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California is cracking down on the gig economy

264 points by luu 7y ago

tomohawk 7y ago
In the 80s IBM got the federal law changed so that tech workers no longer had a safe harbor provision to be 1099s. They wanted to pay less for the workers, and they got their wish. The take home for tech workers dropped a lot. You have to wonder what the big interest is that is pushing this puff piece from vox. This law will have an overall negative impact on people who want to work independently and take care of their own stuff. Here's how its already impacting freelance journalists: https://www.cjr.org/united_states_project/california-freelancer-dynamex.php https://www.cjr.org/united_states_project/california-freelan... We're not talking about slave labor here. It's a consensual relationship. If I want to be a 1099 and be more independent, I'm not sure what the state's interest is here.
- imagetic 7y ago
  I fall under this umbrella, as I do journalism, media and TV production work. It looks as if it will have a HUGE impact. But to be honest, I don't think many of the freelancers/contractors really understand any of the fine print. I barely do.
LanceMan 7y ago
This, along with the need to offset $1B operating losses will severely cripple Uber. I enjoy the convenience of using an Uber to get around town but afraid these coming actions will raise prices significantly.
huffmsa 7y ago
Ah yes, legislation from a "helpful government" which will ultimately drive companies which depend on quasi-contractors to develop their robot replacements at an accelerated rate. Classic political short-sightedness.
- entropea 7y ago
  Your FUD is basically saying "I approve of major exploitation". Robots are coming, but not any time really soon. Autonomous vehicles are not a current threat in the slightest, might as well make drivers lives better at the expense of a corporation who's executives and corporate employee's will do just great. Remove the drivers, Uber doesn't have a business. Their drivers are the most important thing to them.
ravenstine 7y ago
This last year, I drove for GrubHub for about 6 months in order to pay rent while trying to build a business as well as do web development contract work(I'm now employed full time). The whole time, I was active in various gig economy subreddits. There are some people out there who only want to drive for companies like GrubHub, but most of the drivers are people who already have jobs and are using the gig as supplementary income. The topic has come up before in these communities about whether they want to be employees or contractors. At the end of the day, most people want to stay contractors because they already have other jobs and want to make some extra cash during their off hours and weekends, and being an employee would actually mean being their GrubHub's bitch because then they could be told that they can't refuse to pick up orders that are too far away. While I do see the argument that businesses shouldn't be using contractors as a replacement for employees, unless we solve the problem of stagnating wages, doing so will take away a lot of needed extra income from people who don't feel wronged by these companies.
- e40 7y ago
  If you have another job, you have benefits, right? If you don't have another job, being an employee and getting benefits (e.g., health insurance) would be a huge deal.
  - lotsofpulp 7y ago
    Not all jobs offer benefits, and not all benefits are worth much.
  - jlawson 7y ago
    The real issue here is the struture of the US healthcare system, which massively penalizes the provision of healthcare as part of any plan besides benefits from a job. We should have either a heavily government-subsidized user-pay system like Japan, or a real open market without the absurd straitjacket or US healthcare market regulations. With needs-based welfare in both cases. If the medical part of the economy wasn't so ridiculously wrongly regulated, it wouldn't be so distorting the rather academic difference between "contractor" and "employee".
ravenstine 7y ago
> The California bill, known as AB5, expands a groundbreaking California Supreme Court decision last year known as Dynamex. The ruling and the bill instruct businesses to use the so-called “ABC test” to figure out whether a worker is an employee. To hire an independent contractor, businesses must prove that the worker (a) is free from the company’s control, (b) is doing work that isn’t central to the company’s business, and (c) has an independent business in that industry. If they don’t meet all three of those conditions, then they have to be classified as employees. What does this mean for engineers who are independent contractors in California? It's arguable that an engineer would likely be working on something that is central to a company's business, and whether said engineer has an "independent business" in their industry.
- e40 7y ago
  I think it's clear it will cause a lot of contractors in the software industry to be reclassified as employees. To me, the real test is what will happen is this passes. Will it move hiring to other states and offshore? I'm in CA and I haven't hired someone from CA in a long time. Poland and Ukraine are the main places. The last 3 candidates wanted more than the CEO makes. We're small and can't afford Bay Area salaries.
  - ravenstine 7y ago
    That's an interesting angle I didn't think of. As someone who lives in California and has gotten to where they are now through various forms of contract work, I feel like this bill is potentially a bad idea, but I can see how it can also shift the "balance of power", if you will, away from California, which would probably be a good thing for the rest of world. Still, I'm not a fan of losing more freedom, which is what my state government is seemingly doing. If I couldn't work as a contractor this last year, I don't know if I could have made ends meet in one of the country's most expensive cities and have the time to get hired making 6 figures as a software engineer. Maybe, but I imagine it would have been more difficult. When I was driving for GrubHub, I was making about $17.50 per hour after tax, and the faster I was, the more I would make in cash tips. Not having the freedom to work when I want and only take the delivery orders I wanted probably would have meant flipping burgers for $11 an hour(minimum wage) pre-tax and having to work the hours dictated to me. That's if I could even get said minimum wage job, given that even when I was a college student employers would refuse me because I was "overqualified". Either I would have had to stick to a job I didn't care for and not take a shot at starting a business, or I would have spent months or years trying to get on my feet on minimum wage without having as much time to do interviews and coding challenges.
pascalxus 7y ago
Consumers, make no mistake, This will drive up costs of using uber just like everything else in CA And it will reduce the # of uber driver demand / work pool
- entropea 7y ago
