challenged them (in reasonable contexts, not committing outright crimes). This is clearly a case where millions of people are benefiting from a modern approach and it makes sense to review the laws to see if they still work in the current era/culture/society.
Uber has another big asset that I'm surprised hasn't been mentioned. Their ride data will probably be hugely valuable for routing automated vehicles. I'd wager they have people working right now to find the optimal distribution of self-driving cars over a given metro area/time of day.
I'll also speculate this this is a pretty big competitive advantage. Collecting that much ride data is not trivial.
That won't be static in the age automated vehicles. Vehicles will be networked and this dynamic will change constantly. Uber's ride data is useless at that point.
Why do you believe the network effect would prevail when self-driving transport is available?
When I want to get from point A to point B, it doesn't really matter what my friends or other people are using, I just personally want good service at a good price - and I don't think I'd be particularly loyal to any one provider.
I expect that smaller regional providers of self-driving taxis would be able to compete on even footing with larger companies, once self-driving vehicles are purchasable commodities without heavy R&D costs.
What most people want is a car to arrive very quickly (perhaps in seconds) of predictable quality for the best fee. The largest operators with the best software and economy of scale will win this game. You won't be able to automate a single car and compete, not the least of the reason being users aren't going to jump through 15 apps to request a car, and big players will not hand you their customers.
If Uber can operate 100,000 robo-cars in San Fran you can walk up to the sidewalk and press Hail and presto you have your ride. They can dynamically balance load between nearby cities on a day-by-day even hourly basis dispatching streams of robo-cars from their garages when the surges hit. Large events which drive demand are pre-scheduled and automatically reflected in both car distribution and the number of gasoline futures they trade on the options board for the upcoming week, etc. etc.
You can bet these robo-cars will be getting robo-tire-rotations and any other effeciencies they can squeeze out. (Imagine a line of them going through Uber's robo-washers)
5? 10? 15 years out? Doesn't really matter but I'm convinced it will eventually happen. It will be awesome and terrible all at once.
Disagree. Uber is investing heavily in self-driving cars. When they arrive in a practical way, Uber will have a brand name, an app already installed on millions of phones, and an infrastructure at scale to handle routing and billing. Not to mention excellent free cash flow and a valuation in the multi-billions that they can borrow against. Not sure who the bigger fish in this space is who would come along and eat their lunch?
No, it really isn't. There isn't anything special about them, unless you're one of those people that believes a patent should be granted for an existing process simply because now it says, "on a computer".
I have some experience in this area of law and in my view it's how the "on a computer" aspect of the situation affects the power dynamic between Uber and the driver that makes it new and interesting.
In the model where contractors are dispatched to handle some task by phone the contractor is able to make counter offers to the company. Eliminating that through automation affects the legal test. The point I was replying to about the ability to choose jobs from different clients (Uber vs Lyft vs all the other edelivery services) also makes this different.
This is a complex area of law, which I'm guessing you haven't personally litigated, so you incorrectly compare it to the software patent issue.
A misnomer. Uber sets the prices, not the market. Uber can market the concept as much as it wants, but it doesn't change the fact that Uber sets the prices and therefore, no free market really exists.
I think you're confused about what a free market is. Uber is competing against other ride sharing services, and Uber cannot set the price of those services.
Why the downvotes? While you may argue that most countries have only a semblance of a free market, Uber does indeed have competitors and is operating under market pressure.
Riders don't set the rates, no... but I'm not sure what that has to do with a free market.
They're not saying that Uber doesn't operate in a free market. They're saying that the competition between drivers within Uber for rides whose prices are fixed by Uber does not constitute a free market.
I suppose it makes sense when applied just to Uber, but it seems misleading. Actors in a free market system will have different models that in isolation would be not so free. I thought free market deals with aggregates.
Since Uber sets prices for a large portion of the market they operate in they have monopoly power and it's therefore not a free market. Uber's at 46% market share in major U.S. markets[0], since taxi's are regulated locally and Uber is setting prices for almost half the market nationally Uber is arguably the #1 regulatory power in the U.S. personal transportation sector.
It's still early though, right? I mean, they might have some dominance now (I wouldn't call 46% in major markets a monopoly), but let's see how things shake out in a few years.
> Uber is arguably the #1 regulatory power in the U.S. personal transportation sector.
I would reserve the phrase "regulatory power" to government. I think you're using it here for the hyperbolic value.
Given Uber's recent $50bn valuation I'd say "the market" believes they'll keep their market power and resulting profits for some time into the future. (46% definitely means monopoly power but it doesn't mean monopoly.)
I am being snarky, but the libertarian poster-child is shielding 46% of the national market from competition (drivers can't compete with eachother) and that's pretty ironic.
> A free market is a market system in which the prices for goods and services are set freely by consent between vendors and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.
Uber is a price-setting monopoly within the Uber market. Uber is the sole authority in the prices that consumers pay and that drivers receive.
The Uber marketplace is NOT a free market. QED. Its rent-seeking behavior on behalf of the owners.
I suppose if you consider Uber to exist in a vacuum with no other competitors or outside forces. But it doesn't, so I'm not sure how your usage of free market holds up.
Sure, but Uber previously styled themselves as just a middleman between drivers and passengers - the facilitators of a market, not a force in the market of their own.
Consider a counterexample - eBay is clearly a market. Independent buyers and sellers agree to transactions, on their own terms. eBay competes for the attention of both buyers and sellers, in terms of service and fees, not on the prices of the actual goods in the market.
If the competition that's happening in the transportation market is between Uber and Lyft, and that competition is on the price of rides and quality of rides, then Uber isn't a market, it's a vendor in a market - and thus the drivers aren't vendors within Uber's market, they're just employees of Uber.
Some jobs are just "sit around unless something goes wrong, then handle the situation." Something going wrong being exceedingly rare.
I knew someone who worked at a grocery store that was 24/7. Except they did close on Christmas, New Years, and Thanksgiving. The store's insurance was for a 24/7 operation - which meant that someone had to be in the store even those 3 times a year it was closed. So my friend's job 3 times a year was just to sit in an empty store by himself. Just to comply with the insurance policy.
I knew someone who was a master control operator for a TV station for the overnight shift. He told me his job was "make sure the TV doesn't go off the air" which ended up being that he was on the internet and watching TV his whole shift since the TV broadcast very rarely malfunctions. (I don't know if this is usual or not for a master control operator)
I worked as an editor on overnight TV news broadcasts (for the early morning newscasts). Since most of the early news was a recast of the previous night I typically only had about an hour or two of work. That left 6-7 hours of watching tv, surfing the internet (this was in the late 90s so much less net and slower as well), reading, etc.
I don't feel like setting prices is the hallmark of independent contracting. Mechanical Turk, for example, the price is (rightfully) set by the problem setter. Perhaps amazon would find it necessary to comply with your judgment by obscuring the price as a 'bid' and effectively require the turker to guess how much the problem setter is willing to pay, creating market inefficiency,reducing transparency, and potentially being more exploitative (amazon pockets the difference if the turker lowballs it)
I have no idea how Mechanical Turk works, however the end result in this situation would be the same. The independent contractor is allowed to choose the price by accepting tasks priced acceptably. the IC still "sets" the price they are willing to work for by only entering into agreements for work where they agree on the price being offered.
That's not a good analogy if you want to argue drivers are not ICs. The independent driver is allowed to quit driving if Uber sets the prices too low. The driver "sets" the price by only logging on when he agrees to the price that Uber has set.
> The independent driver is allowed to quit driving if Uber sets the prices too low.
But then the driver loses the ability to see when the price goes back up.
If you are "ON" the Uber app, you are required to accept the Uber price, or you get penalized. At no point can you say, "I am willing to accept this price which is lower than Uber." nor can you say "I am not willing to accept a fare below this price for this distance."
I don't the situation is analogous. Amazon would be similar to Uber if they set the price for hit tasks. But they don't the hit submitters can set their prices and there is a vibrant market driving to certain price levels. If Uber let drivers set their own prices in some manner, then Uber would be operating a market. Instead they don't operate a market, they operate a direct to consumer service. I'm not certain if their drivers should be considered contractors or employees, but neither situation would be exposed directly to the consumer unless they switched to a market model.
As I said to you previously (https://news.ycombinator.com/item?id=9592532 ): What value do you expect to get out of demanding that people analyze these random situations? Ultimately, it's the government bureaucrats and legal system that make the decisions, so even if someone gives you some relatively definitive answer, it could still turn out to be wrong.
The determination is made by applying a series of subjective standards, looking at situations that are somewhat comparable along one of those standards is not necessarily going to inform the outcome if the other standards are subjectively more important.
There is room to articulate some frustration with the seeming arbitrariness of the law, but do that instead of asking argumentative questions that are only vaguely interesting to the topic.
Many taxi companies are actually dispatching outfits that license their branding. If you want to drive with their branding and receive their dispatch services and customers, you abide by their rules and pricing. You're an independent contractor, not an employee.
If that is the case Uber drivers will have to become licensed taxi drivers. Uber conveniently circumvented this on the argument that they are a sharing/collaborative economy startup, in turn saving themselves lots of money and gaining an unfair competitive edge. They can't use this argument as they have already cornered themselves in this regard.
Can they subcontract once they license the branding? If so, see point (6) of the thread starter comment. If not, I wonder if point (5) applies in that making licensing decisions is a "managerial" type thing to do. Seems hazy though, and it very well might be that it's no different than Uber, and those companies could be similarly ruled against. Lots of companies come up with schemes to treat employees as contractors, with varying degrees of success.
Uber's outcome on this case does not mean that there are no other companies that have not been discovered that are mis-categorizing employees, if anything, it's the opposite: Uber is mis-categorizing employees, so it's highly likely that other companies are too.
A taxi company that operates this way is at least close to the bar of having employees. You don't mention whether the drivers are allowed to subcontract work or not: if not, I'd be confident the drivers would be legally classified as employees.
This may simply not have been tested in court (or not in any newsworthy case). If you keep a small number of independent contractors happy enough, they won't split hairs over this issue.
In Santa Cruz Transportation, Inc. v. Unemployment
Insurance Appeals Board (1991) 235 CA 3d 1363;
1 Cal Rptr 2d 641, the Appeals Court held the drivers
who paid the taxicab company a fixed-fee to lease a
taxicab were common law employees of the company
Independent contractors still get checks signed by the entity contracting them. This is not a useful or appropriate point regarding the contractor vs employee distinction.
In New York, taxis are generally rented out weekly. There's absolutely no employment relationship between a cab company and the drivers, whose only qualification is a livery license.
That depends on state law. For instance, in New York there are yellow taxis that you can hail but you can't call (on the phone) to be picked up; green taxis that you can call on the phone to be picked up in most of the city; and black cars that you can call on the phone for a pickup anywhere in the city, but which don't have to follow the same rates as the yellow and green taxis.
In Reno, you hardly ever see a taxi driving, so they can all be called for a pickup. I honestly don't know if one would stop if you hailed it.
Aside from real limos, I can't remember seeing luxurious taxis outside of New York. But if they exist, it would be because the local laws allow them to charge a different rate than regular taxis.
Minor correction: The green cabs ("boro taxis") can be either called or hailed, but in either case can only make pickups in the outer boroughs (and the very northern end of Manhattan).
Exactly -- they don't operate as taxis; they operate as "limo" or black car services. The rates are negotiated, often with direct input from the driver.
I'm not sure why. I quit using Taxis as much as possible because of absolutely rude or terrible drivers. Thus they affected my business, and I went to Uber/Lyft. If I had a row of terrible Uber experiences I would quit using Uber.
Well, for me it started happening when Taxi drivers (the same rude people I was trying to avoid) started becoming Uber drivers as well. Sometimes I'll take an Uber and just be like, Oh, great, this guy is clearly a Taxi driver. I'll probably have to explain where to go, but at least he can't bitch and moan about me paying with a credit card.
That would be really cool, a ride marketplace that lets you choose the driver based on rate (and or other factors). Does that exist already? If not, it should.
