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Uber and Lyft ordered by California judge to classify drivers as employees

• yeswecatan 6y ago
  Interesting that Dara wrote this holier-than-thou opinion piece as this came out. I find it hard to think this is a coincidence. https://www.nytimes.com/2020/08/10/opinion/uber-ceo-dara-khosrowshahi-gig-workers-deserve-better.html https://www.nytimes.com/2020/08/10/opinion/uber-ceo-dara-kho...
• criddell 6y ago
  > Uber and Lyft say drivers prefer the flexibility of working as freelancers What would prevent Uber and Lyft from continuing to let employee drivers set their own hours?
  • bpodgursky 6y ago
    Because benefits like healthcare are gated on the number of hours worked. Uber isn't going to (and can't possibly afford to) pay healthcare for someone who drives 2 hours a week.
    • criddell 6y ago
      Sounds like something universal health care could fix. It seems crazy that access to health care is connected to your employment status.
      • munk-a 6y ago
        Yea - this is a real employment advantage up here in Canada. Due to lifetime healthcare Canadians tend to cost less in emergency procedures over their lifetime and employers don't need to worry about standard healthcare for employees (drug coverage is still a thing and WorkSafe (basically OSHA) can still end up costing a lot for on-the-job accidents though).
      • ars 6y ago
        Universal healthcare is not the only way to fix that.... You could use the existing healthcare exchange, and just give people a certain percent of their salary that can only be used to buy healthcare. Then let them buy as they choose.
        • three_seagrass 6y ago
          The difference being the employers have buying power for all their employees and can keep costs down, as opposed to individual buyers on the exchanges. The problem with switching healthcare in America is that any new system that doesn't allow Americans to think, "I've got mine, you can worry about you" is difficult. Whether that's forced exchanges where everyone pays the same or universal healthcare (where everyone pays the same).
      • alextheparrot 6y ago
        The existence of employment tied health insurance isn’t that surprising historically. Some of the first companies to offer healthcare were risky jobs where the job could cause harm and then it became more standard as a non-wage perk under wage controls enacted during the second world war. This timing also coincides with the rise of modern medicine as we know it today (Labor, eduction, and R&D intensive). The truly crazy part is that core issues with the system weren’t addressed over the last 70 or so years. Not working should not mean that I’m only able to participate in health-seeking behaviour if I’m wealthy enough to maintain my own health care coverage. Not to mention conflicts of interest, had a former classmate who’s an ER doctor tweet that he saw a patient who’s chronic condition was causing emergency healthcare needs because insurance was paying for treatment every 4 weeks when the doctor prescribed every 3.
        • three_seagrass 6y ago
          You're right. Health insurance was originally fought for by the unions, which was why they are historically provided by employers in the US. Other nations underwent similar demands from their people, but it ended up being tied to government provision, not corporation. With employee unions being neutered in the past century, and exponential privatized healthcare cost increases, you start to see broad swaths of employees go without insurance in the US, while other countries nationalized their healthcare to keep costs down and continue providing it to their people.
    • henryfjordan 6y ago
      That's not a reason why Lyft and Uber couldn't just reclassify everyone. That's a consequence of the reclassification, but that's a distinction those companies don't want to make because they'd prefer their drivers be confused. Even if you drove 2 hours a week, there's still 1 reason to prefer being an employee over a contractor: Minimum wage. Uber drivers might only make peanuts once you factor in gas, car payments, and all the time they wait between rides. At least an employee driving 2 hours a week will get a fair paycheck.
      • carlosdp 6y ago
        I highly doubt Uber or Lyft will allow an employee on their payroll to work for only 2 hours a week...
        • deleted 6y ago
          [deleted]
        • henryfjordan 6y ago
          Why not? They currently do just that...
          • twblalock 6y ago
            > Why not? They currently do just that... Right now they do that for contractors. After the drivers are reclassified as employees, things might change.
            • henryfjordan 6y ago
              Things might also stay the same. There's inertia in the current system and the drivers clearly value their flexibility. Why would things change?
              • twblalock 6y ago
                Because operating costs increased substantially because of the requirement to provide benefits to workers.
  • Cookingboy 6y ago
    Nothing, but since now they have the added cost of health insurance, minimal wage, etc, it would make more sense for them to arrange pre-set shifts for the drivers to optimize for supply/demand based on time of the day. Some drivers would like that arrangement, especially if that's their full time job. But some drivers who do this for supplemental income may not be able to meet the demand of the new fixed schedule set by Uber/Lyft.