  >Consumers, make no mistake, This will drive up costs of using uber just like everything else in CA. Excellent. Consumers should be paying more for these things so that drivers have benefits and good pay. Solidarity with your fellow American worker. I personally leave huge tips and 5/5 stars no matter what unless I almost physically die or am assaulted. I know they aren't making great money and some probably live in their cars. I don't use them unless it's a non-medical emergency though. "We the people"
  - whiddershins 7y ago
    “I don’t use them unless it is a non-medical emergency.” I think the drivers would like it if you used it more, not less, because then they would make more money.
    - pishpash 7y ago
      "I leave a large tip only in a non-medical emergency." lol
zaroth 7y ago
> That small status change is huge. These workers would suddenly get labor protections and benefits that all employees get, such as unemployment insurance, health care subsidies, paid parental leave, overtime pay, workers’ compensation, and a guaranteed $12 minimum hourly wage. That’s an pretty optimistic take on the situation. What these new “employees” are going to get, is fired. I know some people are OK with that, if the task isn’t profitable enough to pay a human full benefits to work on it, then it’s not profitable enough to employ a human to do it at all. But there’s a lot of space to integrate under the employment curve for these types of super-low-skill jobs that people mostly use to fill in the gaps in their earnings. I think ultimately this does a huge disservice to the people who worked these gigs to earn some extra money, because it will no longer be possible to do that. What will be left is full-time workers in these roles who have no other choice, who probably have a significantly shittier work experience doing jobs or working hours they previously would have passed on. Which honestly is sad, because there is little to no advancement opportunity, so this is not supposed to be a career, and you’ve taken away the option for all these low friction ways to make up a financial gap that might come up one month to the next. If someone finds themselves struggling to pay rent next week and they know they’ll be facing an eviction notice in 10 days, today they can jump on any number of apps and make up that couple hundred dollar shortfall. That’s not going to be possible if they’re classified as an employee.
- entropea 7y ago
  This is always the right wing take on this, that they're going to get fired, create fear, uncertainty, doubt, and inject that right into others minds, repeat for the next issue that helps anyone except for a corporation. That FUD works really well on the general public too. Surely Uber wants to do business and make money in one of the worlds largest economies, California, right? Why would they fire all of their employees? It makes absolutely no sense. Surely they will adapt, AI cars are not currently a threat, drivers will still be needed and hired. When Seattle raised it's minimum wage to $15/hr the same FUD was being pushed, that all restaurants would fire all of their employee's, that Seattle would become literal hell and the local economy would crash. Didn't happen and restaurants now enjoy one of the top markets in the USA.
manfredo 7y ago
Increasing benefits and worker protections also increases the cost of hiring employees. This is widely understood. In countries where employees have extensive benefits and protections like France, employers are very picky about which employees they hire because it will be difficult or expensive to fire them if they turn out to be poor workers. Hence, and unemployment rate over twice that of the US. The ease of entering and exiting the gig economy is one of its most valuable aspects. What other kinds of jobs can you set your own hours, and join and quit largely at whim? If Uber, Lyft, DoorDash, etc. all now have to consider their contractors employees then they will have to start setting hours. If they have to give their workers the same benefits as employees, then it will be financially unsustainable to let them set their own hours. People who depended on Uber for flexible employment will not be able to continue working. This seems like political posturing that's going to hurt the majority of employees if it passes.
- Leszek 7y ago
  Germany has similar workers' rights and protection from firing, yet it has a lower unemployment rate.
  - mseidl 7y ago
    Plus in Germany, you have what's called a probezeit, or probationary time. It can't be longer than one year, but it's a time where either party can end the work contract if it's not working out.
    - deleted 7y ago
      [deleted]
  - erikpukinskis 7y ago
    Don’t German companies penalize you for quitting sometimes?
  - manfredo 7y ago
    Its still easier to fire employees in Germany than in France from what I understand. Germany also has also averaged roughly half the yearly population growth rate as compared to France for the last several decades (even dipping into the negatives for several years). So the supply of labor is more constrained.
asicsp 7y ago
seems like same topic as https://news.ycombinator.com/item?id=20065910 https://news.ycombinator.com/item?id=20065910
egypturnash 7y ago
From TFA: Uber would likely have to reclassify tens of thousands of drivers in California as employees — something Uber drivers have been fighting for in court, unsuccessfully, for years. "Fighting for in court" links to https://www.vox.com/2019/5/8/18535367/uber-drivers-strike-2019-cities https://www.vox.com/2019/5/8/18535367/uber-drivers-strike-20... - which includes these choice paragraphs: It’s worth reemphasizing this: Uber doesn’t want to pay drivers to take 15-minute rest breaks every few hours because it would cost too much, even though all US employers are required to give hourly workers paid breaks under federal law. In the filing, the company says that dissatisfied drivers could become a business liability, as recent protests in India, the United Kingdom, and the United States have interrupted business on the platform. Instead of outlining ways to make drivers happy, Uber suggests it will just get worse. “As we aim to reduce driver incentives to improve our financial performance, we expect Driver dissatisfaction will generally increase,” the company stated. Sssssooo this maybe sounds like something employees who have been doing these jobs have been wanting for a while...
- manfredo 7y ago
  Drivers want it, but drivers probably don't look at Uber's finances. Ask drivers this: You would get the benefits of employees, but now you would have to work at least 40 hours a week and now those hours will be set by Uber - you will not get to choose your own hours. Do you think they'd want that situation?
  - e40 7y ago
    Benefits can be given at less than 40 hours per week. The policy of many companies is a 30 hour per week threshold for that.
  - inferiorhuman 7y ago
    now you would have to work at least 40 hours a week and now those hours will be set by Uber Why would you have to work at least 40 hours a week? There is such a thing as a part-time employee In fact most low-rung jobs try to keep employees under full-time to avoid the extra benefits that FTEs qualify for. Or, put it another way, if Uber required its drivers to work 40 hours a week and this resulted in unhappy drivers, what makes you think anyone would want to drive for Uber in the first place?