My thoughts as well. Maybe Uber and Lyft will migrate to this pricing model if it helps them get around these legal issues. Does anyone with legal knowledge know if this is a viable strategy?
While that might appeal to some people (competition, etc), I think it would seriously weaken Uber from the perspective of marketing. Consistency of experience or pricing has been a huge driver for many businesses (Walmart, McDonalds, etc).
While that might appeal to some people (competition, etc), I think it would seriously weaken Uber from the perspective of marketing. Consistency of experience or pricing has been a huge driver for many businesses (Walmart, McDonalds, etc).
How does this differ from the idea that if I want to get a fence built and I call up three fencing contractors and tell them "I am paying $1000 for a fence", I'm effectively setting prices.
It's not as it uber is the only employer - most drivers I've seen use lyft as well and choose between them at will.
As a rider, I cannot tell Uber I want to pay $20 to get me to the airport, I can accept their prices or not use the service. Uber is setting the prices for their drivers.
I didn't read the ruling, and I'm not sure if any one of those points is a "killer" vs the others, but I have seen that autonomy is a big check to determine contractor vs employee (touched on by 2, 5, and 6). Loosely speaking, when using a contractor, you're really only supposed to specify the end result/requirements that you want, and then it's up to the contractor to figure out how to get there, be it a new room expansion, or a website. With the constraints of 2, 5, and 6, it seems the court feels that drivers don't have that much autonomy.
The ever changing vechicle requirement has always has always baffled me? 2008 four door! Then 2000 when driver enrollment drops? The Uber fancy cars must be black on black? People were going into debt in order to make Uber money.
(I am so glad the government stepped in on this one.)
Sidecar does this and it worsens the user experience for the most part. If this really is the key, I wonder how much lee-way Uber would need to offer to get over the hurdle. There are obviously ways it can offer pricing control but effectively get everyone at or near the desired price. Which I suspect would not fly.
Hmm, doesn't seem too far off from the trucking industry (when contractors are employed). I definitely know of at least one company that fits each of the bullet points above.
As an Uber Driver I find that there are a few big problems for us that simply come down to the fact that Uber as a corporation is a selfish and greedy and doesn't really care about the drivers:
1. We're not allowed to receive tips.
2. They take 20% of our commission anyways.
3. Who gets tipped here? Uber does, not me.
4. I use my own car, quite frequently, and unlike a pizza delivery guy, the valuable that I'm transporting is another person's life.
5. If I get into an accident, my insurance screws me.
6. I don't get paid enough.
I look forward to the day when the scientists bless humanity with a photosynthesis gene, so that our autotrophy-powered intellectual capacities can help the Free Market lead us to the next Pareto optimal unencumbered by animal impatience.
7. If you get into an accident, you're screwing your passenger(s).
Yes, the valuable you're transporting is another person's life, and you're doing it in such a way that circumvent all regulatory safeguards to protect that.
Don't make Uber out to be selfish and greedy when you're doing the same.
I can see some pretty clear holes in that reasoning. If you spend even a few minutes investigating whether you should actually drive with the Uber app, you realize there's an incredibly complex set of calculations to understand profitability, what kind of car to lease, how much to invest in passenger extras to boost your rating, associated "hidden" costs to factor in, etc.
Drivers absolutely choose their tools and invest heavily in those tools which directly impact their profitability and their ratings. Drivers absolutely employ managerial skill in deciding what hours and how many hours to work and what areas to drive in to get the best passengers and best ratings.
For example, the last Uber ride I took, the driver explained how they specifically avoid driving during certain time frames and certain locations because the fares are more likely to damage their tools, or leave poor ratings, or start yelling at them randomly.
> Uber exercises extensive control over vetting and hiring drivers...
For a pretty lose definition of 'extensive'. Nothing compared to a typical job interview and vetting process that a real hire goes through. How many dollars per contractor does Uber spend validating drivers? Probably averages to something like $25 - $50. There's a validation process, certainly, but it's hardly a "vetting" process.
> But for Defendant's intellectual property, Plaintiff would not have been able to perform the work
This is also absolutely not true. There are a number of different apps which would allow the plaintiff to perform substantially the same work using the same tools and the same business plan. But for using the Uber app, they would not be able to pickup Uber fares, obviously, but that's a tautology. They certainly would be able to perform the same work though. Or they could write their own app and perform the same work (obviously fighting the network effect, they may not succeed, but it's certainly possible).
The fact is that plaintiff can drop Uber on Monday and be driving for Lyft on Tuesday, or even drive for both concurrently and arbitrage between the two apps.
Personally I think this ruling goes too far, but it is a close call and it will be very interesting to watch this develop. The chicken farmer analogy is a good one. If Uber drivers are employees, it actually breaks a fairly large number of well established business models. I think this has more to do with push-back against Uber specifically than technical compliance with the law.
> The fact is that plaintiff can drop Uber on Monday and be driving for Lyft on Tuesday, or even drive for both concurrently and arbitrage between the two apps.
I keep seeing this, why do you believe that because people are using more than one app it makes it impossible for them to be employees? Why can't someone work more than one job and be considered an employee of both?
Not an expert, but intuitively it shows that Uber doesn't have any monopoly over their time at any level.
They can't be hourly, because in any given hour they may work for two different companies. They can't be salary, because they are collecting income from both companies concurrently.
So what are they? Minutely employees?
Even if you try to say that they are minutely employees, you have to account for the fact that there is no preset schedule, or even an expectation that the Uber driver must take a fare offered them. In other words, there's no "boss"; the computers are just making a series of offers, some of which may be accepted and others rejected.
Since each effective work 'shift' begins with picking up a rider and ends once they're dropped off, outside of the taxi industry the best comparison i can make off the top of my head is the workers of one of those 900s numbers. They can work from home and accept calls as they please, with each payment being independent of the next. I'm not sure if they're contractors or not, never really looked into it, but they would be 'minutely employees', so to say. You don't even really need a 'boss' in that situation either, just a computer switching calls.
That's another great example, and I think that industry and thousands more just like it are all 1099 today and are impossible to run as W2. This is a really crucially important distinction which drives a significant percentage of GDP. That's why I think ultimately they are throwing the baby out with the bath water and it won't stand.
Could this ruling be used to argue that the farmers in poultry raising contracts with Tyson, Poultry House, etc to raise chickens owned by Tyson are also employees?
1) Chicken farmers own and provide equipment that (2) the parent company requires and has set standards.
3) The contractee chooses farmers based on some criteria(not certain, but I would assume it's fairly extensive).
4) Contractee sets prices; the farmers do compete with each other for the best pay based on quality, but the farmers do not set prices. Chicken quality could be seen as equivalent to Uber's pay based on hours/distance driven.
5)Chicken farmers do possess skills that influence Tyson's profit or loss, so this point differs.
6)I'm very much doubt that the farmers can subcontract.
7) The chicken farmers are vital to the contractee's business; the profit of Tyson and other companies that use poultry contracts depends primarily on the supply and quality of the chickens raised by the contracted farmers.
Overall, Uber drivers and contracted chicken farmers seem fairly similar though the chicken farmers may conform slightly more to the traditional contractor role.
In South Africa, that seems to be exactly the case, at least for most of the rides I've taken on Uber. The vehicle owners are not the same as the drivers (most of the Uber drivers here wouldn't be able to afford their own vehicles). Uber invoices are issued on behalf of third parties that employ the drivers and own the cars (drivers are still rated directly as individuals on the Uber app).
This seems an extension of the existing South African minibus taxi industry model, where drivers make a daily quota for taxi owners, then keep the rest. (It has also led to at least one early-afternoon Uber ride with a very sleepy driver who was up from before dawn making his quota for his owner).
In any case, in South Africa, at least, Uber is clearly acting as a facilitator, rather than a direct employer.
I think it would be a pity if rulings like the one in OP lead to the worldwide emergence of capital-rich fleet owners taking on the role of employers, because Uber became hesitant to deal with individual driver/owners for fear of being designated as their employer.
That's the case for most taxi drivers in general in Vietnam & China. One family member/friend gets the taxi license and lends the car out while he's sleeping/drinking.
It's a little rare to actually see the same person driving as is in the official picture in the cab. But then again, the cab is used 24/7 for maximum efficiency...
6) is critical, you can't just brush it off: someone who can hire other people to perform their labour is generally not an employee. What you're claiming applies to pretty much any fixed price contract, and it should be obvious that most such contracts don't result in an employee relationship. ALL of the necessary criteria must be met for that to happen - not just some.
e.g. I could be paid by a farmer to to work on such a chicken farm (presumably many people are), but I can't be paid by an Uber employee to cover their shift. That is a critical difference.
Then the farmer is just a manager exercising 'managerial skills' and his job cannot be sub-contracted, because Tyson only contracts with the manager/owner of the farm, not with someone that the manager/owner chooses to represent them before Tyson.
As to 1, I cannot find anything on Independent contractors moving livestock? I went to Purdue, and all truck drivers look like employees? Maybe I missed something?
I don't know if it is a distinction that matters, however, I was under the impression that Tyson et al., SELL the chicks at a set price to the farmer; then, offer to buy back all the chickens that are X days old after that, that meet their standards, whatever they are.
I mean, the roofer is likely a employee of a roofing company. You pay 1 check to the roofing company, and they do payroll for the roofers. Not many people hire 10 roofers 1 by 1.
Coder is a better question. I think the argument is that they have a lot more freedom in what they do... i.e. pick their own libraries etc.
Google "Vizcaino v. Microsoft". Whether or not a coder is a contractor or an employee depends very much on the level of control they have over how, when and where they do the work.
> I will say my only understanding of 1099 vs employee has always been "Does the worker have a set schedule" If the answer was yes, they are a employee- If no, a contractor.
Fast food workers, retail workers and such? They're hourly employees, but employees nonetheless.
Sidecar has a different approach to #2,#4, and #5... wonder if that will work in their favor on this ruling
#2: They just aren't as strict as Uber (can't remember specifics now but my friends 2003 Volvo qualified for Sidecar but not for Uber
#4: Sidecar has a marketplace component where drivers bid for jobs
#5: It is managerial to choose how to price a job
Fascinating! RentHop operates in an industry where almost everyone is an independent contractor on 1099: real estate agents.
1.) Agents are mandated to use their company logo and brokerage info in all ads, both by NYC law and by the company. Some companies have strict dress code requirements when meeting clients.
2.) The brokerage firm definitely controls the tools used, from internal databases to marketing syndication tools to in-house CRM systems.
3.) The brokerage firm has vicarious liability over the actions of their agents (also mandated by NYC law). For that reason the brokerage firm has a huge incentive to vet their employees.
4.) Agents generally have very little discretion if any on the commission charged. The brokerage firm sets commission policies and any deviations must be approved by the managing broker or associate broker.
5.) I highly disagree with the court ruling here [edit: administrative ruling?]; my understanding is Uber drivers are free to turn off the Uber app and operate without the source of leads generated, and that certainly impacts PNL (if that's not the case, agents still can't simply ignore leads forever without getting fired). Uber doesn't mandate when or where the work is done. Same with agents, the brokerages generally can't impact when or where the work is done, with the exception of some mandatory company wide meetings. Firms tend to provide desk space and equipment.
6.) An agent hired by a brokerage firm may not "subcontract" by having a friend show up in his place and conduct the work, even if the friend is a licensed real estate agent -- the brokerage, assuming vicarious liability for the actions of all their agents, would not allow it. This is different from an overworked agent asking a colleague to take over clients, both are still agents of the brokerage.
A mandate imposed on contract relations by law (even if echoed by company policy) is often different in considering the employee/contractor distinction than what not imposed by law.
Additionally, New York law is not California law, and 1099 vs W-2 distinction is a federal tax law distinction, which is distinct from California, New York, or even federal labor law employee/contractor distinctions (though some of the factors that are relevant may be similar between those different sources of law.)
> I highly disagree with the court ruling here
There is no court ruling, its an administrative ruling that is being appealed to a court.