    • munk-a 6y ago
      I think Uber & Lyft are just using flexible hours as a red-herring. They certainly can offer flexible hours to full time employees - no where does it say "Americans shalt work from nine until five so sayeth we the founders". They're just griping that they need to start paying benefits.
      • Cookingboy 6y ago
        >They certainly can offer flexible hours to full time employees - no where does it say "Americans shalt work from nine until five so sayeth we the founders". I don't think you understand how a business like this works. For a customer serving business, they need to make sure they are staffed appropriately. Would it make sense for a restaurant to offer all of their staffs "flexible hours"? Is it ok for the waiter to show up at 3am when he has trouble sleeping and just get paid doing nothing? It's not about 9-5, but it's about when the customers show up.
        • munk-a 6y ago
          Sorry, I'm really confused, how is moving from contractors to employees supposed to make covering certain periods of the day harder for uber? Normal businesses with normal benefits that hire for off-normal shifts generally pay higher for those shift slots or find an employee that values that shift higher than mid-day and employers absolutely can have an expectation of business hours and fire people for failing to meet that. They can also choose to allow their employees to work more flexible hours but this choice is entirely disconnected from contractor vs. FTE. In the service industry in particular (as you noted above) showing up to work outside of core hours isn't likely to result in any productive work - maybe that waiter could run inventory or do some prep (and actually 3 AM isn't insanely early if you get a big breakfast rush) but that's entirely disconnected from uber saying: "Darn - we wanted to give them flexible hours, but now that they're employees I guess we can't let anyone work after 5PM" that's just BS PR from the company.
  • LatteLazy 6y ago
    The same reason it doesn't work in other industries: if you pay everyone the same wage and let them pick, everyone will work the quite shifts. This is doubly true for Uber: why would I work a shift when I have to actually drive places and burn gas when I could insist on doing shifts I knew no one would use the service?
• xenospn 6y ago
  "Uber and Lyft say drivers prefer the flexibility of working as freelancers" Doesn't this lawsuit prove otherwise?
  • droidno9 6y ago
    Short answer is no. This lawsuit, and particularly this motion for preliminary injunction, was filed by the State of California--not drivers.
  • Cookingboy 6y ago
    >Doesn't this lawsuit prove otherwise? No, you can have a lawsuit for anything and from anyone. All this article suggests is that some Uber/Lyft drivers want to work as full time employees. In the case of this suit, it was filed by the California government, not drivers.
  • pacificmint 6y ago
    This lawsuit isn’t being filed by drivers, according to the article it’s being filed by “the California Attorney General Xavier Becerra, along with city attorneys of Los Angeles, San Francisco, and San Diego”. I mean drivers may or may not prefer freelancing, and certainly Uber will say whatever supports their case, but I don’t think the State suing Uber proves what drivers want in any way.
• marcrosoft 6y ago
  This is an example of regulation getting in the way of innovation again. It’s like they want the medallion taxi system again.
  • LargeWu 6y ago
    Regulation, in general, exists primarily as a response to exploitation. If drivers felt they were getting paid equitably, had fair dispute resolution, had access to benefits, etc., there wouldn't be a need for this.
    • nickff 6y ago
      The parent's point brings up the fact that the medallion system wasn't particularly beneficial to all drivers (or riders); medallions are good for medallion-holders, which are usually taxi companies.
      • Pfhreak 6y ago
        Has anyone suggested the solution to this is to make another medallion system? It seems like the OP was putting the cart before the horse.
        • marcrosoft 6y ago
          The medallion system was regulation at its worst. I’m suggesting we look to our past so we don’t repeat it.
          • three_seagrass 6y ago
            How is California enforcing it's laws a repeat of a medallion licensing system?
            • deleted 6y ago
              [deleted]
• rdgthree 6y ago
  It strikes me that these articles are always biased in the direction of the benefits of being an employee. I have several friends that actively choose to be contractors because they prefer the (legally protected) flexibility to decide their own hours, among other things. It's a personal decision, and there are upsides and downsides in both directions. Sure - some (non-insignificant) portion of Uber and Lyft drivers would like to be employees. But surely some (also non-insignificant) portion would prefer to be contractors for Uber and Lyft and keep the legal protections that come with that. These articles always make it seem like it's a no-brainer win for all drivers no matter what, but it's never seemed so clear cut to me.