deleted 7y ago
[deleted]
dmode 7y ago
While I am sympathetic to Uber and Lyft drivers and other gig economy workers, I am wondering if anyone has the done the calculus on job losses vs. making something. And whether making something is better than being jobless. I met a Uber driver the other day who drives 5000 miles per month. Clearly that is close to exploitation. But if Uber is forced to pay drivers 100% more surely there will be fewer drivers. And many people may not have a path to make money. In addition, I have met many Uber drivers who are retired and only do few hours over the weekend for supplemental income. This sweeping bill will also take out those positions. It feels like short sighted without accounting for these edge cases. Also, what is the difference between Uber and eBay / Airbnb ? Can a seller in eBay or a host at Airbnb be considered an employee ? Essentially both eBay and Airbnb have no business without their sellers or hosts. One can claim that these are marketplaces, but the only difference between these marketplaces and Uber is that Uber sets price (according to the ABC test). Can Uber then simply skirt the law by allowing a price "opt-in" suggestion ? or even outsourcing pricing to another LLC ? Edit: just thinking more about my last point. Uber can easily let drivers set their own price and simply show the lower price range to the passenger. Will be interesting to see how that plays out
- jeremyjh 7y ago
  eBay and Airbnb sellers are using their own capital to buy and sell goods that they own. They are not selling their labor in any sense. Uber drivers use their own cars but they are primarily selling their labor.
  - entropea 7y ago
    They include the cost of all of that in their prices, at least, someone who ran a good business would. This is not comparable to Uber, because drivers do not set their own prices. I also am pretty certain Uber takes much higher percent cut than eBay and Paypal/payment processing.
  - dmode 7y ago
    Does it matter whether labor or capital is sold ? The ABC test doesn’t check for that. Uber drivers also use their own capital to buy cars. The major difference is setting prices
brianchu 7y ago
I'm coming to the view that gig workers are neither employees nor independent contractors. Employees don't get to unilaterally set their own hours, and contractors don't get prices unilaterally dictated to them or barred from their profession if their rating falls too low. All this regulatory squabbling is arguing over whether a square peg fits a round hole or fits a triangular hole. We need a third classification for gig workers that affords them some protections while preserving the economic viability of ridesharing companies. Disregarding any problems we might have with specific companies, I think ridesharing companies are a benefit to consumers.
- cycomanic 7y ago
  Just because somethin has a benefit to the consumer does not mean we should keep it a viable business model, otherwise we should also allow slave labor. Moreover, while there might be an immediate benefit to consumers, as the article notes it might as well be detrimental overall, because it increases costs for everyone. The only people who are really benefiting are the large shareholders.
  - humanrebar 7y ago
    You are correct that some business models are inherently bad. Ones that require violence like slavery or fraud like Ponzi schemes especially. But I don't care for California to make sure privately hired cars are theoretically X% cheaper. If there are protections that are needed for drivers so their net income is more obvious or something, let's do that.
  - bko 7y ago
    > Just because somethin has a benefit to the consumer does not mean we should keep it a viable business model, otherwise we should also allow slave labor. How could you compare someone voluntarily engaging in employment to slave labor? > well be detrimental overall, because it increases costs for everyone. I don't buy it. The math that claims that these designations cost taxpayers is naive. As though applying additional costs to the employers would somehow just generate wealth and tax revenue from nowhere. The money would come from somewhere (consumers and gig workers), and would result in less business as an artificially higher price would scale back quantity demanded. > The only people who are really benefiting are the large shareholders. Most of these businesses are losing a lot of money. They're not fleecing anyone. It might not be viable by any means but increasing the costs arbitrarily would decrease their chances. It's important to remember that most of these gig workers work these jobs because they prefer them over any other job available to them. So removing options for them is unlikely to benefit them.
dnautics 7y ago
Just charge drivers $1/day to use the platform and now they aren't contractors, they're customers.
- esolyt 7y ago
  Even better, categorize your app as a game. Now they're players. Pokémon Go players don't even get paid, yet they drive from pokestop to pokestop just to earn virtual items.
  - antisemiotic 7y ago
    By default you get 5 uses of GPS per day, for more than that use in-app purchases. Also try our lootbox for a chance at winning fancy avatars to display near your name!
- didibus 7y ago
  Actually, this might happen in the future. You could totally see it as, any independent person who want to offer rides as a service might need a platform for it. And if Uber offers itself more as a marketplace, this could make sense. Pay Uber a fixed price to be on the app, or have them take a percentage, and be routed through calls, but set your own prices for the rides. I'm surprised there isn't an Uber like app that operates this way yet actually.
pishpash 7y ago
I see that Vox is hyperventilating again.
CryptoPunk 7y ago
The people I see working gig economy jobs seem to come from diverse socioeconomic backgrounds, ranging from people with new Teslas to those who look like they are on the margins of society. With respect to the latter, these are people who I don't see in any other occupation. I assume the reason they work these jobs is that they cannot get traditional jobs which generally have higher barriers-to-entry due to higher guaranteed wages and more benefits. If gig economy jobs are made to be more like other jobs, then the same barriers to entry are going to emerge. It's the very low-cost nature of providing these jobs that makes them accessible to those at the lower end of the skill scale. Th US has actually seen wages for low-skilled workers grow very quickly over the last couple of years and perhaps it is not a coincidence that it has been over the last couple of years when the number of gig economy jobs has grown to become a significant portion of the total job market. Basic economy theory dictates that increasing the sources of demand for low-skilled labor will increase wages for low-skilled labor. That's why gig economy jobs shouldn't be prohibited.