This is a good ruling for workers, but maintains society's status quo. That is, Uber has realized significant margin gains by pushing all risk of carrying passengers and car maintenance onto its drivers. Therefore, this risk is transferred to either drivers (who are on average mot equipped to handle this risk) or insurance companies (who pass the costs on to their entire insurance pool) and not borne directly by Uber nor its customer base. By classifying drivers as employees, risk becomes better aligned.
Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits. This ruling will postpone a public discussion on the role of employer-based insurance and benefits.
Is it? If this were to remain, the large majority of the drivers will not have a position to fill. It will not be viable.
>That is, Uber has realized significant margin gains by pushing all risk of carrying passengers and car maintenance onto its drivers
No one has 'pushed' anything. Drivers are consensually agreeing to drive because the pay they receive values their time.
>Therefore, this risk is transferred to either drivers (who are on average mot equipped to handle this risk)
How are they not equipped?
>Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits. This ruling will postpone a public discussion on the role of employer-based insurance and benefits.
What society needs is less people forcing them to do what others think is best.
I'm not going to engage in Actual Deep Political Conversation on HN, but I would like to take this opportunity to apologise for two things:
1. You're getting downvotes for reasonable requests after taking an unpopular stance, and I hate HN for that. I expected my little pointless bit of snark to be crushed but instead you seem to be getting the blunt end of public opinion here. That sucks, and you're right to want constructive criticism.
2. I (and you) missed a couple of talking points, actually: 'monopoly on violence', 'fruits of labor', and 'coercion/taxation/etc is slavery'.
I guess we'll see what happens next in California? I'm guessing they'll significantly relax the controls they exert over drivers to get them back to contractor status. Which doesn't sound great for Uber.
'equals' is incredibly hazy. There will never be a perfect equilibrium but it is close, if drivers could command better pay at a better establishment why would they choose to drive for Uber?
There will never be a perfect equilibrium but it is close
Thanks for your clarification.
Since you apparently believe that they're negotiating as "close" equals, I don't believe that you and I can have a constructive conversation about this, and so I'm going to bow out now.
(I'm not mootothemax and if I were you I wouldn't expect a reply after someone has left the conversation.)
They are not equals, the drivers probably can't get a better deal anywhere else, and the law should be changed to make sure drivers can get a better deal in the future.
Welcome to Hacker News, where everyone on earth has $90k in the bank, and nobody ever needs money right-this-second so they can continue to barely-afford their food, housing, and medical care.
Does any contractor / employer? The ultimate power in negotiatons is the ability to walk away. Uber created value through its product and network and drivers want a piece of it, otherwise, what's the conversation?
> Is it? If this were to remain, the large majority of the drivers will not have a position to fill. It will not be viable.
I guess you found the main point. If Uber would operate like a normal company, with employees, proper insurance and risk coverage for everyone, it might not be profitable.
So tell all their customers, who love it, to go pound sand (or pay 2x or 3x more), and the drivers to sit at home... This doesn't seem like a good solution.
If they can't abide by the rules that the state have set for them - in this case, what seems to be a fairly reasonable a ruling saying that their 'contractors' are actually employees - and they can't make profit with those changes, then their company should die, or reform. That's basically all it comes down to. If their company is downsized as a result, well, you can blame them for unsustainable business that didn't actually work when the alarm finally rang, and their inability to respond.
If your friends want a startup that will help them get downtown to pound beers faster, and Uber dies, don't worry - someone else who can _actually do the job_ and abide by the rules will almost certainly be there. And the Uber employees who get canned? They might actually
The amount of doublethink people have here about "bad actors will get pushed out of the market for better ones" while simultaneously defending shitty business practices, or conveniently ignoring that bad actor principle when their oh-so-favorite business gets a slap, is pretty astonishing. But given most people on HN seem to only want to "disrupt" the wallets of other so theirs can get fatter through acquihire buy-out plans for their ephemeral startups, I guess it's not surprising.
You are completely blind to the desire of the customer. You are happy to tell the customer to absorb costs for services they clearly do not want.
What's amazing is that people are voting with their dollars that they approve of the business and you want to stick your nose in there and say "hey guys, I don't approve of this transaction. Get out of the car."
So, according to you, McDonald's should be free to break minimum wage law in order to lower their prices? That other companies should be allowed to violate safety regulations in order to provide cheaper prices?
The customer wanting something in no way, shape, or form justifies violating the law. And in this case, the customer is NOT told to absorb costs for services they don't want. They're simply told to pay the true cost of the service. If they don't want to, then they clearly did not value the service that much.
Driver A: "I'll get you there for $10. If I crash, you don't get to sue Uber, just me."
Driver B: "I'll get you there for $15. If I crash, you can go after Uber."
As the customer, do you believe I should have the right to choose between these two options? Or do you believe I should be forced to choose B every time?
Yes, I think it's fine for you to be forced to choose B. Because when people get hurt, someone pays. And if uber doesn't pay, and the driver doesn't pay, society does. Hurt passengers would have their medical problems paid for by their insurance or by all of us through taxes.
In CA, you have to have insurance to drive a car. It would be cheaper for you not to have insurance, but most people don't have the money to make things right when they get into an accident. This is exactly analogous.
Nowhere in the example was the condition that the driver is not insured.
Outside of that, I find this attitude incredibly patronizing. "We need to save you from yourself" is what it boils down to. You pay somebody for a ride knowing she's not insured? That's _your_ problem, not mine.
Oh, come on. Would you accept the phrasing, "Uber has shifted risk away from themselves and toward its drivers"? Which 99% of English speakers would read as equivalent to "Uber pushed risk to its drivers."
That's just factual, not some hidden communist rhetoric.
What does that have to do with the price of tea in China?
I really hate the trend of libertarianism inventing its own political correctness, policing regular speech with well-known meanings ("pushing risk") for hidden accusations of oppression and slavery.
With a conventional taxi company, if something bad happens, you deal with the taxi company, get compensation, etc etc
With Uber, they wash their hands of it and say it's all the individual drivers fault. So now the drivers have to deal with any bad stuff, and their insurance companies as well.
This is Uber, pushing the risk onto drivers, so it can make more money.
pro tip: If you don't want to cover your own liability, don't drive for Uber. I have to have liability insurance for my office, $50/mo or whatever. I could have chosen to forgo it but that would have been stupid wouldn't it?
>With a conventional taxi company, if something bad happens, you deal with the taxi company, get compensation, etc etc
In many places, if something bad happens with your taxi ride, you're still dealing with just the taxi driver. They are independent contractors in many places.
I'm not sure what the makeup is of employees vs. independent contractors, but they are definitely out there in significant numbers. In NYC, for example, most are independent contractors, and this has resulted in a whole mess of problems ( http://nypost.com/2015/01/22/1-5m-in-taxi-drivers-money-held... )
Choices take place within causality. Causal language can and should be applied to choices. If your politics appears to require a spooky metaphysical sort of free will and your ethics fail to align with the real world of cause-and-effect, then they are wrong.
An infinite number of theories of causality can be applied to any situation. This is why much of human thought, and some brands of political theory and law assume the ideal of "free will". To determine the actual "cause" of any event in the way you would like to interpret it, you would have to be omniscient.
Some people would "consensually" trade both their kidneys for a hot meal. A company offering this deal would be exploiting the inability of these people to properly assess risk, and would be acting unethically.
>If this were to remain, the large majority of the drivers will not have a position to fill. It will not be viable.
That's correct, it's probably not viable.
>How are they not equipped?
Most personal car insurance policies don't cover operating your car commercially. In addition, each driver would be required to conform to ADA rules (which apparently not all of them were doing https://arstechnica.com/tech-policy/2015/04/blind-users-with...) and the penalties for noncompliance are higher than most people can afford. And those aren't the only rules they would be responsible for - the risks are just really high!
Uber's commercial insurance policy only applies when a driver is actually conveying a passenger or has accepted a trip, not when they're, say, on the way to an area of high demand but don't have a trip accepted yet. This is different from a taxi company's insurance policy, which covers the driver effectively the entire time they are in the cab.
Sure it would, why wouldn't it? It's not like Uber is the first taxi company that has employees in the history of USA. Why do you think it would make Uber not viable?
Thing is, I don't use uber for the price. Most of the time the price is obscured anyway. Uber lets me pull out an app, see where drivers are, book a driver, and get an estimate for how long it takes for them to arrive. A taxi requires me to stand on a busy street and wave for half an hour, or call one or more taxi businesses and go through an operator, get a vague ETA, and hope it arrives, eventually.
There is nothing innate about Uber preventing any other transportation system from moving its tech offerings into the present day. Before UberX, Uber was significantly more expensive than taxis anyway (at least for me it was).
You're not in the majority. A former coworker worked for a company that actually did what Uber has always claimed it does -- the app connected passengers to independent companies for a seamless experience.
What distinguished it from Uber is that the connection was made to livery companies who complied with labor law, and they therefore cannot really compete on price and struggle to gain traction.
Products and services fail for a lot of reasons. To start with, customers have to be aware that a competitor even exists before price can become a factor.
Very true. The company's not failing, but it has not yet captured any significant consumer interest. From what I understand, they get most of their revenue from corporate clients for whom safety and compliance and more important than price.
So? Many people claim they bring something better than the existing taxi companies. If that's the case, then they should be able to survive this no problem. If they can't, then it turns out that what they brought to the table wasn't that great in the first place.
The traditional taxi market has been expanded due to Uber's low prices and liquidity. In SF Uber is reportedly doing 3-5x what all taxis were doing before.
Restricting supply and increasing the prices will forego the benefits of Uber.
> Is it? If this were to remain, the large majority of the drivers will not have a position to fill. It will not be viable.
It's simple supply and demand. The demand for easy-to-book, gps-enabled car rides is there. If uber cannot accommodate, someone else will.
>No one has 'pushed' anything. Drivers are consensually agreeing to drive because the pay they receive values their time.
People undervalue their labor in order to get the gigs they need to make money. Laborers consensually agreed to unsafe, 18 hour factory work back in the day, and indentured servants consensually agreed to years-long contracts of, effectively, their life.
If the only reason uber competes is due to price difference gained by eschewing labor laws and benefits, then of course drivers are agreeing to drive with them -- there is no other option for their labor when the competitors that provide benefits have to shrink operations due to demand shifting to illegally-sourced labor. That said, I don't think Uber is used due to their price so much as their technology.
>How are they not equipped?
I doubt many will afford commercial vehicle insurance, health insurance, 401Ks, in addition to substantially increased maintenance costs covered out of their own pocket. It will certainly make driving for uber undesirable. Of course, Uber covering these costs is far cheaper overall, and the price change would likely be negligible.
>What society needs is less people forcing them to do what others think is best.
The supply of taxis is regulated in the cities, amongst other things, so that the pricing reflects society's ideas of the minimum fair compensation for that class of work.
The constraint on the supply of taxis has no effect on prices, which are regulated separately.
The real effect of the supply regulation is to force drivers to pay up to a hundred dollars per day to be allow to work by some medallion-owning companies and investors.
Lease drivers rent the medallions, and usually the taxis, for a day or a week from their owners or a middleman. Depending on the owner and the night of the week, a lease driver pays $72 to $100 to take a car out for a 12-hour shift, or about $450 to $650 for a weekly lease. The driver must also pay for gas, at $15 to $20 a night. Drivers keep whatever fares and tips they collect, but they often start a day's work $100 or more behind.
No. Just no. This idea that every single thing like this has no coercion needs to stop. You cannot possibly make the argument that both the driver and Uber are on the same level of power in that relationship.
I'm a Lyft driver and this is a TERRIBLE decision for me, personally. Luckily, I will be quitting and launching my own company (a biotech) soon. The irony is that if this ruling sticks and Uber and Lyft lose significant business, business will migrate to taxis, which have an even more exploitative (but definitely legal) relationship with their drivers!!
Or, you know, an actual platform that does connect freelance drivers to passengers and allows them to set the conditions for the fare in a legal manner?