  • vmception 6y ago
    You’re not missing anything. There is a populist slant to one specific outcome that doesn't factor in the populace itself. The most marginalized and desperate gain more from employment structure.
  • munk-a 6y ago
    I think the core issue as to why employeeship is favored is that those folks that want the freedom of contracting have more personal power and are less disadvantaged compared to the employer. If you are choosing to favor the flexibility of your own hours over other work benefits then you have a much more secure source of income than a lot of working Americans. I think that ensuring that those poorest off have the ability to keep themselves above water is vital - and while I think everyone should be able to better control their work-life balance we live in a society where that isn't valued, so I'm not holding my breath.
    • cycrutchfield 6y ago
      Then that is for the government to provide, not for a company to provide.
      • munk-a 6y ago
        This lawsuit was filed by the state of California - this is how the government is providing it. It might be weird (and it is really weird to look at the US) but most of your regulations seem to work by hoping people do good things and then trying to sue the bad actors enough times that everyone backs off of doing not good things. I'd love to see the US government actually step up to the healthcare plate though - especially after so many years of terrible FDA & Dept. of Edu. policies have led to widespread obesity. Personal responsibility doesn't really work as an excuse when your entire country is an outrageous outlier compared to the rest of the world - that seems more systemic.
• droidno9 6y ago
  The relevant statute:[0] 2750.3. (a) (1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied: (A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. (B) The person performs work that is outside the usual course of the hiring entity’s business. (C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. [0] https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB5 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml...
  • tick_tock_tick 6y ago
    Other than the spirt of the law being drafted to explicitly target Uber/Lyft the letter explicitly clears them.
    • shkkmo 6y ago
      The law was drafted to formalize a set of legal criteria that was established and enforced by Californian courts. The spirit of the law was not to target Uber/Lyft. The letter of the law, according to the courts so far does not appear to clear Uber in anyway. We will see how the appeal goes. Edit: I don't see how you think the letter of the law clears Uber, Uber sea to fail every part of the test. A) Uber does exert control over many aspects of how the work is performed, e.g. acceptable car models, acceptable ride acceptance rates. B) The rides provided by drivers are central to Uber's business. Uber has no business model without its drivers. C) Many drivers do drive for other companies and would pass this critiwia but some do completely different work and have not done any driving work independently from Uber. These drivers would not pass this criteria.
      • TheGeminon 6y ago
• rogerdickey 6y ago
  It seems inevitable that the government will make reactionary, uninformed decisions. The question is, how do we revert to normal (a freer market) and begin to teach those in power some basic economics lessons? I'm not hopeful that an op-ed by Uber's CEO will help. Perhaps it needs to look more like a grass-roots movement.
  • linuxftw 6y ago
    For the vast history of humanity, "Normal" was little more than serfdom or outright slavery. I'm not sure what "normal" you're actually implying, but if you're referring to the post-War era as normal, that's really just a microcosm.
  • Daishiman 6y ago
    This doesn't sound reactionary or uninformed at all. There's a decision that the benefits of stable employment are more important than flexibility. You can be free to argue whether it's better or worse bit it's not about ignorance.
• sparrish 6y ago
  I'm confused how they are violating Assembly Bill 5 (workers can generally only be considered contractors if they perform duties outside the usual course of a company’s business)? Do any employees working at Uber or Lyft currently do any driving? Their business is providing riders with drivers. The driving is not their business.
  • gruez 6y ago
    >Their business is providing riders with drivers. The driving is not their business. Can't you use this excuse to bypass that clause altogether? eg. a pizza restaurant that classifies its delivery drivers as contractors: "their business is making the pizza. delivery is not their business".
    • tick_tock_tick 6y ago
      I mean it's that how contracting is supposed to work? If your core competency is in making the product expecting you to become experts on delivering it too is crazy.
    • x3n0ph3n3 6y ago
      Pizza restaurants contract out delivery to firms all of the time. Is that really different than contracting out to an individual?
