9 ms·

I don't really understand how a state law declaring something as so can have any relevant effect on federal determinations of employee/contractor status, which

by gergles 11y ago

I don't really understand how a state law declaring something as so can have any relevant effect on federal determinations of employee/contractor status, which is far more dangerous to the TNCs business model. This mostly seems like feel-good legislation purchased by Uber to try to delay the inevitable, but the drivers are employees by any sort of logical duck test, and it's only a matter of time before the courts come to that conclusion too.

geogra4 11y ago
Yeah -- I see this not going very far as the states don't really have control over this.
fweespeech 11y ago
> I don't really understand how a state law declaring something as so can have any relevant effect on federal determinations of employee/contractor status 1) It causes the state tax boards to go along with it so Uber can focus its legal resources on when it gets dragged into Federal court. 2) If it becomes "usual and customary" in enough states a Republican congress might be willing to pass a bill to back it.
shams93 11y ago
Yeah if you think of it from the perspective of the federal IRS I bet they are getting nervous about so much of the economy going freelance.As an employee Im a sitting duck for the tax man, as a contractor with my own business my income is far less preductabke however the IRS inevitably and legally gets a much smaller piece of my pie.
- asift 11y ago
  How do they legally get less of your money? Unless you are engaging in some type of tax fraud, this really isn't true.
  - gozur88 11y ago
    I think he's assuming the government will have a much harder time proving undeclared income. Probably not true in Uber's case, but contractors are pretty notorious for giving generous cash discounts.
- dangrossman 11y ago
  For the same job making the same income, you'll typically pay more taxes as a contractor than as an employee. You'll pay 100% of your SS/medicare taxes via the self-employment tax, where previously your employer was paying 50% of it for you. The income tax brackets are the same. You can deduct business expenses, but so could your employer, so the IRS isn't missing out on anything.
  - 15155 11y ago
    Sure, but it's substantially more expensive to administer and enforce tax on a company than an individual filing a simple 1040. The withholdings system exists to make it easier to collect.
morgante 11y ago
> the drivers are employees by any sort of logical duck test I strongly disagree and think this is very open for debate. Drivers set their own hours and use their own equipment. They can even simultaneously use another app (ex. Lyft). I really don't see how it constitutes an employment relationship. In fact, it seems to match all the typical characteristics of contractors.
- venomsnake 11y ago
  A good test - if the contracts are negotiated individually for all drivers - they are contractors. If it is take or leave with 1000s more like you - you are employee. If you have no bargaining power - you are not a contractor IMO.
  - sageikosa 11y ago
    Or...more likely...you are a contractor offering a commodity service in a market with ample supply. There's no requirement to go into lengthy or customized negotiations to offer, accept or reject a contract.
    - jsprogrammer 11y ago
      Uber drivers don't even have the opportunity to negotiate a contract. The situations are not even comparable.
      - sageikosa 11y ago
        Huh? I can negotiate a salary, that doesn't make me a contractor. A separate haggling phase of a contract is not necessary for a contract to have legal force. It's the agreement to the letter of the contract.
        jsprogrammer 11y ago
        Yes, you can still have a "contract", but the driver and rider either accept or reject a prewritten, third-party contract. The driver cannot negotiate directly with the rider as you would expect an independent contractor to be able to do.
ahallock 11y ago
What if I don't want to be an employee? What if I like setting my own hours? Seems like there's a lack of empathy on some accounts to force everyone into one category.
- benten10 11y ago
  A lot of workplaces do allow you to be an employee and have your own hours.
- pc86 11y ago
  Since being an employee v. a contractor is largely a tax concern, it's not necessarily your decision.
- gutnor 11y ago
  I guess it is a question of power. An IT Contractor for example, may be tied to a specific client and the client may have strict requirement, but actually enjoy the same flexibility as the company as he can leave and reasonably assume he can be contracted somewhere else, or work on its own. On the other hand, if McDo was to label all its employee contractor, most of them are tied to that specific employment and don't have actual flexibility. I guess the contractor / employee law is meant to protect #2, but can catch #1 as a side effect. So whenever you say "I don't want to be an employee" you most likely in position #1, while people in the other group simply would say "I can't be an employee". That said, I have no idea what status Uber driver really should have. As taxi driver, I guess they have a variety of option for revenues and are only tied to Uber because Uber is a good source of work rather than being dominated by Uber ?
SilasX 11y ago
But what is the relevant "duck" here? What actual dynamic is the law trying to enforce? Any good law tries to align individual incentives with a social optimum, and I don't see how it's doing that here. As best I can tell, employment law is trying to achieve the goal of "to the extent that you make a person economically dependent on you in the short term, you must provide that person some benefits that make up for that dependence". Hence why contractors get treated one way and employees another. But then the law goes about it the wrong way by having a sharp discontinuity that encourages employers to make the relationship such that they get all of the advantages of such dependence, but stay just on the side of "you're still a contractor". For example, as it stands now, employers strengthen their case by making the worker bring their own tools. A sane law would be more continuous: as you introduce more dependence of the worker on you, you most provide increasingly more benefits to cancel the problem that introduces. Though I admit that would involve a huge refactoring. Trying to resolve whether someone "is" a contractor is (in the grander scheme) asking the wrong question, like debating whether alcoholism "is" a disease (cf Scott Alexander's "non central fallacy" or "worst argument in the world").
hwstar 11y ago
Yes, and this will only get passed by the legislatures of red states.
forrestthewoods 11y ago
Drivers are like employees in someways and contractors in someways. We currently have square holes and round holes. Drivers are hexagons and don't match either. Forcing them into either hole will have negative consequences.
pkaye 11y ago
I never understood why Uber didn't make all their employees (developers, marketing, sales) become contractors so they can save of all the additional costs.
- jsprogrammer 11y ago
  What would Uber be then? Just a holding company that everyone dumps their money in to? Why would anyone do that?
  - pkaye 11y ago
    Then a bulk of the value will go to the investors.
    - jsprogrammer 11y ago
      Bulk of whatever value exists. My point is that there probably will be no value for the investors to extract as none of the people who do the actual work would stand for such a structure for long. It would be trivial to introduce an organization that performs the same function, but which distributes all accumulated value to those performing the actions of the organization. Such an organization would have no use for investors who exist solely to take value out of the organization.
- dalke 11y ago
  Because they might be liable for fines if the IRS determines that is a misclassification. See https://en.wikipedia.org/wiki/Misclassification_of_employees_as_independent_contractors https://en.wikipedia.org/wiki/Misclassification_of_employees... with the misclassification at Microsoft ( https://en.wikipedia.org/wiki/Permatemp#IRS_tax_rulings https://en.wikipedia.org/wiki/Permatemp#IRS_tax_rulings ) as a well-known example.
  - pkaye 11y ago
    They can just get the state to pass laws to allow it...
xixi77 11y ago
Similar schemes have been used in e.g. trucking for years; I am not sure what you think is the substantial difference between an Uber driver and a truck owner-operator, but it's far from obvious and very far from inevitable.
awqrre 11y ago
Do you have any disclosure to make? are you involved with the taxi industry for example?