" Therefore, this risk is transferred to either drivers (who are on average mot equipped to handle this risk) or insurance companies (who pass the costs on to their entire insurance pool) and not borne directly by Uber nor its customer base. "
This is really revolting to me. And outlines what my intuition feels is wrong with most SV 'disruption'. Its just so immature. While I don't agree with your later sentiments, the risk shifting is dead on.
It's also delusional and betrays a complete lack of economic understanding of insurance. Uber is paying for insurance. The drivers should be paying for commercial insurance. It should be all priced in. If the drivers aren't getting commercial insurance, then Uber should be verifying it. If the insurance companies aren't pricing it right, then go talk to the insurance commissioner (i.e. the government agency in charge of screwing up this market).
I'm reading the words you are saying, but I'm hearing fuck off. To your point, it would be great if the driver's had the ability to charge according to their cost basis. But they don't. A lot of should be's in your world. All I'm saying is that the money Uber makes appears to be closely linked with free riderism. If a poacher and a person willing to purchased poached game from publicly maintained land, voluntarily transact, I'm not sure either is a paragon of capitalistic virtue you seem to be implying.
"Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits. This ruling will postpone a public discussion on the role of employer-based insurance and benefits."
This ruling will have quite little effect on that conversation. The political situation in this country has already decided that conversation shouldn't happen yet.
"Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits."
This was my reaction as well. If Uber drivers feel that they don't have access to typical benefits like good healthcare, life insurance, disability insurance/workers comp, etc. then it would seem that one solution is to make these things easily available to people who are not full-time employees. And that would help millions of non-Uber citizens as well.
Another solution is what the court is ruling here, to force Uber to take on the complexity and cost. I can't see how this could actually be better for anyone involved in the long run. Uber will just raise their cut of the fares to cover the costs of benefits so drivers won't actually take home more money. I suppose it'll get a lot harder to fire drivers so maybe some will benefit from that?
In any case, I honestly feel like it would be more reasonable if this driver could sue the state of California for not making benefits easily available to 1099 workers. Hopefully Obamacare will open up the Overton Window[0] and this is the way things are heading in the future
> Another solution is what the court is ruling here, to force Uber to take on the complexity and cost. I can't see how this could actually be better for anyone involved in the long run.
The ruling here isn't a long-term solution, its an immediate (and retrospective) ruling on rights under current law.
Changing the law to provide a different model is a forward-looking, longer-term approach, and not the job of the court or labor commission. That it might be better if taxes -- almost certainly new taxes, including on capital income -- shifted the model of support from employers supporting their employees for certain basic needs to the tax base as a whole supporting the citizenry at large for those needs, that doesn't create a license for employers not meeting their obligation under existing law until that new model is in place.
One hypothesis could be Uber can't raise their fares if there's significant competition and outside options. That is, if Uber were to take a higher margin cut, others would undercut be able Uber. Overtime, each competitor would be subject to the same sanctions and maintain depressed margins in the highly competitive market.
Does it not complicate things for drivers as well? As employees they may have to tax entire income from Uber, including car expenses, maintenance etc..
I believe you can still deduct work-related expenses. That's what Line 21 "Unreimbursed Employee Expenses" on the 1040A is for, if I'm reading the instructions correctly.
Have taxi companies managed to get a driver to actually show up when you call? I thought Uber's advantage was not being completely dysfunctional, even when they only had expensive town cars.
Just throwing a hypothetical out there. What if this sticks and the drivers decide to organize with a union and collectively bargain a living wage, benefits, etc?
What would be the value of Uber (and related businesses)? Would it stay in business even? How many VC's would lose fortunes over Uber going nearly to 0? Would this be the popping of what some suspect is a private equity bubble as the effects of this ripple throughout?
Regardless, it would be a very different business with a very different valuation.
My thought on this is that the current Uber valuation is related very strongly to the idea of their future worth, which is currently quite optimistic due to their self-driving car research. Uber without having to pay drivers at all is still the end-goal for them, so it may just mean that they need more capital investment in the short-term and investors may be happy to do so.
I don't believe self driving cars will be practical in the next 10 years. Not at the level Uber would benefit.
I don't understand why self driving cars are good for Uber. Uber is successful right now due to he network effect of their drivers. Once self driving cars are a reality you will see numerous offers for this service with all of them racing to the bottom.
Bigger fish like Apple and Google would be able to siege them and starve them out as pricing races to the bottom. Uber is valuable because of their drivers, not despite their drivers. In the age of self driving cars - Uber won't be able to compete.
The data Uber is collecting from their app will be very valuable once they start using self driving cars. Google may have a lot more data coming in from Maps, but it is noisy and unfiltered. Uber has a geospatial history of every ride along with the metadata needed to make it truly useful.
This was obvious from the beginning. There's really not the slightest doubt that all government authorities are going to classify Uber employees as employees, except perhaps a few that might be bribed/pressured into not doing so.
Uber controls every aspect of the business, from the fares charged (and how much profit Uber will take from each) to the route taken to the conditions of the vehicle to preventing subcontracting. It isn't even close or arguable. As the ruling points out, these people aren't independent drivers with their own businesses that just happen to have engaged in a contract with Uber, nor could Uber's business exist without them.
Doesn't seem obvious at all to me since I know several drivers who do rides for several systems at the same time. How could they be an employee or three companies at once? They aren't, they are clearly contractors.
You can see multiple people stating the same here about driving for multiple services:
http://qr.ae/7y7fv7
I think this is just another ruling by a clueless government that has no clue what is actually happening on the computers involved.
Many people work for multiple jobs at once. I've been a receptionist who codes for someone else at the same time, and I've been a crowd manager while doing email for my other job. Both were time sheet W2 employee relationships.
This isn't about computers whatsoever. This is about the requirements and business relationship between Uber and Uber drivers. The relationship does not allow Uber drivers to subcontract, negotiate prices, and had control over profit and loss. Uber drivers are employees.
> How could they be an employee or three companies at once?
So by your logic i can't be employed as waiter at a restaurant and also be employed as cashier at a grocery store at the same time. Obviously i can't be scheduled for the same shift at both places, but with Uber, Sidecar, Lyft, etc your shift starts once you accept the rider and ends when you drop them off. You clearly aren't going to pick up an Uber rider while you have a Lyft rider in the car.
So what's the difference between the waiter/cashier scenario and the Uber/Lyft scenario besides shift length?
I think mostly the opposite. I don't think the ruling holds tightly or sees broad copying.
No, Uber does not "control every aspect of the business". Specifically, it doesn't control when you work, where you work, how you work (obviously not the route taken), the conditions of the vehicle (beyond that it is legal), etc.
They control the important aspects of the business. They control the pricing, they control how the drivers work, they control the condition of the vehicle (can't have an old vehicle, must be newer), and they exert control over when drivers work by punishing those that turn down too many fares.
The pricing, yes, although Lyft explicitly supports tipping and Sidecar actually enables differentiated pricing. Vehicles can be 10 or mor years old which is the vast majority of vehicles on the road (i.e., hardly "control"). And, yes, lights and seat belts must work (that's hardly control). They exert literally zero control over when you work. If you're going to open up the app and start declining fares, that's equivalent to a contractor turning in shoddy work.
Completely different. Uber drivers don't even have to work...ever!
Vehicles can be 10 or 15 years old which includes some 90% of all vehicles. That's hardly "controlling condition". And, OK, lights and seat belts have to work.
There actually aren't any hard limits on how many fares you can refuse but refusing fares is like a contractor turning in lousy work.
The ruling is not unexpected at all. After the ruling against Microsoft back in the 90s on contracting, it's pretty clear that a business needs to be very careful how they hire contractors, so that they don't become implicit employees. Google has to jump through hoops so that their contractors aren't considered employees (only work for 1 yr max, etc).
I'm curious how much this will affect Uber and what it will do to their business model. If I had to speculate, it would be that it becomes unprofitable almost instantly, but they do have a gigantic warchest, so maybe they can fight the ruling or figure out another way to classify their drivers.
Maybe they can advertise fares and jobs ("This person wants to be driven from SFO to Mountain View") and drivers bid on it like an auction. I wonder if that might change the equation? But then it means that drivers will have a lot more friction in the process.
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[ 3.2 ms ] story [ 154 ms ] threadIf this ruling sticks, many of those drivers will no longer have a position.
If it is appealed and eventually decided by a court whose decisions are binding precedent -- and the first stage appeal from the Labor Commissioner's ruling would be a state trial court, which is not such a court -- then it would have broader effect.
OTOH, its likely a guide to how the Labor Commission would rule on similar cases brought by other Uber drivers, so, in a sense it signals an effect in California, without having a direct effect on any other worker.
ISTR reading about a Florida decision that found the same thing with regard to Uber drivers, and IIRC there are a number of other labor complaints and lawsuits pending on similar grounds.
The requirements that uber enforces on its (now) employees would pretty much have to be wiped to make it more of a contractor relationship than an employee relationship. No more banning 2-door cars or 11 year old cars, no more banning tips, no more auto-filtering out all less than perfect records, drivers would have to negotiate fares not uber, no more background checks. Basically uber does a traditional hiring process without actually hiring, whereas they'd have to move to a traditional contracting relationship. Uber forbids contracting relationships in their ToS, its specifically forbidden to hire a subcontractor. Clauses like that really set off labor boards and the IRS about "fake" contracting.
Specifically, uber would have to let the end user decide not to accept a ride in my new 2-door Yaris or my wife's 2004 Prius rather than denying for me. Also if riders consistently give me 1 star because of my HN posting habits or whatever, they'd have to let the riders decide to not accept me rather than autofiltering out all sub 4.6 or whatever grade-inflated score they use. They couldn't run a background check on me to join the service, MAYBE they could get away with running it and putting the result semi-anonymously online for the rider to make a judgement. They would have to let me set the minimum fare I'd demand, which actually sounds pretty nice for drivers rather than existing "yes/no" take it or leave it, and tips would have to be permitted.
Possibly they could spawn off a "union" or professional organization that only allows members to join that passed a background check and then only allow members to advertise themselves as part of the union. Like my roofing contractor or my unionized electrician.
There's a widely held belief, that is completely wrong, that a contractor is just an employee who is treated like dirt in exchange for more money than an employee gets; essentially a gambling relationship. The actual legal position is considerably more complicated and is not concerned with popular beliefs.
Another point I didn't mention was they were very unhappy that the company and the contractor were in the exact same line of business, this is often an indicator of problems. A company that makes dispatching middleman software for the taxi industry couldn't possibly care less about what an end user of their software wears while at work. On the other hand, a company that's a stealth taxi driver employer is going to get all out of whack about employee dress codes, even if they call the employees "contractors".
"Do it exactly how we say" is classic employer relationship. "Produce this documented contractual end result" is more typical contractor relationship.
I'm not saying that wearing torn jeans and tee shirt to a financial contract job is wise, in practice dressing that way is probably a good way not to get renewed. Dress codes are for employees and if they're happy with the risk reward ratio for turning contractors into employees, well, that substantial and expensive legal risk is their problem. Maybe for "image" and marketing reasons it really is financially worth it for them.
Dress codes are a different manner.
Its also not in the IRS's best interest to put Uber out of business. Even assuming the worst it seems likely that there would be some sort of compromise brokered that would allow Uber to stay operational. They've got a pretty big war-chest to work with.
Why? Uber has shown they're a terrible company when it comes to following regulations. If anything, I would assume the IRS would take a more critical eye towards them, allowing Google's self driving vehicle program to get a head start.
Disclaimer: My opinion is "self driving cars are the future, but f* Uber"
Look the IRS is a revenue generating organziation. Saddling Uber with a 100 billion dollar tax bill will get them a bankruptcy proceeding and $0. Finding a way to collect some percentage of what's past owed and then having them pay, at least, payroll taxes moving forward can bring hundreds of millions of dollars into the IRS's coffers.
I'm not a huge fan of Uber's business practices either but killing them does the IRS no good.