  • droidno9 6y ago
    This decision technically doesn't find that Uber/Lyft are violating the statute. The analysis considers: (1) the likelihood that the prevailing party will ultimately prevail on the merits; and (2) the relative interim harm to the parties from the issuance or nonissuane of the injunction. Here, a Superior Court judge found that the State of California is likely to prevail on the merits in the end. The reason being that Uber/Lyft failed to satisfy the prong "(B) The person performs work that is outside the usual course of the hiring entity’s business." Basically, the judge thought that Uber/Lyft is in the transportation business, not some "multi-sided platforms" as they claim to be. Can this injunction be overturned by a higher California court? Absolutely. Does it look bad for Uber/Lyft in the court of public opinion? Yup, very much so. That's why three's an Opinion piece in the Times today by the CEO of Uber.[0] He knew this was coming. [0] https://www.nytimes.com/2020/08/10/opinion/uber-ceo-dara-khosrowshahi-gig-workers-deserve-better.html https://www.nytimes.com/2020/08/10/opinion/uber-ceo-dara-kho...
• lhh 6y ago
  Leave it to California to stick it to a company losing $7 billion per year trying to find its footing. Drivers are voluntarily entering into the current work arrangement. Why does the government need to have an opinion on the matter?
  • ccday 6y ago
    Regardless of whether this decision is correct or not, Uber's financial situation is of their own making and shouldn't factor in to the ruling.
    • lhh 6y ago
      Fair enough, the court's job is just to interpret the law; it's the law I object to. But a lot of people advocating for these types of laws make the moral argument that companies are exploiting workers. Given the evidence, I think that's a pretty difficult case to make in good faith.
      • websight 6y ago
        It seems like a very easy case to make. Regardless of whether the abstract corporate entity is losing money, Uber's founders, employees, and early investors have all done very well for themselves.
        • lhh 6y ago
          How does it follow that someone was exploited for that to have happened?
  • fcsp 6y ago
    Is it still voluntary if it happens out of economic desperation?
    • twblalock 6y ago
      If Uber and Lyft weren't around, people in a state of economic desperation would have fewer options. California is basically saying that if you can't provide a good job with benefits, you aren't allowed to provide a job at all. That will result in fewer jobs.
• c3534l 6y ago
  I'm not surprised. Uber and Lyft try co classify their workers as contractors when it comes to taxes and benefits, yet undermine workers abilities to actually be independent contractors when it suits them to do so. If you want to be a platform that helps connect drivers with passengers, then be that app. You can't then go in and set rates, not pay per client, not give contractors the ability to work for the customers they want, etc. These companies have such a strange culture of hubris and trying to skirt the law, its only a matter of time for that to catch up with them.
  • julienb_sea 6y ago
    Part of the reason Uber and Lyft work so well for riders is due to how they structure the relationship between drivers and their platform. Drivers are required to conform to the platform's payment structure. This enables predictable up-front pricing for rides before they are even requested. This enables the surge pricing system, which rapidly ramps up supply to match surges of demand. Drivers can decline rides at will, but if a driver excessively declines rides there is punishment for this. This makes perfect sense as the platform calculates projected rates and surge pricing based on driver availability. Unnecessarily declining rides provides a poor user experience for riders, and riders ultimately can choose to take their business elsewhere. This means drivers need to be disincentivized to decline rides in order to maintain the quality of the platform. Ultimately the relationship between driver and platform is structured to ensure a consistent driver and rider experience. The benefits arguments are more interesting, and maybe there does need to be a system for driver benefits like health insurance if they are working full time for the company, but ultimately these costs will fall squarely on consumers.
    • c3534l 6y ago
      If your points are true, then all that really means is that there is a structural, economic incentive to not be structured as a platform and that the old model, of having cab companies with drivers who are employed by that company, is the most naturally efficient structure. That's fine, except for the part where they claim their employees are independent contractors, which would be tax fraud if they didn't try to structure in plausible deniability as best they could. That was the criticism I started with: they want to treat their workers as independent contractors when and to the extent that it benefits to do so, and they want to treat them like employees when it doesn't. "the relationship between driver and platform is structured to ensure a consistent driver and rider experience" - yes, that relationship has a specific name and that name is "employer." Uber and Lyft want to employ drivers to work for them, but want to avoid paying taxes on it. This is a dangerous game they're playing.