by gergles 11y ago

geogra4 11y ago

Yeah -- I see this not going very far as the states don't really have control over this.

fweespeech 11y ago

> I don't really understand how a state law declaring something as so can have any relevant effect on federal determinations of employee/contractor status 1) It causes the state tax boards to go along with it so Uber can focus its legal resources on when it gets dragged into Federal court. 2) If it becomes "usual and customary" in enough states a Republican congress might be willing to pass a bill to back it.

shams93 11y ago

Yeah if you think of it from the perspective of the federal IRS I bet they are getting nervous about so much of the economy going freelance.As an employee Im a sitting duck for the tax man, as a contractor with my own business my income is far less preductabke however the IRS inevitably and legally gets a much smaller piece of my pie.

asift 11y ago
How do they legally get less of your money? Unless you are engaging in some type of tax fraud, this really isn't true.
- gozur88 11y ago
  I think he's assuming the government will have a much harder time proving undeclared income. Probably not true in Uber's case, but contractors are pretty notorious for giving generous cash discounts.
dangrossman 11y ago
For the same job making the same income, you'll typically pay more taxes as a contractor than as an employee. You'll pay 100% of your SS/medicare taxes via the self-employment tax, where previously your employer was paying 50% of it for you. The income tax brackets are the same. You can deduct business expenses, but so could your employer, so the IRS isn't missing out on anything.
- 15155 11y ago
  Sure, but it's substantially more expensive to administer and enforce tax on a company than an individual filing a simple 1040. The withholdings system exists to make it easier to collect.

morgante 11y ago

> the drivers are employees by any sort of logical duck test I strongly disagree and think this is very open for debate. Drivers set their own hours and use their own equipment. They can even simultaneously use another app (ex. Lyft). I really don't see how it constitutes an employment relationship. In fact, it seems to match all the typical characteristics of contractors.