If most corporations can avoid taxes other than payroll, why would Uber be any different? They're a tech company! Their only expenses are HQ/on the ground labor, server/storage operating expenses, and whatever real estate they have in the US (with most of it in SF).
OTOH, it will also discourage future violations of the same kind, because people don't generally start businesses to lose the time and resources poured into it just for the joy of denying the IRS taxes. So, even though it may not be optimal on a narrow view, it may be desirable on a longer view. Corporate tax evasion is motivated by profit, and as long as it is more profitable to break the law and make a partial settlement later, businesses will be encouraged to do it. It if it is catastrophically not profitable to do that, the incentives are different.
Über will be on the hook for penalties for the misclassification, but there is reason to believe that the drivers knew that they were classified as contractors and no imminent tax bill is due.
Beyond that there is a really interesting debate as to whether sharing economy jobs are an end-run around minimum wage laws, rendering such laws meaningless for certain industries going forward. If the majority of workers are turned into 1099 consultants, but are doing effectively the same jobs (drivers, delivery people, etc) that employees did in the past, what does that mean for society?
Please excuse my demeanor, but it means that if the "sharing" economy is really the "tech companies sidestepping worker/labor protections with no repercussions", then society is screwed.
> society is screwed
Please elaborate.
Walmart is guilty of this to a lesser extent, as while they categorize their workers properly, they pay them so little that they have company-provided documentation on how to collect social benefits to supplement their income, which means we're subsidizing Walmart's labor costs directly.
This will be less of a problem as the minimum wage rises across the country, and companies are held accountable for proper worker classification.
Agreed.
> but it's questionable whether raising the wage floor minimizes social benefits payout.
Disagree.
http://www.dol.gov/minwage/mythbuster.htm
http://www.npr.org/2012/01/03/144594861/raising-the-minimum-...
"Increases in the minimum wage are essentially a shift from corporate profits to low-wage employees," he says. "And we know that low-wage employees spend more of their money. They're going to spend essentially every penny they get, so that increased demand is going to result in more economic activity and potentially more jobs."
How many years until Uber moves to self-driving cars and this entire article is meaningless?
The real minimum wage is $0: when you can't find a job.
I think arguing about the minimum wage is ''fighting the last war'' and not facing the real problems in the future that will force societies to evolve to survive.
A social safety net funded by a tax on automation.
> I think arguing about the minimum wage is ''fighting the last war'' and not facing the real problems in the future that will force societies to evolve to survive.
We agree here. The real problem is, how will we equitably distribute productivity as automation continues to work itself up the stack? Allow the owners of automation and software to soak up the majority of income? Probably not. It'll either be basic income or guillotines.
According to you, Walmart employees cannot support themselves, even though we have a raft of labor protections. Walmart is not subverting any labor laws, as far as I can tell.
As to your point about minimum wage: how does increasing the cost of labor ensure that more people will have work? When you are unemployed, you cannot support yourself.
The bottom line is that when two parties enter into a contract voluntarily, that should be the end of the matter.
Increasing the cost of labor ensures labor can support itself. If a job doesn't exist, the social safety net steps in and ensures you can survive. That's how every other first world country works.
As a citizen, you have basic rights. As a corporation, you do not. A citizen is entitled to survival, a corporation is not entitled to cheap labor.
That is a very black and white view; real life has a certain nuance that just isn't captured by blanket statements like this.
You'll miss things if you limit yourself to a single level of abstraction: while it makes sense to the two parties to look at it like that, there is also a larger-scale, societal interest that certain sorts of contracts not be allowed. Thus, society makes rules about contracts and employment. For example, we ban slavery, indentured servitude, and child labor because as a society, we've determined that those are exploitive (even if you can get children who would willingly work for you, or people who would sell themselves to you).
These sorts of laws are what make us a society. For an example of a what happens without them, take a look at Somalia.
Tell me, how many Uber drivers are able to negotiate with Uber on the cut Uber takes?
Should people be allowed to sign contracts to enter into slavery? How about two criminals entering a voluntary contract to never betray each other. Would testifying against a criminal partner then be a compensatable contract breach?
Current US law says no. If two parties have unequal leverage (you need a job to survive, the company does not need you) there is an implicit structural coercion. That suggests it's not possible for two parties to actually "voluntarily" enter an agreement, as one is being coerced by bills/kids/health insurance, without an equal balance on the other side of the scale.
Currently the National Taxi Workers’ Alliance does not have any collective bargaining rights as they represent a non-traditional workforce. Taxi cab drivers are not covered under the Fair Labor Standards Act which protects workers’ safety and grants overtime pay.
I did! That doesn't make Uber's actions any better.
> If anything, Uber will (inadvertently) bring more labour protections where there were none.
I look forward to whatever positive change they can bring about until the commoditization of cheap, electric, self-driving mobility is complete.
No, but it's hard to argue that their actions will screw society, if it was already the status quo.
Honestly, the fundamental situation is not new, only the particulars are novel.
And if you are looking for a ride and Uber has 80% chance of having the closest available car then you are probably willing to pay a premium to use their service.
* People sign up with Uber
* They drive literally whenever they want
* Uber has no standards for their drivers other than "get good ratings" and "pass a background check"
..and they're considered employees? WTF?
Apparently a Labor Commissioner disagrees with this assessment.
edit: http://www.businessinsider.com/leaked-charts-show-how-ubers-...
"The most useful part of the Uber guide for its drivers will probably be the advice on how to maintain a high score. Here's what Uber recommends:"
Offer passengers bottled water, chewing gum, snacks, mints and phone chargers. Keep your vehicle clean and well-maintained. Dress appropriately. Open the door. Offer to carry bags. Take the best route. Be nice. Pick up the right rider. Don't ask for a five-star rating.
Can you please cite any case law for this proposition?
PS there is a ton of caselaw on what it means for a taxi driver to be an employee or not, and this isn't in there :)
http://www.quora.com/Is-it-better-to-be-a-UberX-or-Uber-Blac...
How many Uber Black drivers are employees of black car cab companies? Does that factor into this? My impression was that this was more about UberX than Uber Black
So the Uber hate comes about because the idea is they are cheating. The drivers' POV is not considered; Uber holds Job Giving Magic and they have to be fair with that power. Proving a service that is in demand is not enough- They have to constantly thank us that we permit them to offer us their service. That's the idea.
And a free agreement between two parties really cannot be reached with such a power imbalance. How many Uber drivers are able to negotiate on the cut that Uber takes of the fares?
And no, providing a service that is in demand is not enough. Just because their service is in demand is no reason whatsoever to not comply with the law.
Uber like any company or individual wants to get maximum value for its spend. Uber is offering $X to drivers. The drivers can opt to take $X, or to not. If enough drivers don't take $X, Uber will increase $X until enough drivers accept the pay. What is wrong with any of this? This is how YOU operate in your daily life.
The law is wrong in many ways. Don't get lost in the fallacy of appeal to authority.
Edit: it appears that the critical factor they considered was whether or not the driver could have operated their business independently of Uber. They said they could not. They also cited the fact that Uber controls the way payments are collected and other aspects of operations as critical to showing employment. http://www.scribd.com/doc/268946016/Uber-v-Berwick
They make some references to Case law for a Yellow taxi case back in 1991. (at least that was my reading!)
I think providing a service to connect buyers and sellers should be able to be distinct from having employees.
It is, but the court decided that Uber exercised too much control over the conditions of the work to just be connecting buyers and sellers.
The former is saying a business cannot exist without employees performing critical functions (I'm not saying that this is de facto truth, but just phrasing the argument).
The latter is saying that without a business, you don't have employees/contractors, which makes sense, but seems obvious and inconsequential.
A ride-sharer / driver needs the platform and the platform needs the driver, fundamentally. It's not like most contracting where it's not the end of the world if all the contracts end.
But I think the Cali court may have had the right of it by going "that's bullshit."
As one can quickly see that line of argument is exceedingly thin. In order for it to make even a little sense it would have to be rephrased to something more like an argument that Uber's business isn't providing rides, but connecting people who need a ride to an independent business that offers rides to people.
But taking a step back, though it does seem to be a vaguely mitigating factor, maybe, in the abstract, the fact is that this woman wasn't a contractor by the legal definition.
The law doesn't say that employee/employer relationships are determined by what could have happened in some alternate universe. There are full time employee plumbers and carpenters and programmers, and contractor plumbers and carpenters and programmers. They use multi-part tests and precedent to determine which is which.
The determination was that this woman was -- in fact - an employee, it was not a hearing to determine a hypothetical scenario.
Somewhere in California there may be an Uber driver with a fact pattern that makes them a contractor, or not, but it'll take more cases to figure that out.
Of course this is assuming a similar situation with an organization that aggregates customers and connects them to contractors doing the work. The specific example that I saw elsewhere in the thread was the contracted chicken farmers[0]
[0]:https://news.ycombinator.com/item?id=9733269
Yes. infact that happens quite a lot (subject to jurisdiction).
Many builders I know are very concerned about hiring the same contractor too often as they might accidently become an employee (and hence have to pay taxes on them).
These things have nothing to do with my status as an employee or contractor as you'd never guess which one I was based on these facts.
In software, the tools are a big determination, i.e., do you provide your own laptop? You might be a contractor. Are you given benefits such as reasonable vacation days? You might be an employee.
Mis-categorization of employees is a big issue for the IRS and few "contractors" are informed or in a position to threaten to challenge it.
In the software business, I've had an employer who gave me an employment contract and then just decided to write me checks like a contractor each month until I raised a fuss.
I don't know for McDonald's, but for many fast food companies that's absolutely true: the main company (the brand) only sells the franchises, and the franchisers actually own and operate the restaurants. However, the main company holds very tight control over the experience (prices, branding, inspections, menus, ...).
So, if Lyft and Uber and a hypothetical third all had similar business models, and a driver could find people to drive on more than one platform they would be considered independent contractors. I assume Uber wouldn't allow an Uber driver to also be a Lyft driver (citation needed).
This makes sense, and is similar to determining if ANY contractor is an employee. One determinator is if the "contractor" has multiple "clients". If a contractor only ever has one client, and is with that client for an extended time they are more likely to be found to be a full time employee instead.
Others factors generally include things like how you get paid (do you bill the client, or are you on payroll?) or the nature of your work (projects and deliverables, or day-to-day operations, etc).
Of course many of these things favour classifying Uber drivers as contractors, but there's enough of a gray zone for a court to rule they are full-time employees.
Additionally, McDonald's (or similar) locations are independently managed to a certain extent, that's why ads always say "at participating locations".
[0] http://www.entrepreneur.com/article/240709
The ruling is embedded on the page.
The case law they cite: "In addition, even though there is an absence of control over the details, an employer-employee relationship will be found if the [Defendants] retain control over the operation as a whole, the worker's duties are an integral part of the operation, and the nature of the work makes detailed control unnecessary."
The ruling points out that this isn't as important as it appears. The example given in the ruling is that of a pizza delivery person. A delivery person is considered an employee of a pizzeria even if they are required to provide their own car and pay for their own gas and insurance.
Also, Uber provides drivers with an iPhone (though they don't have to use it).
"Plaintiff's car and her labor were her only assets. Plaintiff's work did not entail any 'managerial' skills that could affect profit or loss. Aside from her car, Plaintiff had no investment in the business. Defendants provided the iPhone application, which was essential to the work. But for Defendant's intellectual property, Plaintiff would not have been able to perform the work."
That's a pretty solid line of reasoning, to be honest. Note that for those unfamiliar with the subtleties of legal jargon, the words "but for" have a specific meaning that relates to causality. In other words that last sentence roughly translates to "if not for the existence of the iPhone app there would be no distinct or independent business here."
In addition, earlier in the ruling they address the fact that mere ownership of a car has historically not been considered the same thing as owning specific "tools" required to perform a job, and it cites the fact that previous precedent for delivery drivers that they are employees, and merely owning the car and paying for gas does not change that.
http://www.law.cornell.edu/wex/but-for_test
http://dictionary.law.com/Default.aspx?selected=113
http://legal-dictionary.thefreedictionary.com/%22But+for%22+...