• nknealk 6y ago
  So I think the biggest question here is whether, as an employee, Uber/Lyft can set hours for a driver. Some specific implications: * Will we see employees (drivers) get a say in their shifts? An employee can be asked to work a 3AM - 9AM shift for example. * Can not arriving to shifts on time be grounds for dismissal? * Can refusing a shift be grounds for dismissal? * Can incurring unapproved overtime be grounds for dismissal? * If a driver is incurring overtime, is that reflected in the pricing that consumers pay? * Can Uber/Lyft systemically set employee hours to like 29 per week to avoid FTE status? * Will multihoming (ie working for multiple "gig" apps) be grounds for dismissal as a conflict of interest? I see a lot of ways Uber/Lyft could retain significant power over drivers.
  • twblalock 6y ago
    In a lot of ways this gives them more power over drivers than they had before.
  • ogre_codes 6y ago
    > Will we see employees (drivers) get a say in their shifts? An employee can be asked to work a 3AM - 9AM shift for example. > > Can not arriving to shifts on time be grounds for dismissal? > > Can refusing a shift be grounds for dismissal? If Uber requires someone to work a "Shift", then they have to pay them for that shift regardless of miles driven. Uber doesn't want that. I don't believe the state is requiring Uber to pay hourly and Uber almost certainly doesn't want to pay people hourly either so none of this is relevant. > Can Uber/Lyft systemically set employee hours to like 29 per week to avoid FTE status? This is what most low-wage jobs do so why wouldn't they? > Will multihoming (ie working for multiple "gig" apps) be grounds for dismissal as a conflict of interest? Maybe. But since a big chunk of the appeal of working for Uber is flexible hours that work around the hours of other jobs or responsibilities, why would they? If Uber prevents drivers from doing other gig-jobs, they will have a hard time finding drivers.
    • jccooper 6y ago
      > I don't believe the state is requiring Uber to pay hourly and Uber almost certainly doesn't want to pay people hourly either so none of this is relevant. Pay may be calculated based on metrics other than time, but must be at least the minimum wage, which is based on time at work. For employees, if you want to pay on trips/widgets/sales/whatever, you have to also track hours. So, yes, the state is requiring Uber to pay hourly. Uber may allow flexibility of when you're on the clock, though they won't have to, but you can bet they'll require a certain amount of productivity.
• cocktailpeanuts 6y ago
  If Uber and Lyft are forced to classify drivers as employees, doesn't that mean these companies will try to lock them in? For example Uber won't allow their drivers to work for Lyft, and vice versa. If this is the case, I think Lyft will die very quickly because as far as I know, most drivers prefer Uber over Lyft.
  • microtherion 6y ago
    IANAL, but to my knowledge, in California, a company cannot[] legally prevent their employees from working a second job in their spare time, so this kind of lock in would not work. [] some exceptions apply, mainly related to IP I think.
    • cjlars 6y ago
      Mostly it's been people working for both at the same time, and then taking the best fare as it comes up. Employers can definitely prevent them from doing that, and then there would be additional friction over who gets to schedule drivers for rush hour.
    • cocktailpeanuts 6y ago
      But it's not a "spare time". A driver literally has to constantly make decisions whether to take the next Uber call or Lyft call. A lot of drivers have both Uber and Lyft apps running and take the ones they prefer at the moment. Some have become tired of this and just choose Uber. If Uber or Lyft are required to legally hire these drivers as employees, they will probably develop a technology to track the drivers so that they won't take a Lyft call when there's an Uber passenger nearby, for example. This effectively means lockin. Also, Uber (or lyft) may even compensate these behaviors by giving the drivers base salary as long as they don't take their competition's calls. Of course, this is until one becomes the dominant player and the other goes out of business.
      • microtherion 6y ago
        > A driver literally has to constantly make decisions whether to take the next Uber call or Lyft call. Under an employee model, they would do this while on the clock of a particular company (and being paid by it). Sure, Uber could choose to employ a driver for 16 hours a day, but they'd have to pay for that time.
• twblalock 6y ago
  The corollary to this is that Uber and Lyft will now be able to exert more control over drivers. Contractors have certain legal freedoms that employees do not, such as setting their own hours, being able to turn down work, driving for both Uber and Lyft, etc -- that last one seems pretty common. I wouldn't expect those freedoms to last long after they are reclassified as employees. After all, this is Uber and Lyft we are talking about. We know how they behave. Now the government has both increased their operating costs and given them the ability to exert more control over their drivers.