- JMTQp8lwXL 7y ago
  I've never been picked up by a Tesla when requesting Uber or Lyft rides.
  - cardiffspaceman 7y ago
    It might happen if you change your preferences in the app, but then you'd be paying a higher fare. I usually use Uber for "occasions" and I wouldn't be surprised by a model X or model S. Usually it's an Escalade or similar.
whiddershins 7y ago
It would be interesting if I could see someone do the math on where all the money (for example) Uber would need to pay as a result of this actually goes. How much of a bill like this is actually the government looking to increase revenue, and how much of it would ultimately benefit pole dancers? Uber drivers are a particularly weird case because there is no way to really stop them from working for Lyft at the same time ... so they are supposed to get a guaranteed minimum wage? From each ride service they drive for?
- pishpash 7y ago
  And what is minimum wage? When are they actually "working", especially if they are working multiple gigs at the same time? Dumb grandstanding lawmakers did not think about these.
lostmymind66 7y ago
This will most likely result in a loss of many jobs. If Uber/Lyft is going to be forced to reclassify contractors as employees, there will be stricter guidelines on who will actually be able to work for them (which means less people working for them), because the company simply will not be able to afford to pay insurance and a higher wage for everyone and anyone that wants to drive for them. Everyone has a choice: You can choose to work for Uber/Lyft and make extra money or get a job somewhere else that provides benefits and a higher wage. There is no scam going on and everyone is trying to make a buck. I see no problem with classifying the drivers as contractors.
sidlls 7y ago
I don't understand the implications of the second item in the test: "doing work that isn’t central to the company’s business." How does this apply to business-to-business contracting arrangements, especially in the world of software engineering? Businesses hire contract labor from vendors all the time--are those laborers to be considered employees of both the vendor and hiring company now?
- CydeWeys 7y ago
  In most B2B contracting arrangements, the contractors are full-time employees of the contracting firm, and get their benefits from that company. (This was my first job out of college.)
  - sidlls 7y ago
    Yes; I've done this myself. It's also not uncommon for individuals to contract themselves out through a shell corporation. The test as indicated in the article doesn't say anything about this kind of B2B arrangement, though. Why wouldn't this law apply to individuals in this case?
    - CydeWeys 7y ago
      The law is about classifying individual contractors as employees. It's not going to re-classify employees of one company as employees of another.
whiddershins 7y ago
I just don’t understand who is being protected here. When I talk to people doing these jobs they are glad to have them, and don’t have a problem with the terms. They like the flexibility and many are doing them as a stepping stone to the next thing. If an Uber ride becomes more expensive, how does that benefit an elderly person living on social security who can’t walk well and has to get across town?
- conanbatt 7y ago
  The marxists that believe any money taken from a corporation is recuperating the thievery of labor surplus.
hawkOne 7y ago
Good news for workers
ddffre 7y ago
Then what's the point if gig economy? With these laws it won't be profitable for those companies to run their business.
- mseidl 7y ago
  Well Uber has not been profitable for 10 years. So, changing the laws will make it worse. But uber is horrible anyway.
  - ddffre 7y ago
    Yeah Uber is quite terrible, they are aiming for the autonomous taxis, that's where they might start being profitable. But the delivery companies, and the scooter companies that pay people to charge the scooters. Overall the gig economy is the future, we shouldn't harm it because of greed.
cheerlessbog 7y ago
I totally get the negative consequences of gig jobs: no benefits, security and so forth. But whenever I take an Uber or Lyft (maybe 100 in the US and UK) I ask the driver how they feel about the job. Almost all of them are happy with it - some gripe about the pay but they like the flexibility. It's possible they aren't thinking far enough ahead - and I'm talking to the self selected group who didn't get a disabling injury or illness and fall into poverty.
- sgillen 7y ago
  I think people in general want to put up a positive persona up. I think most people (certainly not all) aren’t going to tell strangers how awful their job is, even if they think that.
  - Zak 7y ago
    I have a couple of friends who have driven for Uber and found it to be a positive experience. It's not very many peoples' dream job, but it's a way to make money with a fairly low barrier to entry for anyone who already has a suitable car. It offers a lot more flexibility than, for example a retail or restaurant job.
- ilaksh 7y ago
  What is that supposed to mean, "they aren't thinking far enough ahead"? Are you trying to say that since Uber drivers didn't complain about a lack of benefits or lay out their ten year plan for a stranger that it's evidence that they "can't think ahead" and plan to be an Uber driver forever?
  - cheerlessbog 7y ago
    I'm saying they may not have thought through what they will do in the case of sudden debilitating illness. Most of us don't.
    - ilaksh 7y ago
      Of course they thought it through. They just don't get health insurance. The choice was between having an income with no health insurance and having no income. It's not easy to get work.
jquery 7y ago
We finally have the closest thing to a guaranteed jobs program that's ever existed in the USA, and California (and New York) wants to destroy it? This is disgusting. If I want to drive for Uber, all I have to do is pass a background check. When I want to drive for them, all I have to do is turn on an app. When I'm done, I turn off the app. I can work whenever I feel like it. Very low stress! I get wanting to "protect" workers but this ain't it. I want Uber/Uber-like things to exist so I can earn a few dollars here and there if I need to. Ugh, sorry, this makes me so angry and other people have been much more eloquent on the subject.
aiisjustanif 7y ago
Why don't we start with extending some employee coverage to 1099? Like just one thing healthcare, and idk car insurance for Uber/Lyft and then see how it goes. Sounds better than dealing with extremes.
- imagetic 7y ago
  That sounds far more reasonable of a solution.
webninja 7y ago
“Here we are in a great economy and yet most working people have no money saved,” Caitlin Vega, legislative director for the California Labor Federation, told me. This quote from the article resounds heavily with me.
nitwit005 7y ago
I wish they would rework the laws so that being an employee or contractor mattered less. It seems we've created a perverse financial incentive to encourage this behavior of pretending everyone is a contractor.
seaghost 7y ago
Gig economy is a capitalisam at it’s worst.