venomsnake 11y ago
A good test - if the contracts are negotiated individually for all drivers - they are contractors. If it is take or leave with 1000s more like you - you are employee. If you have no bargaining power - you are not a contractor IMO.
- sageikosa 11y ago
  Or...more likely...you are a contractor offering a commodity service in a market with ample supply. There's no requirement to go into lengthy or customized negotiations to offer, accept or reject a contract.
  - jsprogrammer 11y ago
    Uber drivers don't even have the opportunity to negotiate a contract. The situations are not even comparable.
    - sageikosa 11y ago
      Huh? I can negotiate a salary, that doesn't make me a contractor. A separate haggling phase of a contract is not necessary for a contract to have legal force. It's the agreement to the letter of the contract.
      - jsprogrammer 11y ago
        Yes, you can still have a "contract", but the driver and rider either accept or reject a prewritten, third-party contract. The driver cannot negotiate directly with the rider as you would expect an independent contractor to be able to do.

ahallock 11y ago

What if I don't want to be an employee? What if I like setting my own hours? Seems like there's a lack of empathy on some accounts to force everyone into one category.

benten10 11y ago
A lot of workplaces do allow you to be an employee and have your own hours.
pc86 11y ago
Since being an employee v. a contractor is largely a tax concern, it's not necessarily your decision.
gutnor 11y ago
I guess it is a question of power. An IT Contractor for example, may be tied to a specific client and the client may have strict requirement, but actually enjoy the same flexibility as the company as he can leave and reasonably assume he can be contracted somewhere else, or work on its own. On the other hand, if McDo was to label all its employee contractor, most of them are tied to that specific employment and don't have actual flexibility. I guess the contractor / employee law is meant to protect #2, but can catch #1 as a side effect. So whenever you say "I don't want to be an employee" you most likely in position #1, while people in the other group simply would say "I can't be an employee". That said, I have no idea what status Uber driver really should have. As taxi driver, I guess they have a variety of option for revenues and are only tied to Uber because Uber is a good source of work rather than being dominated by Uber ?

SilasX 11y ago

But what is the relevant "duck" here? What actual dynamic is the law trying to enforce? Any good law tries to align individual incentives with a social optimum, and I don't see how it's doing that here. As best I can tell, employment law is trying to achieve the goal of "to the extent that you make a person economically dependent on you in the short term, you must provide that person some benefits that make up for that dependence". Hence why contractors get treated one way and employees another. But then the law goes about it the wrong way by having a sharp discontinuity that encourages employers to make the relationship such that they get all of the advantages of such dependence, but stay just on the side of "you're still a contractor". For example, as it stands now, employers strengthen their case by making the worker bring their own tools. A sane law would be more continuous: as you introduce more dependence of the worker on you, you most provide increasingly more benefits to cancel the problem that introduces. Though I admit that would involve a huge refactoring. Trying to resolve whether someone "is" a contractor is (in the grander scheme) asking the wrong question, like debating whether alcoholism "is" a disease (cf Scott Alexander's "non central fallacy" or "worst argument in the world").

hwstar 11y ago

Yes, and this will only get passed by the legislatures of red states.

forrestthewoods 11y ago

Drivers are like employees in someways and contractors in someways. We currently have square holes and round holes. Drivers are hexagons and don't match either. Forcing them into either hole will have negative consequences.

pkaye 11y ago

I never understood why Uber didn't make all their employees (developers, marketing, sales) become contractors so they can save of all the additional costs.

jsprogrammer 11y ago
What would Uber be then? Just a holding company that everyone dumps their money in to? Why would anyone do that?
- pkaye 11y ago
  Then a bulk of the value will go to the investors.
  - jsprogrammer 11y ago
    Bulk of whatever value exists. My point is that there probably will be no value for the investors to extract as none of the people who do the actual work would stand for such a structure for long. It would be trivial to introduce an organization that performs the same function, but which distributes all accumulated value to those performing the actions of the organization. Such an organization would have no use for investors who exist solely to take value out of the organization.
dalke 11y ago
Because they might be liable for fines if the IRS determines that is a misclassification. See https://en.wikipedia.org/wiki/Misclassification_of_employees_as_independent_contractors https://en.wikipedia.org/wiki/Misclassification_of_employees... with the misclassification at Microsoft ( https://en.wikipedia.org/wiki/Permatemp#IRS_tax_rulings https://en.wikipedia.org/wiki/Permatemp#IRS_tax_rulings ) as a well-known example.
- pkaye 11y ago
  They can just get the state to pass laws to allow it...

xixi77 11y ago

Similar schemes have been used in e.g. trucking for years; I am not sure what you think is the substantial difference between an Uber driver and a truck owner-operator, but it's far from obvious and very far from inevitable.

awqrre 11y ago

Do you have any disclosure to make? are you involved with the taxi industry for example?