• thekyle 6y ago
  What I'm guessing will happen if Uber/Lyft are forced to treat drivers as employees is that those driving full-time will be hired and everyone else will be let go. The employees will lose some control over what hours they work and may be forced to sign non-compete agreements (not sure if that would fly in CA). What I don't understand is why Uber/Lyft don't just allow drivers to set their own prices. Whatever their pricing algorithm is it cannot possibly be better than an efficient market of riders and drivers bidding on trips.
  • jcims 6y ago
    Probably because they would end up losing money, drivers would be willing to work for less.
• alex_young 6y ago
  Uber wants you to believe that the cost of paying drivers as employees is that you won’t be able to get a car in most places. This can’t be true. Uber replaced a poorly run system that actually covered most places and employed it’s labor force. If Uber and other car services were forced to recognize their workforce as employees, there would be market incentives to support doing so. American taxpayers pay for Uber and Lyft driver’s subsidized medical plans and other public benefits they receive because they are not paid as employees with the right to organize. Your ride may seem cheap, but you pay for it in your tax bill.
  • skybrian 6y ago
    If you mean taxi drivers, apparently they were usually contractors, until this new law was passed, anyway. https://www.sfchronicle.com/business/article/California-s-gig-work-law-targets-Uber-and-14565001.php https://www.sfchronicle.com/business/article/California-s-gi...
    • alex_young 6y ago
      Thanks for pointing this out - in SF there was an intentional effort to destroy the employee taxi driver system in the late 70s. This is talked about at length in the article you linked to. Many other places still have working employee systems for taxis. SF could too if they wanted to change this law.
• crobertsbmw 6y ago
  I kind of hope that both companies just decide to not shut down the app in California. Otherwise I’m nervous that other cities might end up subsidizing the California market.
  • mav3rick 6y ago
    CA subsidized others before. Time's up
• lotophage 6y ago
  > labor unions and elected officials contend this deprives them of traditional benefits like health insurance and workers’ compensation This is the real problem that needs to be fixed. Most other developed nations have affordable, if not universal health care that isn't tied to their employment. The status of Lyft/Uber drivers wouldn't be as much of an issue if this was solved.
• jdeibele 6y ago
  It would be interesting to let passengers have a slider that let them show how price sensitive they were and the drivers were able to set a minimum price for total (driving to passenger + driving to destination). Maybe you'd be willing to wait for 15 minutes if Driver B would be cheaper than Driver A, even though Driver A was 3 minutes away. Even better (if drivers are really treated as contractors) would be to show you the rates from Driver A, Driver B, and Driver C and you can pick one: Driver A: 23 minutes, $20 Driver B: 35 minutes, $15 Driver C: 30 minutes, $18 The issue for Uber/Lyft is they're focusing on the ride and that's nice - I don't know that drivers rejected me since they're just showing the ride cost from Point A to Point B. But that ignores actual driving time for the drivers, plus that they might end up in an undesirable area.
• KKKKkkkk1 6y ago
  It's interesting how often Silicon Valley companies blitzscale an unsustainable business model and then leave public investors holding the bag. In the Uber and Lyft case, the time bomb was the regulatory issue. Which investors should have known about, given that these companies have been breaking the law since day 1. Tesla with their full self driving is also an example of this dump the risks on the bag holders pattern.
  • DeonPenny 6y ago
    Poeple shouldn't be protecting investors. It's literally public market job and only job to access risk and pick stock. Why are we protecting them from their only job.
  • favorited 6y ago
    Isn't the other time bomb that they aren't profitable?
    • bdcravens 6y ago
      Ensuring that the only options aren't time bombs is the responsibility of whoever came up with the business plan.
  • cwhiz 6y ago
    Uber has never made money. They haven’t even come close to making money. It’s hard for me to have any sympathy for investors who keep funneling money into a company that defines “success” by lowering their quarterly loss to a mere billion. It’s not as if this information isn’t public. Everyone can see that Uber can’t make money.
    • mullingitover 6y ago
      Amazon has gone very long stretches without making money, too. They're still a trillion-plus dollar company and nobody seems to care. I was under the impression that the markets that are mature for Uber were profitable, and they've been plowing capital into growth, hence the losses. Feel free to correct me if you have sources that show otherwise.