264 points by luu 7y ago

In the 80s IBM got the federal law changed so that tech workers no longer had a safe harbor provision to be 1099s. They wanted to pay less for the workers, and they got their wish. The take home for tech workers dropped a lot. You have to wonder what the big interest is that is pushing this puff piece from vox. This law will have an overall negative impact on people who want to work independently and take care of their own stuff. Here's how its already impacting freelance journalists: https://www.cjr.org/united_states_project/california-freelancer-dynamex.php https://www.cjr.org/united_states_project/california-freelan... We're not talking about slave labor here. It's a consensual relationship. If I want to be a 1099 and be more independent, I'm not sure what the state's interest is here.

imagetic 7y ago
I fall under this umbrella, as I do journalism, media and TV production work. It looks as if it will have a HUGE impact. But to be honest, I don't think many of the freelancers/contractors really understand any of the fine print. I barely do.

LanceMan 7y ago

This, along with the need to offset $1B operating losses will severely cripple Uber. I enjoy the convenience of using an Uber to get around town but afraid these coming actions will raise prices significantly.

huffmsa 7y ago

Ah yes, legislation from a "helpful government" which will ultimately drive companies which depend on quasi-contractors to develop their robot replacements at an accelerated rate. Classic political short-sightedness.

entropea 7y ago
Your FUD is basically saying "I approve of major exploitation". Robots are coming, but not any time really soon. Autonomous vehicles are not a current threat in the slightest, might as well make drivers lives better at the expense of a corporation who's executives and corporate employee's will do just great. Remove the drivers, Uber doesn't have a business. Their drivers are the most important thing to them.

ravenstine 7y ago

This last year, I drove for GrubHub for about 6 months in order to pay rent while trying to build a business as well as do web development contract work(I'm now employed full time). The whole time, I was active in various gig economy subreddits. There are some people out there who only want to drive for companies like GrubHub, but most of the drivers are people who already have jobs and are using the gig as supplementary income. The topic has come up before in these communities about whether they want to be employees or contractors. At the end of the day, most people want to stay contractors because they already have other jobs and want to make some extra cash during their off hours and weekends, and being an employee would actually mean being their GrubHub's bitch because then they could be told that they can't refuse to pick up orders that are too far away. While I do see the argument that businesses shouldn't be using contractors as a replacement for employees, unless we solve the problem of stagnating wages, doing so will take away a lot of needed extra income from people who don't feel wronged by these companies.

e40 7y ago
If you have another job, you have benefits, right? If you don't have another job, being an employee and getting benefits (e.g., health insurance) would be a huge deal.
- lotsofpulp 7y ago
  Not all jobs offer benefits, and not all benefits are worth much.
- jlawson 7y ago
  The real issue here is the struture of the US healthcare system, which massively penalizes the provision of healthcare as part of any plan besides benefits from a job. We should have either a heavily government-subsidized user-pay system like Japan, or a real open market without the absurd straitjacket or US healthcare market regulations. With needs-based welfare in both cases. If the medical part of the economy wasn't so ridiculously wrongly regulated, it wouldn't be so distorting the rather academic difference between "contractor" and "employee".

ravenstine 7y ago

> The California bill, known as AB5, expands a groundbreaking California Supreme Court decision last year known as Dynamex. The ruling and the bill instruct businesses to use the so-called “ABC test” to figure out whether a worker is an employee. To hire an independent contractor, businesses must prove that the worker (a) is free from the company’s control, (b) is doing work that isn’t central to the company’s business, and (c) has an independent business in that industry. If they don’t meet all three of those conditions, then they have to be classified as employees. What does this mean for engineers who are independent contractors in California? It's arguable that an engineer would likely be working on something that is central to a company's business, and whether said engineer has an "independent business" in their industry.

e40 7y ago
I think it's clear it will cause a lot of contractors in the software industry to be reclassified as employees. To me, the real test is what will happen is this passes. Will it move hiring to other states and offshore? I'm in CA and I haven't hired someone from CA in a long time. Poland and Ukraine are the main places. The last 3 candidates wanted more than the CEO makes. We're small and can't afford Bay Area salaries.
- ravenstine 7y ago
  That's an interesting angle I didn't think of. As someone who lives in California and has gotten to where they are now through various forms of contract work, I feel like this bill is potentially a bad idea, but I can see how it can also shift the "balance of power", if you will, away from California, which would probably be a good thing for the rest of world. Still, I'm not a fan of losing more freedom, which is what my state government is seemingly doing. If I couldn't work as a contractor this last year, I don't know if I could have made ends meet in one of the country's most expensive cities and have the time to get hired making 6 figures as a software engineer. Maybe, but I imagine it would have been more difficult. When I was driving for GrubHub, I was making about $17.50 per hour after tax, and the faster I was, the more I would make in cash tips. Not having the freedom to work when I want and only take the delivery orders I wanted probably would have meant flipping burgers for $11 an hour(minimum wage) pre-tax and having to work the hours dictated to me. That's if I could even get said minimum wage job, given that even when I was a college student employers would refuse me because I was "overqualified". Either I would have had to stick to a job I didn't care for and not take a shot at starting a business, or I would have spent months or years trying to get on my feet on minimum wage without having as much time to do interviews and coding challenges.