This is a factor in total revenue but not a factor in marginal profits.
I argue that because I don't get a choice of waiter, their actions have relative little consequence apart from the current transaction - I am not much more likely to come back because I may not get that same waiter - and customers have very limited information. Not so with Uber.
I can't.
I think there's a very good argument for Uber having to treat the drivers as employees. They are dependent on Uber and Uber sets the amount they will earn. They would more likely be contractors if the drivers set their own rates and Uber would choose who they wanted to drive. Doesn't Uber also try to restrict who they can drive for too? Additionally, Uber's business relies entirely on the labor of the drivers. Uber also supervises the employees in-part by the rating system.
In terms of buying their own equipment - this is not an uncommon thing in many trades. Mechanics have to buy their own tools. Many machinists buy their own tools.
Truth is there is a lot of gray area here but I can see interpretation both ways. I do hope the drivers in California take this opportunity to organize as quickly as possible and begin collective bargaining with Uber.
I'd set Uber's value at less than one billion if this happened.
I think that would be a bit of an overreaction.
Not true. I know someone who drives for Uber. Just last month, he was suspended because he did not want to drive during low-demand hours (when he literally loses money). Uber drivers are, in fact, required to (a) work when they don't want to and (b) work specific hours.
Incidentally, if it were a 2-party scenario where you required a specific contractor to be available on demand, you would probably be their legal employer. A mandated, regular schedule is indeed one the main tests when distinguishing between an employee and a contractor. I have worked as a software contractor in the US for over almost 15 years and the employers, especially the larger ones with proper HR departments, have been careful to define my work in terms of skills and deliverables, not hours worked.
If I don't weed out people to make the connections as efficient as possible, I'm not doing very well at my job of handling the logistics.
They get compensated via driving. Which is why they drive in the first place.
Why forcibly stop people consensually partaking in an activity? It's amazing how far away bureaucrats can tell others what's best for them.
Democracy; it's a pretty nifty system.
It is absolutely amazing how people of today totally ignore history and historical context. It has been years and years of struggles to enact labors laws to give employees some very small amount of power in the extremely unequal employee/employer relationship. You're acting like the time of The Jungle and the Triangle Shirtwaist Factory fire were the good old days until pesky governments got involved and ruined everything.
The US, comparatively, has labor laws that don't give much power to the employee (see: at-will employment).
And just because it's "consensual" doesn't mean that it's not against the law. Otherwise should McDonalds be able to circumvent health codes and minimum wage because it found people willing to work for that? Of course not.
There wouldn't be an issue here if there wasn't a dispute between the parties involved in the activity.
Definitely not going to happen in the near future.in 5/10 years maybe, but it looks like Uber is racing to make as much money as possible before the legislator cracks down on it. If the the decision of the commission is confirmed, they'll have to change their business model ASAP. They can do it, they have a shitload of money.
In essence, AirBnb is just a broker.
With Uber, you don't rent Wissam's driving services for 20 minutes or hire Samantha to pick you up at SFO. You hire Uber and they dispatch a faceless anonymous cog.
For Uber to fall into AirBnB status, you'd be able to rate drivers, and drivers could request to pick you up, and you'd choose a driver amongst those available. That's not what happens. Uber would have less control.
There is much more involved here, but the decision is fairly easy reading.
4-6 are madly different for airbnb than Uber:
4) Uber alone sets prices, and tipping is discouraged, so there is no mechanism for driver (as "contractor") to set prices. 5) Plaintiff driver only provided her time and car. "Plaintiff's work did not entail any 'managerial' skills that could affect profit or loss." 6) Drivers cannot subcontract (presumably negating Uber's position as a "lead generation" tool for contractors).
AirBnB is facing an entirely different challenge - residential vs commercial zoning, hotel taxes, impact on the normal rent market, etc. I'm seeing laws coming up either seeking to regulate & tax them as hotels, or outright ban them as in santa monica: http://www.npr.org/sections/thetwo-way/2015/05/13/406587575/... Clearly a residential rental market isn't sustainable when you can easily earn at least double with short term rentals.
That said I'd be interested to know the break down between host involvement/room etc and "entire place" because Airbnb seem to have sold a lot on the host element and there's arguably a major commitment to the guest by a live in host. Also things like superhosts [0] which clearly aren't employees but come a bit closer to blurring the lines.
I think the ebay seller analogy mentioned might be best though - Airbnb hosts set the price freely, approve/reject at will, can make individualised offers, earn trust and Airbnb - like ebay - call out without employing (and supposedly without endorsing) highly trusted hosts.
[0] https://www.airbnb.co.uk/superhost
Switching to driverless raises the question of who owns the vehicles they'll be using, and if they're the ones owning the vehicles in their fleet that represents a major shift in capital expenses and ongoing maintenance costs.
I think if cities and states had to choose between Uber with people (more jobs) and Uber with autonomous vehicles (less jobs) they would or should pick the former.
As much as cities and states can regulating employment rules, and taxi rules, they can also regulate rules for use of autonomous vehicles. So, when it comes down to it, they don't have to choose a regulatory regime that makes either of those options viable.
You buy the car and lease it to Uber for 70% of the revenue. Same model as now, minus the "employee" factor.
1) Drivers providing their own cars is not a strong factor - pizza delivery employees also drive their own cars.
2) Uber "control the tools that drivers use" by regulating the newness of the car.
3) Uber exercises extensive control over vetting and hiring drivers and requires extensive personal information from drivers.
4) Uber alone sets prices, and tipping is discouraged, so there is no mechanism for driver (as "contractor") to set prices.
5) Plaintiff driver only provided her time and car. "Plaintiff's work did not entail any 'managerial' skills that could affect profit or loss."
6) Drivers cannot subcontract (presumably negating Uber's position as a "lead generation" tool for contractors).
Sorry that these are out of order. Look on Page 9 of court documents for full text.
All those costs are precisely why Uber wanted contractors instead of employees. The real problem is that hiring actual employees is way more costly and risky than hiring contractors.
>Uber alone sets prices
is the killer one. I guess the only solution to that would be to make it more of a market where drivers could choose their rate to compete.
This is how every other independent contractor works.
Riders set the rates with demand based pricing and drivers choose which one gives them the best opportunity at each trip request. That's a unique situation, so a comparison to "every other independent contractor" misses the point here.
Ebay for instance, the suppliers set the prices. Amazon Marketplace: the seller sets the prices (not Amazon).
Uber sets the prices, NOT the free market.
Uber is a price setting monopoly, the "sole authority" of the price within the Uber "marketplace". Consumers do NOT have any ability to change the price. Nor do any of the Uber drivers.
Taxis never were a free market either. But at least they didn't pretend to be one like Uber does.
Uber has one job. Connect riders with drivers.
The "libertarian" solution is to provide a marketplace where drivers can sell their services to riders. Drivers can compete against each other by raising or lowering prices, while riders can compete against each other by similarly increasing or decreasing the bid.
Uber pretends to do this, but with a distinct difference. Uber sets all the prices. Therefore, Uber is anything BUT a free market.
Maybe you don't get it because you haven't been paying attention to Uber marketing. But I'm not claiming that Uber has no competitors. What I'm saying is within Uber's "marketplace" of "independent contractors", the drivers and riders are in fact helpless to Uber's pricing whims.
Uber is NOT a free market. But they are trying to market themselves as one. This is a distinct reason why Uber drivers have been declared to be employees.
> The "libertarian" solution is to provide a marketplace where drivers can sell their services to riders.
States create solutions. The libertarian "solution" is to do nothing and let the interactions happen organically. This could mean a marketplace, it could mean other things. It really depends on what people want, the locality, technology available, etc. And sometimes people actually want a monopoly and are happy with that. Facebook is practically a monopoly and I don't think people want 2 main social networks.
> Uber pretends to do this, but with a distinct difference. Uber sets all the prices. Therefore, Uber is anything BUT a free market.
I agree that Uber by itself is definitely not a free market place. I'll take your word that their marketing paints a different picture--seems likely.
Upvoted.
You are confusing anti-trust law ( or something else ) with labor law.
> Uber is a price setting monopoly, the "sole authority" of the price within the Uber "marketplace".
Within the Uber marketplace dilutes the definition of "monopoly" into meaninglessness. Uber competes for drivers with Lyft, SideCar, taxi companies, limo companies, and, well, every other company hiring (relatively) unskilled labor. Uber competes for passengers with, uh, again, Lyft, SideCar, and taxi companies.
A free market does not require that consumers have the freedom to choose exactly what price they will pay for a particular product or service. What defines the free market is the ability to choose between competing products and services.
Can the Uber drivers, within the Uber marketplace, compete with each other? If yes, then they are acting like independent agents. If not, they are acting like employees.
So, is Uber acting like a market, or like an employer?
Also, Uber actively discourages this by penalizing drivers who skip to many fares, which suggests they really don't want you to do this.
When Uber caught on, they added the penalty.
But in this case, when a driver takes a Lyft passenger instead of an Uber passenger, they are actively taking business from Uber. This is more like an employee working at a call center, and answering calls for another call center on their cell phone instead of taking the ones that are ringing at their desk.
As an employer Uber can set shifts for its employees and ban them from taking jobs from anywhere else while on shift.
I wonder what Uber's new privileges with respect to its workers will cost. What benefits are California employers required to pay? Paid vacation? Pay in lieu of notice for termination without cause? Employment insurance contributions? Social security contributions?
It's all going to be a moot point in the end. Transport automation is coming.
Uber's biggest asset is the installed customer base. Uber's drivers are technically their biggest liability... as this ruling well demonstrates!
Companies like Uber face problems most of us can't even imagine, such as regulatory capture by the incumbent taxi industry. Yes, Uber plays dirty, but to some extent I think they have to, because it's a dirty game.
Incidentally, this is why car manufacturers like Daimler and VW are running carsharing systems
I'll also speculate this this is a pretty big competitive advantage. Collecting that much ride data is not trivial.
Actually it pretty much is, if you're willing to snoop on handshaking data from peoples' cell phones.
When I want to get from point A to point B, it doesn't really matter what my friends or other people are using, I just personally want good service at a good price - and I don't think I'd be particularly loyal to any one provider.
I expect that smaller regional providers of self-driving taxis would be able to compete on even footing with larger companies, once self-driving vehicles are purchasable commodities without heavy R&D costs.
If Uber can operate 100,000 robo-cars in San Fran you can walk up to the sidewalk and press Hail and presto you have your ride. They can dynamically balance load between nearby cities on a day-by-day even hourly basis dispatching streams of robo-cars from their garages when the surges hit. Large events which drive demand are pre-scheduled and automatically reflected in both car distribution and the number of gasoline futures they trade on the options board for the upcoming week, etc. etc.
You can bet these robo-cars will be getting robo-tire-rotations and any other effeciencies they can squeeze out. (Imagine a line of them going through Uber's robo-washers)
5? 10? 15 years out? Doesn't really matter but I'm convinced it will eventually happen. It will be awesome and terrible all at once.
No, it really isn't. There isn't anything special about them, unless you're one of those people that believes a patent should be granted for an existing process simply because now it says, "on a computer".
In the model where contractors are dispatched to handle some task by phone the contractor is able to make counter offers to the company. Eliminating that through automation affects the legal test. The point I was replying to about the ability to choose jobs from different clients (Uber vs Lyft vs all the other edelivery services) also makes this different.
This is a complex area of law, which I'm guessing you haven't personally litigated, so you incorrectly compare it to the software patent issue.
A misnomer. Uber sets the prices, not the market. Uber can market the concept as much as it wants, but it doesn't change the fact that Uber sets the prices and therefore, no free market really exists.
Riders don't set the rates, no... but I'm not sure what that has to do with a free market.
[0] - http://www.forbes.com/sites/andrewbender/2015/04/10/ubers-as...
> Uber is arguably the #1 regulatory power in the U.S. personal transportation sector.
I would reserve the phrase "regulatory power" to government. I think you're using it here for the hyperbolic value.