• chrischen 6y ago
  Seems like crux of this disagreement is that there is a large group of drivers that do it full time as their primary source of income, and they want protection from all the part time gig workers that flood the market and depress their earnings. Changing to employee model will result in fewer drivers (better protected), but lose out on the gig workers or even those doing multiple jobs just to make ends meet.
• blisterpeanuts 6y ago
  The judge does not understand what a "gig" is. Uber drivers can choose to drive one, twelve, or zero hours in any given day. They can suddenly stop working by simply not accepting any more ride requests. It's the ultimate remote, self-directed, self-managed job. An employee can't make such decisions; they do as they are told or they are fired. Uber drivers are private, self-owned businesses that rent out their time and equipment to a corporation on a completely arbitrary basis. The company counts on an oversupply of such drivers to meet demand and does not need to manage the supply other than to continually recruit more people. I suspect this ruling will be overturned, if not in the Ninth Circuit Court of Appeals, then in the Supreme Court.
  • jdm2212 6y ago
    California law is pretty clear on the matter. You don't have to like the law (it's a dumb law), but the law is clear.
  • quadrifoliate 6y ago
    > Uber drivers are private, self-owned businesses that rent out their time and equipment to a corporation on a completely arbitrary basis. As far I know, this is not true. Uber dictates the prices that drivers can charge, they cannot set an arbitrary price for their own labor. Is that not the case?
    • gocard 6y ago
      Is the driver charging the passenger? Or is Uber charging the passenger, and putting forth a contract at a set rate which individual drivers can accept or decline?
    • blisterpeanuts 6y ago
      True, Uber sets the prices and also acts as the broker/middleman. Kind of a super-broker.
    • Akababa 6y ago
      I'm not sure that this makes an economic difference - ultimately Uber's algorithm will set the price where supply intersects demand. Or equivalently, drivers can raise their own prices/restrict supply by only working during surge hours.
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• shrimpx 6y ago
  This debate seems to be about what's a user vs. a contractor vs. an employee. Does the fact that I walk a Google device around enabling Google to record rich profitable data, in exchange for extracting some value from their services, make me a contractor or an employee? Because for sure it doesn't sound like it makes me a user. Edit: spelling.
• surround 6y ago
  Drivers in less population-dense areas such as my own keep both the Uber and Lyft apps open in order to fill enough time. Would this still be possible if they were an employee?
• catsarebetter 6y ago
  I can't see Uber not doing everything they can to fight this
• dangus 6y ago
  There’s a lot of discussion in this thread about whether or not it’s a good idea to force Uber and Lyft to classify drivers as employees. I think that discussion is a tangent the real issue. California’s elected officials already ended that discussion by writing it into law. If you live in California and don’t like the law you can call or write your representative and see if they’ll repeal or change it. But that law is the law. It seems unlikely that Uber and Lyft will win this appeal. What we have here are two corporations ignoring the law because they don’t agree with it, and the “hire lawyers to endlessly fight this” number is lower than the “paying payroll tax for all our drivers” number on the spreadsheet. Just my opinion, it’s frankly disturbing how many people are ready to jump to these companies’ defense. They’re proclaiming imminent disaster, that this business model can’t possibly work with W2 employees, but I doubt that’s true. Nothing stops Uber and Lyft from allowing their W2 employees to make their own schedules, and nothing stops them from hiring directly from the app with quick approval. They just don’t want to pay their share of the payroll tax, and they don’t want to provide family and medical leave that their upper caste employees enjoy.
• jquery 6y ago
  California gets more stupid by the day, I have no words for how stupid this is.
• Cakez0r 6y ago
  Why doesn't Uber just let Californian drivers set their own rates? Would it really be such a huge deal to their business model if drivers could set their own price per mile, or similar? Uber still takes a percentage cut and I assume the free market cost would work out to be in the same ballpark as Uber's pricing model.
• tehjoker 6y ago
  Bear in mind that these ridesharing companies are basing their entire business model vs taxis not on some dumb app, every taxi company tries to get you to install its app. Instead its innovation, is reducing labor and capital costs in order to offer cheaper rides than taxis to corner the market. In order to reduce capital costs, they have workers bring the cars. To reduce labor costs, they pay less. Uber is a cash inferno and they have been fighting against employee status because for various reasons the workers get paid more overall.