pascalxus 7y ago

Consumers, make no mistake, This will drive up costs of using uber just like everything else in CA And it will reduce the # of uber driver demand / work pool

entropea 7y ago
>Consumers, make no mistake, This will drive up costs of using uber just like everything else in CA. Excellent. Consumers should be paying more for these things so that drivers have benefits and good pay. Solidarity with your fellow American worker. I personally leave huge tips and 5/5 stars no matter what unless I almost physically die or am assaulted. I know they aren't making great money and some probably live in their cars. I don't use them unless it's a non-medical emergency though. "We the people"
- whiddershins 7y ago
  “I don’t use them unless it is a non-medical emergency.” I think the drivers would like it if you used it more, not less, because then they would make more money.
  - pishpash 7y ago
    "I leave a large tip only in a non-medical emergency." lol

zaroth 7y ago

> That small status change is huge. These workers would suddenly get labor protections and benefits that all employees get, such as unemployment insurance, health care subsidies, paid parental leave, overtime pay, workers’ compensation, and a guaranteed $12 minimum hourly wage. That’s an pretty optimistic take on the situation. What these new “employees” are going to get, is fired. I know some people are OK with that, if the task isn’t profitable enough to pay a human full benefits to work on it, then it’s not profitable enough to employ a human to do it at all. But there’s a lot of space to integrate under the employment curve for these types of super-low-skill jobs that people mostly use to fill in the gaps in their earnings. I think ultimately this does a huge disservice to the people who worked these gigs to earn some extra money, because it will no longer be possible to do that. What will be left is full-time workers in these roles who have no other choice, who probably have a significantly shittier work experience doing jobs or working hours they previously would have passed on. Which honestly is sad, because there is little to no advancement opportunity, so this is not supposed to be a career, and you’ve taken away the option for all these low friction ways to make up a financial gap that might come up one month to the next. If someone finds themselves struggling to pay rent next week and they know they’ll be facing an eviction notice in 10 days, today they can jump on any number of apps and make up that couple hundred dollar shortfall. That’s not going to be possible if they’re classified as an employee.

entropea 7y ago
This is always the right wing take on this, that they're going to get fired, create fear, uncertainty, doubt, and inject that right into others minds, repeat for the next issue that helps anyone except for a corporation. That FUD works really well on the general public too. Surely Uber wants to do business and make money in one of the worlds largest economies, California, right? Why would they fire all of their employees? It makes absolutely no sense. Surely they will adapt, AI cars are not currently a threat, drivers will still be needed and hired. When Seattle raised it's minimum wage to $15/hr the same FUD was being pushed, that all restaurants would fire all of their employee's, that Seattle would become literal hell and the local economy would crash. Didn't happen and restaurants now enjoy one of the top markets in the USA.

manfredo 7y ago

Increasing benefits and worker protections also increases the cost of hiring employees. This is widely understood. In countries where employees have extensive benefits and protections like France, employers are very picky about which employees they hire because it will be difficult or expensive to fire them if they turn out to be poor workers. Hence, and unemployment rate over twice that of the US. The ease of entering and exiting the gig economy is one of its most valuable aspects. What other kinds of jobs can you set your own hours, and join and quit largely at whim? If Uber, Lyft, DoorDash, etc. all now have to consider their contractors employees then they will have to start setting hours. If they have to give their workers the same benefits as employees, then it will be financially unsustainable to let them set their own hours. People who depended on Uber for flexible employment will not be able to continue working. This seems like political posturing that's going to hurt the majority of employees if it passes.

Leszek 7y ago
Germany has similar workers' rights and protection from firing, yet it has a lower unemployment rate.
- mseidl 7y ago
  Plus in Germany, you have what's called a probezeit, or probationary time. It can't be longer than one year, but it's a time where either party can end the work contract if it's not working out.
  - deleted 7y ago
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- erikpukinskis 7y ago
  Don’t German companies penalize you for quitting sometimes?
- manfredo 7y ago
  Its still easier to fire employees in Germany than in France from what I understand. Germany also has also averaged roughly half the yearly population growth rate as compared to France for the last several decades (even dipping into the negatives for several years). So the supply of labor is more constrained.

asicsp 7y ago

seems like same topic as https://news.ycombinator.com/item?id=20065910 https://news.ycombinator.com/item?id=20065910

egypturnash 7y ago

From TFA: Uber would likely have to reclassify tens of thousands of drivers in California as employees — something Uber drivers have been fighting for in court, unsuccessfully, for years. "Fighting for in court" links to https://www.vox.com/2019/5/8/18535367/uber-drivers-strike-2019-cities https://www.vox.com/2019/5/8/18535367/uber-drivers-strike-20... - which includes these choice paragraphs: It’s worth reemphasizing this: Uber doesn’t want to pay drivers to take 15-minute rest breaks every few hours because it would cost too much, even though all US employers are required to give hourly workers paid breaks under federal law. In the filing, the company says that dissatisfied drivers could become a business liability, as recent protests in India, the United Kingdom, and the United States have interrupted business on the platform. Instead of outlining ways to make drivers happy, Uber suggests it will just get worse. “As we aim to reduce driver incentives to improve our financial performance, we expect Driver dissatisfaction will generally increase,” the company stated. Sssssooo this maybe sounds like something employees who have been doing these jobs have been wanting for a while...

manfredo 7y ago
Drivers want it, but drivers probably don't look at Uber's finances. Ask drivers this: You would get the benefits of employees, but now you would have to work at least 40 hours a week and now those hours will be set by Uber - you will not get to choose your own hours. Do you think they'd want that situation?
- e40 7y ago
  Benefits can be given at less than 40 hours per week. The policy of many companies is a 30 hour per week threshold for that.
- inferiorhuman 7y ago
  now you would have to work at least 40 hours a week and now those hours will be set by Uber Why would you have to work at least 40 hours a week? There is such a thing as a part-time employee In fact most low-rung jobs try to keep employees under full-time to avoid the extra benefits that FTEs qualify for. Or, put it another way, if Uber required its drivers to work 40 hours a week and this resulted in unhappy drivers, what makes you think anyone would want to drive for Uber in the first place?