I am being snarky, but the libertarian poster-child is shielding 46% of the national market from competition (drivers can't compete with eachother) and that's pretty ironic.
> A free market is a market system in which the prices for goods and services are set freely by consent between vendors and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.
Uber is a price-setting monopoly within the Uber market. Uber is the sole authority in the prices that consumers pay and that drivers receive.
The Uber marketplace is NOT a free market. QED. Its rent-seeking behavior on behalf of the owners.
Consider a counterexample - eBay is clearly a market. Independent buyers and sellers agree to transactions, on their own terms. eBay competes for the attention of both buyers and sellers, in terms of service and fees, not on the prices of the actual goods in the market.
If the competition that's happening in the transportation market is between Uber and Lyft, and that competition is on the price of rides and quality of rides, then Uber isn't a market, it's a vendor in a market - and thus the drivers aren't vendors within Uber's market, they're just employees of Uber.
No, it isn't. There isn't anything special or unique about Uber that says they should be exempt from existing law.
"Riders set the rates with demand based pricing"
No, they really don't. I have no ability as a user to state how much I'm willing to pay for a trip.
I knew someone who worked at a grocery store that was 24/7. Except they did close on Christmas, New Years, and Thanksgiving. The store's insurance was for a 24/7 operation - which meant that someone had to be in the store even those 3 times a year it was closed. So my friend's job 3 times a year was just to sit in an empty store by himself. Just to comply with the insurance policy.
I knew someone who was a master control operator for a TV station for the overnight shift. He told me his job was "make sure the TV doesn't go off the air" which ended up being that he was on the internet and watching TV his whole shift since the TV broadcast very rarely malfunctions. (I don't know if this is usual or not for a master control operator)
But then the driver loses the ability to see when the price goes back up.
If you are "ON" the Uber app, you are required to accept the Uber price, or you get penalized. At no point can you say, "I am willing to accept this price which is lower than Uber." nor can you say "I am not willing to accept a fare below this price for this distance."
As I said to you previously (https://news.ycombinator.com/item?id=9592532 ): What value do you expect to get out of demanding that people analyze these random situations? Ultimately, it's the government bureaucrats and legal system that make the decisions, so even if someone gives you some relatively definitive answer, it could still turn out to be wrong.
The determination is made by applying a series of subjective standards, looking at situations that are somewhat comparable along one of those standards is not necessarily going to inform the outcome if the other standards are subjectively more important.
There is room to articulate some frustration with the seeming arbitrariness of the law, but do that instead of asking argumentative questions that are only vaguely interesting to the topic.
How is that different than Uber?
This may simply not have been tested in court (or not in any newsworthy case). If you keep a small number of independent contractors happy enough, they won't split hairs over this issue.
http://www.edd.ca.gov/pdf_pub_ctr/de231tc.pdf
In Santa Cruz Transportation, Inc. v. Unemployment Insurance Appeals Board (1991) 235 CA 3d 1363; 1 Cal Rptr 2d 641, the Appeals Court held the drivers who paid the taxicab company a fixed-fee to lease a taxicab were common law employees of the company
In Reno, you hardly ever see a taxi driving, so they can all be called for a pickup. I honestly don't know if one would stop if you hailed it.
Aside from real limos, I can't remember seeing luxurious taxis outside of New York. But if they exist, it would be because the local laws allow them to charge a different rate than regular taxis.
[1] http://www.visitsweden.com/sweden/Travel-guide/Getting-aroun...
How about Sidecar's approach of actually letting drivers price their services (to some degree)?
It's not as it uber is the only employer - most drivers I've seen use lyft as well and choose between them at will.
As a rider, I cannot tell Uber I want to pay $20 to get me to the airport, I can accept their prices or not use the service. Uber is setting the prices for their drivers.
(I am so glad the government stepped in on this one.)
http://www.edd.ca.gov/pdf_pub_ctr/de231tc.pdf [PDF]
Cites precedent in Santa Cruz Transportation v. Unemployment Insurance Appeals Board. Here's what's relevant to Uber:
1) Drivers could be terminated if they did not maintain good relations with the public.
2) The company required the drivers to account for the fares they received.
3) The work did not require the expertise of a skilled professional.
4) The drivers depended on the company’s dispatcher for their livelihood.
5) The drivers did not set their own rates, but were paid according to the number and distance of fares they carried.
6) There was no evidence of entrepreneurial risk.
7) The customers called the company and the company arranged for the performance of the services.
8) The drivers did not advertise their services.
9) The driver’s work was part of the regular business of the taxicab company.
1. We're not allowed to receive tips. 2. They take 20% of our commission anyways. 3. Who gets tipped here? Uber does, not me. 4. I use my own car, quite frequently, and unlike a pizza delivery guy, the valuable that I'm transporting is another person's life. 5. If I get into an accident, my insurance screws me. 6. I don't get paid enough.
And you aren't self-interested or greedy when you find the opportunity?
And why do you work for a company that is so terrible? Find a new occupation or work for a competing service.
Well, unless you purchased specific insurance to cover the cost of driving your car for business use of transporting people.
Yes, the valuable you're transporting is another person's life, and you're doing it in such a way that circumvent all regulatory safeguards to protect that.
Don't make Uber out to be selfish and greedy when you're doing the same.
Of course, for this to be done well they need to pay the drivers enough that tipping is not necessary.
Drivers absolutely choose their tools and invest heavily in those tools which directly impact their profitability and their ratings. Drivers absolutely employ managerial skill in deciding what hours and how many hours to work and what areas to drive in to get the best passengers and best ratings.
For example, the last Uber ride I took, the driver explained how they specifically avoid driving during certain time frames and certain locations because the fares are more likely to damage their tools, or leave poor ratings, or start yelling at them randomly.
> Uber exercises extensive control over vetting and hiring drivers...
For a pretty lose definition of 'extensive'. Nothing compared to a typical job interview and vetting process that a real hire goes through. How many dollars per contractor does Uber spend validating drivers? Probably averages to something like $25 - $50. There's a validation process, certainly, but it's hardly a "vetting" process.
> But for Defendant's intellectual property, Plaintiff would not have been able to perform the work
This is also absolutely not true. There are a number of different apps which would allow the plaintiff to perform substantially the same work using the same tools and the same business plan. But for using the Uber app, they would not be able to pickup Uber fares, obviously, but that's a tautology. They certainly would be able to perform the same work though. Or they could write their own app and perform the same work (obviously fighting the network effect, they may not succeed, but it's certainly possible).
The fact is that plaintiff can drop Uber on Monday and be driving for Lyft on Tuesday, or even drive for both concurrently and arbitrage between the two apps.
Personally I think this ruling goes too far, but it is a close call and it will be very interesting to watch this develop. The chicken farmer analogy is a good one. If Uber drivers are employees, it actually breaks a fairly large number of well established business models. I think this has more to do with push-back against Uber specifically than technical compliance with the law.
I keep seeing this, why do you believe that because people are using more than one app it makes it impossible for them to be employees? Why can't someone work more than one job and be considered an employee of both?
They can't be hourly, because in any given hour they may work for two different companies. They can't be salary, because they are collecting income from both companies concurrently.
So what are they? Minutely employees?
Even if you try to say that they are minutely employees, you have to account for the fact that there is no preset schedule, or even an expectation that the Uber driver must take a fare offered them. In other words, there's no "boss"; the computers are just making a series of offers, some of which may be accepted and others rejected.
Again, not an expert; just using my intuition.
Since each effective work 'shift' begins with picking up a rider and ends once they're dropped off, outside of the taxi industry the best comparison i can make off the top of my head is the workers of one of those 900s numbers. They can work from home and accept calls as they please, with each payment being independent of the next. I'm not sure if they're contractors or not, never really looked into it, but they would be 'minutely employees', so to say. You don't even really need a 'boss' in that situation either, just a computer switching calls.
Uber tried to play the pedantry card, and failed.
> even an expectation that the Uber driver must take a fare offered them.
And here is where the Auber-defender lies right out of his ass. If an uber driver declines any material portion of fares offered, they're fired.
> Again, not an expert; just using my intuition.
tl;dr, you're an idiot, talking out of your ass, mixing lies with bullshit. Typical fucking HN.
1) Chicken farmers own and provide equipment that (2) the parent company requires and has set standards.
3) The contractee chooses farmers based on some criteria(not certain, but I would assume it's fairly extensive).
4) Contractee sets prices; the farmers do compete with each other for the best pay based on quality, but the farmers do not set prices. Chicken quality could be seen as equivalent to Uber's pay based on hours/distance driven.
5)Chicken farmers do possess skills that influence Tyson's profit or loss, so this point differs.
6)I'm very much doubt that the farmers can subcontract.
7) The chicken farmers are vital to the contractee's business; the profit of Tyson and other companies that use poultry contracts depends primarily on the supply and quality of the chickens raised by the contracted farmers.
Overall, Uber drivers and contracted chicken farmers seem fairly similar though the chicken farmers may conform slightly more to the traditional contractor role.
This seems an extension of the existing South African minibus taxi industry model, where drivers make a daily quota for taxi owners, then keep the rest. (It has also led to at least one early-afternoon Uber ride with a very sleepy driver who was up from before dawn making his quota for his owner).
In any case, in South Africa, at least, Uber is clearly acting as a facilitator, rather than a direct employer.
I think it would be a pity if rulings like the one in OP lead to the worldwide emergence of capital-rich fleet owners taking on the role of employers, because Uber became hesitant to deal with individual driver/owners for fear of being designated as their employer.
It's a little rare to actually see the same person driving as is in the official picture in the cab. But then again, the cab is used 24/7 for maximum efficiency...
e.g. I could be paid by a farmer to to work on such a chicken farm (presumably many people are), but I can't be paid by an Uber employee to cover their shift. That is a critical difference.
http://perdue.balancetrak.com/lists/103/jobdescription.aspx?...
(Edit--I did find some vage(pretty much state regulations) at Tyson, but if anything they don't regulate their independent farmers enough?)
This is Tyson's overview of their contracts: http://www.growwithtyson.com/overview-of-contract-poultry-fa...
Coder is a better question. I think the argument is that they have a lot more freedom in what they do... i.e. pick their own libraries etc.
Fast food workers, retail workers and such? They're hourly employees, but employees nonetheless.
I think the "ruling" is pretty silly. The Uber model is reasonable. Maybe some tweaks are needed but from a high level it's a legitimate approach.
1.) Agents are mandated to use their company logo and brokerage info in all ads, both by NYC law and by the company. Some companies have strict dress code requirements when meeting clients.
2.) The brokerage firm definitely controls the tools used, from internal databases to marketing syndication tools to in-house CRM systems.
3.) The brokerage firm has vicarious liability over the actions of their agents (also mandated by NYC law). For that reason the brokerage firm has a huge incentive to vet their employees.
4.) Agents generally have very little discretion if any on the commission charged. The brokerage firm sets commission policies and any deviations must be approved by the managing broker or associate broker.
5.) I highly disagree with the court ruling here [edit: administrative ruling?]; my understanding is Uber drivers are free to turn off the Uber app and operate without the source of leads generated, and that certainly impacts PNL (if that's not the case, agents still can't simply ignore leads forever without getting fired). Uber doesn't mandate when or where the work is done. Same with agents, the brokerages generally can't impact when or where the work is done, with the exception of some mandatory company wide meetings. Firms tend to provide desk space and equipment.
6.) An agent hired by a brokerage firm may not "subcontract" by having a friend show up in his place and conduct the work, even if the friend is a licensed real estate agent -- the brokerage, assuming vicarious liability for the actions of all their agents, would not allow it. This is different from an overworked agent asking a colleague to take over clients, both are still agents of the brokerage.
Additionally, New York law is not California law, and 1099 vs W-2 distinction is a federal tax law distinction, which is distinct from California, New York, or even federal labor law employee/contractor distinctions (though some of the factors that are relevant may be similar between those different sources of law.)
> I highly disagree with the court ruling here
There is no court ruling, its an administrative ruling that is being appealed to a court.
Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits. This ruling will postpone a public discussion on the role of employer-based insurance and benefits.
Is it? If this were to remain, the large majority of the drivers will not have a position to fill. It will not be viable.
>That is, Uber has realized significant margin gains by pushing all risk of carrying passengers and car maintenance onto its drivers
No one has 'pushed' anything. Drivers are consensually agreeing to drive because the pay they receive values their time.
>Therefore, this risk is transferred to either drivers (who are on average mot equipped to handle this risk)
How are they not equipped?
>Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits. This ruling will postpone a public discussion on the role of employer-based insurance and benefits.
What society needs is less people forcing them to do what others think is best.
1. You're getting downvotes for reasonable requests after taking an unpopular stance, and I hate HN for that. I expected my little pointless bit of snark to be crushed but instead you seem to be getting the blunt end of public opinion here. That sucks, and you're right to want constructive criticism.
2. I (and you) missed a couple of talking points, actually: 'monopoly on violence', 'fruits of labor', and 'coercion/taxation/etc is slavery'.
Operating in a legal gray area isn't a good solution for drivers, riders, or Uber.
I just want to make sure that I understand you fully:
You believe that Uber and its drivers negotiate as equals?
Thanks for your clarification.
Since you apparently believe that they're negotiating as "close" equals, I don't believe that you and I can have a constructive conversation about this, and so I'm going to bow out now.
They are not equals, the drivers probably can't get a better deal anywhere else, and the law should be changed to make sure drivers can get a better deal in the future.
What law and how will it work?
>the drivers probably can't get a better deal anywhere else
You just made my point, if driving for Uber was terrible, people wouldn't do it. They do because it's there best alternative.
Of course they would, because there is no alternative.
I guess you found the main point. If Uber would operate like a normal company, with employees, proper insurance and risk coverage for everyone, it might not be profitable.
If your friends want a startup that will help them get downtown to pound beers faster, and Uber dies, don't worry - someone else who can _actually do the job_ and abide by the rules will almost certainly be there. And the Uber employees who get canned? They might actually
The amount of doublethink people have here about "bad actors will get pushed out of the market for better ones" while simultaneously defending shitty business practices, or conveniently ignoring that bad actor principle when their oh-so-favorite business gets a slap, is pretty astonishing. But given most people on HN seem to only want to "disrupt" the wallets of other so theirs can get fatter through acquihire buy-out plans for their ephemeral startups, I guess it's not surprising.
What's amazing is that people are voting with their dollars that they approve of the business and you want to stick your nose in there and say "hey guys, I don't approve of this transaction. Get out of the car."
The customer wanting something in no way, shape, or form justifies violating the law. And in this case, the customer is NOT told to absorb costs for services they don't want. They're simply told to pay the true cost of the service. If they don't want to, then they clearly did not value the service that much.
Driver A: "I'll get you there for $10. If I crash, you don't get to sue Uber, just me."
Driver B: "I'll get you there for $15. If I crash, you can go after Uber."
As the customer, do you believe I should have the right to choose between these two options? Or do you believe I should be forced to choose B every time?
In CA, you have to have insurance to drive a car. It would be cheaper for you not to have insurance, but most people don't have the money to make things right when they get into an accident. This is exactly analogous.
Outside of that, I find this attitude incredibly patronizing. "We need to save you from yourself" is what it boils down to. You pay somebody for a ride knowing she's not insured? That's _your_ problem, not mine.
Oh, come on. Would you accept the phrasing, "Uber has shifted risk away from themselves and toward its drivers"? Which 99% of English speakers would read as equivalent to "Uber pushed risk to its drivers."
That's just factual, not some hidden communist rhetoric.
I really hate the trend of libertarianism inventing its own political correctness, policing regular speech with well-known meanings ("pushing risk") for hidden accusations of oppression and slavery.
There is no pushing of risks. There are inherent risks to any activity, be it crossing the road or driving for Uber.
With a conventional taxi company, if something bad happens, you deal with the taxi company, get compensation, etc etc
With Uber, they wash their hands of it and say it's all the individual drivers fault. So now the drivers have to deal with any bad stuff, and their insurance companies as well.
This is Uber, pushing the risk onto drivers, so it can make more money.
In many places, if something bad happens with your taxi ride, you're still dealing with just the taxi driver. They are independent contractors in many places.
I'm not sure what the makeup is of employees vs. independent contractors, but they are definitely out there in significant numbers. In NYC, for example, most are independent contractors, and this has resulted in a whole mess of problems ( http://nypost.com/2015/01/22/1-5m-in-taxi-drivers-money-held... )
That's correct, it's probably not viable.
>How are they not equipped?
Most personal car insurance policies don't cover operating your car commercially. In addition, each driver would be required to conform to ADA rules (which apparently not all of them were doing https://arstechnica.com/tech-policy/2015/04/blind-users-with...) and the penalties for noncompliance are higher than most people can afford. And those aren't the only rules they would be responsible for - the risks are just really high!
Why is everyone talking about as if we were in 2013?
Sure it would, why wouldn't it? It's not like Uber is the first taxi company that has employees in the history of USA. Why do you think it would make Uber not viable?
There is nothing innate about Uber preventing any other transportation system from moving its tech offerings into the present day. Before UberX, Uber was significantly more expensive than taxis anyway (at least for me it was).
What distinguished it from Uber is that the connection was made to livery companies who complied with labor law, and they therefore cannot really compete on price and struggle to gain traction.
Restricting supply and increasing the prices will forego the benefits of Uber.
It's simple supply and demand. The demand for easy-to-book, gps-enabled car rides is there. If uber cannot accommodate, someone else will.
>No one has 'pushed' anything. Drivers are consensually agreeing to drive because the pay they receive values their time.
People undervalue their labor in order to get the gigs they need to make money. Laborers consensually agreed to unsafe, 18 hour factory work back in the day, and indentured servants consensually agreed to years-long contracts of, effectively, their life.
If the only reason uber competes is due to price difference gained by eschewing labor laws and benefits, then of course drivers are agreeing to drive with them -- there is no other option for their labor when the competitors that provide benefits have to shrink operations due to demand shifting to illegally-sourced labor. That said, I don't think Uber is used due to their price so much as their technology.
>How are they not equipped?
I doubt many will afford commercial vehicle insurance, health insurance, 401Ks, in addition to substantially increased maintenance costs covered out of their own pocket. It will certainly make driving for uber undesirable. Of course, Uber covering these costs is far cheaper overall, and the price change would likely be negligible.
>What society needs is less people forcing them to do what others think is best.
This is just a stupid talking point.
Taxi drivers already were consider contractors and didn't have benefits, so I'd really like to hear that argument.
The real effect of the supply regulation is to force drivers to pay up to a hundred dollars per day to be allow to work by some medallion-owning companies and investors.
Lease drivers rent the medallions, and usually the taxis, for a day or a week from their owners or a middleman. Depending on the owner and the night of the week, a lease driver pays $72 to $100 to take a car out for a 12-hour shift, or about $450 to $650 for a weekly lease. The driver must also pay for gas, at $15 to $20 a night. Drivers keep whatever fares and tips they collect, but they often start a day's work $100 or more behind.
http://www.nytimes.com/1995/04/09/nyregion/driving-a-taxi-di...
This is really revolting to me. And outlines what my intuition feels is wrong with most SV 'disruption'. Its just so immature. While I don't agree with your later sentiments, the risk shifting is dead on.
This ruling will have quite little effect on that conversation. The political situation in this country has already decided that conversation shouldn't happen yet.
This was my reaction as well. If Uber drivers feel that they don't have access to typical benefits like good healthcare, life insurance, disability insurance/workers comp, etc. then it would seem that one solution is to make these things easily available to people who are not full-time employees. And that would help millions of non-Uber citizens as well.
Another solution is what the court is ruling here, to force Uber to take on the complexity and cost. I can't see how this could actually be better for anyone involved in the long run. Uber will just raise their cut of the fares to cover the costs of benefits so drivers won't actually take home more money. I suppose it'll get a lot harder to fire drivers so maybe some will benefit from that?
In any case, I honestly feel like it would be more reasonable if this driver could sue the state of California for not making benefits easily available to 1099 workers. Hopefully Obamacare will open up the Overton Window[0] and this is the way things are heading in the future
[0] https://en.wikipedia.org/wiki/Overton_window
The ruling here isn't a long-term solution, its an immediate (and retrospective) ruling on rights under current law.
Changing the law to provide a different model is a forward-looking, longer-term approach, and not the job of the court or labor commission. That it might be better if taxes -- almost certainly new taxes, including on capital income -- shifted the model of support from employers supporting their employees for certain basic needs to the tax base as a whole supporting the citizenry at large for those needs, that doesn't create a license for employers not meeting their obligation under existing law until that new model is in place.
Of the many factors preventing that I think this ruling is a pretty minor one.
http://www.irs.gov/pub/irs-pdf/i1040sca.pdf
What would be the value of Uber (and related businesses)? Would it stay in business even? How many VC's would lose fortunes over Uber going nearly to 0? Would this be the popping of what some suspect is a private equity bubble as the effects of this ripple throughout?
Regardless, it would be a very different business with a very different valuation.
I don't understand why self driving cars are good for Uber. Uber is successful right now due to he network effect of their drivers. Once self driving cars are a reality you will see numerous offers for this service with all of them racing to the bottom.
Bigger fish like Apple and Google would be able to siege them and starve them out as pricing races to the bottom. Uber is valuable because of their drivers, not despite their drivers. In the age of self driving cars - Uber won't be able to compete.
Because if there's one thing we know about Google it's that they're terrible at slicing and dicing large volumes of data.
Uber controls every aspect of the business, from the fares charged (and how much profit Uber will take from each) to the route taken to the conditions of the vehicle to preventing subcontracting. It isn't even close or arguable. As the ruling points out, these people aren't independent drivers with their own businesses that just happen to have engaged in a contract with Uber, nor could Uber's business exist without them.
The short version:
http://www.irs.gov/uac/Employee-vs.-Independent-Contractor-%...
You can see multiple people stating the same here about driving for multiple services: http://qr.ae/7y7fv7
I think this is just another ruling by a clueless government that has no clue what is actually happening on the computers involved.
This isn't about computers whatsoever. This is about the requirements and business relationship between Uber and Uber drivers. The relationship does not allow Uber drivers to subcontract, negotiate prices, and had control over profit and loss. Uber drivers are employees.
So by your logic i can't be employed as waiter at a restaurant and also be employed as cashier at a grocery store at the same time. Obviously i can't be scheduled for the same shift at both places, but with Uber, Sidecar, Lyft, etc your shift starts once you accept the rider and ends when you drop them off. You clearly aren't going to pick up an Uber rider while you have a Lyft rider in the car.
So what's the difference between the waiter/cashier scenario and the Uber/Lyft scenario besides shift length?
Many people have multiple jobs. Uber doing a poor job of making sure that one of their drivers is only working for them at the time doesn't matter.
I don't see the problem here. Customers like Uber. Drivers are choosing to use it. For some reason the government needs to wade in...
No, Uber does not "control every aspect of the business". Specifically, it doesn't control when you work, where you work, how you work (obviously not the route taken), the conditions of the vehicle (beyond that it is legal), etc.
You're wrong about the vehicle condition part and "how you work" is questionable (you have limits on how many fares you can refuse, for instance).
Vehicles can be 10 or 15 years old which includes some 90% of all vehicles. That's hardly "controlling condition". And, OK, lights and seat belts have to work.
There actually aren't any hard limits on how many fares you can refuse but refusing fares is like a contractor turning in lousy work.
I'm curious how much this will affect Uber and what it will do to their business model. If I had to speculate, it would be that it becomes unprofitable almost instantly, but they do have a gigantic warchest, so maybe they can fight the ruling or figure out another way to classify their drivers.
Maybe they can advertise fares and jobs ("This person wants to be driven from SFO to Mountain View") and drivers bid on it like an auction. I wonder if that might change the equation? But then it means that drivers will have a lot more friction in the process.