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dmode 7y ago

While I am sympathetic to Uber and Lyft drivers and other gig economy workers, I am wondering if anyone has the done the calculus on job losses vs. making something. And whether making something is better than being jobless. I met a Uber driver the other day who drives 5000 miles per month. Clearly that is close to exploitation. But if Uber is forced to pay drivers 100% more surely there will be fewer drivers. And many people may not have a path to make money. In addition, I have met many Uber drivers who are retired and only do few hours over the weekend for supplemental income. This sweeping bill will also take out those positions. It feels like short sighted without accounting for these edge cases. Also, what is the difference between Uber and eBay / Airbnb ? Can a seller in eBay or a host at Airbnb be considered an employee ? Essentially both eBay and Airbnb have no business without their sellers or hosts. One can claim that these are marketplaces, but the only difference between these marketplaces and Uber is that Uber sets price (according to the ABC test). Can Uber then simply skirt the law by allowing a price "opt-in" suggestion ? or even outsourcing pricing to another LLC ? Edit: just thinking more about my last point. Uber can easily let drivers set their own price and simply show the lower price range to the passenger. Will be interesting to see how that plays out

jeremyjh 7y ago
eBay and Airbnb sellers are using their own capital to buy and sell goods that they own. They are not selling their labor in any sense. Uber drivers use their own cars but they are primarily selling their labor.
- entropea 7y ago
  They include the cost of all of that in their prices, at least, someone who ran a good business would. This is not comparable to Uber, because drivers do not set their own prices. I also am pretty certain Uber takes much higher percent cut than eBay and Paypal/payment processing.
- dmode 7y ago
  Does it matter whether labor or capital is sold ? The ABC test doesn’t check for that. Uber drivers also use their own capital to buy cars. The major difference is setting prices

brianchu 7y ago

I'm coming to the view that gig workers are neither employees nor independent contractors. Employees don't get to unilaterally set their own hours, and contractors don't get prices unilaterally dictated to them or barred from their profession if their rating falls too low. All this regulatory squabbling is arguing over whether a square peg fits a round hole or fits a triangular hole. We need a third classification for gig workers that affords them some protections while preserving the economic viability of ridesharing companies. Disregarding any problems we might have with specific companies, I think ridesharing companies are a benefit to consumers.

cycomanic 7y ago
Just because somethin has a benefit to the consumer does not mean we should keep it a viable business model, otherwise we should also allow slave labor. Moreover, while there might be an immediate benefit to consumers, as the article notes it might as well be detrimental overall, because it increases costs for everyone. The only people who are really benefiting are the large shareholders.
- humanrebar 7y ago
  You are correct that some business models are inherently bad. Ones that require violence like slavery or fraud like Ponzi schemes especially. But I don't care for California to make sure privately hired cars are theoretically X% cheaper. If there are protections that are needed for drivers so their net income is more obvious or something, let's do that.
- bko 7y ago
  > Just because somethin has a benefit to the consumer does not mean we should keep it a viable business model, otherwise we should also allow slave labor. How could you compare someone voluntarily engaging in employment to slave labor? > well be detrimental overall, because it increases costs for everyone. I don't buy it. The math that claims that these designations cost taxpayers is naive. As though applying additional costs to the employers would somehow just generate wealth and tax revenue from nowhere. The money would come from somewhere (consumers and gig workers), and would result in less business as an artificially higher price would scale back quantity demanded. > The only people who are really benefiting are the large shareholders. Most of these businesses are losing a lot of money. They're not fleecing anyone. It might not be viable by any means but increasing the costs arbitrarily would decrease their chances. It's important to remember that most of these gig workers work these jobs because they prefer them over any other job available to them. So removing options for them is unlikely to benefit them.

dnautics 7y ago

Just charge drivers $1/day to use the platform and now they aren't contractors, they're customers.

esolyt 7y ago
Even better, categorize your app as a game. Now they're players. Pokémon Go players don't even get paid, yet they drive from pokestop to pokestop just to earn virtual items.
- antisemiotic 7y ago
  By default you get 5 uses of GPS per day, for more than that use in-app purchases. Also try our lootbox for a chance at winning fancy avatars to display near your name!
didibus 7y ago
Actually, this might happen in the future. You could totally see it as, any independent person who want to offer rides as a service might need a platform for it. And if Uber offers itself more as a marketplace, this could make sense. Pay Uber a fixed price to be on the app, or have them take a percentage, and be routed through calls, but set your own prices for the rides. I'm surprised there isn't an Uber like app that operates this way yet actually.

pishpash 7y ago

I see that Vox is hyperventilating again.

CryptoPunk 7y ago

The people I see working gig economy jobs seem to come from diverse socioeconomic backgrounds, ranging from people with new Teslas to those who look like they are on the margins of society. With respect to the latter, these are people who I don't see in any other occupation. I assume the reason they work these jobs is that they cannot get traditional jobs which generally have higher barriers-to-entry due to higher guaranteed wages and more benefits. If gig economy jobs are made to be more like other jobs, then the same barriers to entry are going to emerge. It's the very low-cost nature of providing these jobs that makes them accessible to those at the lower end of the skill scale. Th US has actually seen wages for low-skilled workers grow very quickly over the last couple of years and perhaps it is not a coincidence that it has been over the last couple of years when the number of gig economy jobs has grown to become a significant portion of the total job market. Basic economy theory dictates that increasing the sources of demand for low-skilled labor will increase wages for low-skilled labor. That's why gig economy jobs shouldn't be prohibited.

JMTQp8lwXL 7y ago
I've never been picked up by a Tesla when requesting Uber or Lyft rides.
- cardiffspaceman 7y ago
  It might happen if you change your preferences in the app, but then you'd be paying a higher fare. I usually use Uber for "occasions" and I wouldn't be surprised by a model X or model S. Usually it's an Escalade or similar.

whiddershins 7y ago

It would be interesting if I could see someone do the math on where all the money (for example) Uber would need to pay as a result of this actually goes. How much of a bill like this is actually the government looking to increase revenue, and how much of it would ultimately benefit pole dancers? Uber drivers are a particularly weird case because there is no way to really stop them from working for Lyft at the same time ... so they are supposed to get a guaranteed minimum wage? From each ride service they drive for?

pishpash 7y ago
And what is minimum wage? When are they actually "working", especially if they are working multiple gigs at the same time? Dumb grandstanding lawmakers did not think about these.

lostmymind66 7y ago

This will most likely result in a loss of many jobs. If Uber/Lyft is going to be forced to reclassify contractors as employees, there will be stricter guidelines on who will actually be able to work for them (which means less people working for them), because the company simply will not be able to afford to pay insurance and a higher wage for everyone and anyone that wants to drive for them. Everyone has a choice: You can choose to work for Uber/Lyft and make extra money or get a job somewhere else that provides benefits and a higher wage. There is no scam going on and everyone is trying to make a buck. I see no problem with classifying the drivers as contractors.

sidlls 7y ago

I don't understand the implications of the second item in the test: "doing work that isn’t central to the company’s business." How does this apply to business-to-business contracting arrangements, especially in the world of software engineering? Businesses hire contract labor from vendors all the time--are those laborers to be considered employees of both the vendor and hiring company now?

CydeWeys 7y ago
In most B2B contracting arrangements, the contractors are full-time employees of the contracting firm, and get their benefits from that company. (This was my first job out of college.)
- sidlls 7y ago
  Yes; I've done this myself. It's also not uncommon for individuals to contract themselves out through a shell corporation. The test as indicated in the article doesn't say anything about this kind of B2B arrangement, though. Why wouldn't this law apply to individuals in this case?
  - CydeWeys 7y ago
    The law is about classifying individual contractors as employees. It's not going to re-classify employees of one company as employees of another.

whiddershins 7y ago

I just don’t understand who is being protected here. When I talk to people doing these jobs they are glad to have them, and don’t have a problem with the terms. They like the flexibility and many are doing them as a stepping stone to the next thing. If an Uber ride becomes more expensive, how does that benefit an elderly person living on social security who can’t walk well and has to get across town?

conanbatt 7y ago
The marxists that believe any money taken from a corporation is recuperating the thievery of labor surplus.

hawkOne 7y ago

Good news for workers

ddffre 7y ago

Then what's the point if gig economy? With these laws it won't be profitable for those companies to run their business.

mseidl 7y ago
Well Uber has not been profitable for 10 years. So, changing the laws will make it worse. But uber is horrible anyway.
- ddffre 7y ago
  Yeah Uber is quite terrible, they are aiming for the autonomous taxis, that's where they might start being profitable. But the delivery companies, and the scooter companies that pay people to charge the scooters. Overall the gig economy is the future, we shouldn't harm it because of greed.

cheerlessbog 7y ago

I totally get the negative consequences of gig jobs: no benefits, security and so forth. But whenever I take an Uber or Lyft (maybe 100 in the US and UK) I ask the driver how they feel about the job. Almost all of them are happy with it - some gripe about the pay but they like the flexibility. It's possible they aren't thinking far enough ahead - and I'm talking to the self selected group who didn't get a disabling injury or illness and fall into poverty.

sgillen 7y ago
I think people in general want to put up a positive persona up. I think most people (certainly not all) aren’t going to tell strangers how awful their job is, even if they think that.
- Zak 7y ago
  I have a couple of friends who have driven for Uber and found it to be a positive experience. It's not very many peoples' dream job, but it's a way to make money with a fairly low barrier to entry for anyone who already has a suitable car. It offers a lot more flexibility than, for example a retail or restaurant job.
ilaksh 7y ago
What is that supposed to mean, "they aren't thinking far enough ahead"? Are you trying to say that since Uber drivers didn't complain about a lack of benefits or lay out their ten year plan for a stranger that it's evidence that they "can't think ahead" and plan to be an Uber driver forever?
- cheerlessbog 7y ago
  I'm saying they may not have thought through what they will do in the case of sudden debilitating illness. Most of us don't.
  - ilaksh 7y ago
    Of course they thought it through. They just don't get health insurance. The choice was between having an income with no health insurance and having no income. It's not easy to get work.

jquery 7y ago

We finally have the closest thing to a guaranteed jobs program that's ever existed in the USA, and California (and New York) wants to destroy it? This is disgusting. If I want to drive for Uber, all I have to do is pass a background check. When I want to drive for them, all I have to do is turn on an app. When I'm done, I turn off the app. I can work whenever I feel like it. Very low stress! I get wanting to "protect" workers but this ain't it. I want Uber/Uber-like things to exist so I can earn a few dollars here and there if I need to. Ugh, sorry, this makes me so angry and other people have been much more eloquent on the subject.

aiisjustanif 7y ago

Why don't we start with extending some employee coverage to 1099? Like just one thing healthcare, and idk car insurance for Uber/Lyft and then see how it goes. Sounds better than dealing with extremes.

imagetic 7y ago
That sounds far more reasonable of a solution.

webninja 7y ago

“Here we are in a great economy and yet most working people have no money saved,” Caitlin Vega, legislative director for the California Labor Federation, told me. This quote from the article resounds heavily with me.

nitwit005 7y ago

I wish they would rework the laws so that being an employee or contractor mattered less. It seems we've created a perverse financial incentive to encourage this behavior of pretending everyone is a contractor.

seaghost 7y ago

Gig economy is a capitalisam at it’s worst.