• zackmorris 6y ago
  Funny, unlike whatever these busybodies in California are doing, I'm actively working to go the opposite direction in my own life - from full time work to the gig economy. I'm hoping to write about this some more, but so far so good a year and a half in. Here are a few directions I'm working towards: - 40 hours -> 20 hours or less - boss -> employee-owned - office -> remote or shared workspaces - set schedule -> set our own schedule - being on call -> tech to free us from obligation - brands -> anonymity - benefits -> societal evolution towards public healthcare - egalitarianism -> shared prosperity - job security -> a scalable job market in the gig economy - scraping by to make rent -> substantial cashflow (donating plasma, Uber, Lyft, Grubhub, Airbnb, etc etc etc) I think that last point is the one that the status quo will go after, since they always start with the $$$. I'm dismayed that California has chosen to go this route, as they used to be at the forefront of tech and innovation. The above points are loosely based on concepts from Burning Man (although I've never attended, sadly). Mostly regarding humanism and decommodification. Can anyone think of some more points to add, or other sources of cashflow?
• CarbyAu 6y ago
  Look to history to see why Uber/Lyft/gig-economy is a backwards step for society. We've been here already. Historically low wage rise. People lining up hoping to be picked for the next piece of work. It ended up with the labor movement to fight for 40 hr weeks, protections for employees etc. Uber hasn't done anything new in terms of labor use. Merely communication and organisation. But society judged the labor use to be a poor outcome in the past so where do we think it will go now?
• koolba 6y ago
  I hope they retroactively collect unemployment tax from both companies. They’ve been playing this shell game for long enough.
• sabujp 6y ago
  I'm sure someone has thought of this, but why don't we have ridehailing apps where the contract literally is between the driver and the passenger(s)? The app can merely suggest a rate but the driver can set whatever price they want. The app takes a very small finder's fee.
  • umvi 6y ago
    What if drivers can't make a living wage using such an app because there is too much supply driving prices down? The app will be crucified for "exploiting drivers"
    • sabujp 6y ago
      Why would there be any more or less supply than what's available via uber or lyft and why would the app be at fault when decisions are made by the driver? Now there are more choices you can be your own contractor or work for uber/lyft as an employee. People who have older cars and can charge less may drive down prices but I think there will always be a market for being driven in newer cars, suv's, luxury cars, etc. You can schedule rides ahead of time and set contract breakage penalties. All these can be suggested by the app but again it's up to the final decision made between the customer and driver.
• george120 6y ago
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• cityzen 6y ago
  Uber CEO: "Gig workers deserve better!" CA: "Uber drivers are employees, how bout dat?" Uber CEO: NOT THAT MUCH BETTER....
• cmckn 6y ago
  Honestly, I've lost track of the actual argument in this app-taxi space. Is it primarily health insurance? What is the employee benefit that is the crux of the issue for the average driver?
• BurningFrog 6y ago
  The reality is that these "gig economy" jobs are neither "Employee" nor "Contractor". It's a new kind of working relationship, and jurisdictions insisting on one of the old categories can't really have a modern gig economy.
• abvdasker 6y ago
  The consequences of this ruling are probably not going to be known for a while. This is certainly bad for Uber & Lyft insofar as it will greatly increase their operating costs. The question is what effect the ruling will have on drivers. Uber is not a profitable company with fat margins like Google, Facebook, Amazon, Apple or Netflix. I don't see any way for Uber to absorb the increased costs that come with full employment without reducing the number of drivers and increasing the cost of rides in California. The change in employment classification means that drivers will no longer be able to choose when they work. Uber will choose when they work, and for how long. The barrier to becoming an Uber driver will increase. Currently, in most cities it's possible to sign up to drive entirely online and basically just requires a license and a completed background check. Going forward people who want to drive for Uber will have to interview like any other job, probably in-person with a resume, and jump through the many hoops which that process entails. My guess is that for new drivers who can pass the interview and existing full-time drivers who don't get laid off this will bring a big improvement in quality of life and provide some much-needed financial security and benefits. The rest will be out of a job. I think it's unfortunate that some kind of compromise couldn't be reached which would have provided some economic security for these workers while accounting for the real differences between gig work and regular employment.
  • octodog 6y ago
    The whole point is that Uber isn't actually treating its drivers like contractors. Any theoretical benefit to being a contractor is not really relevant if they don't have those rights in practice.
    • xmprt 6y ago
      I'm not sure you can claim that with confidence if you haven't driven with Uber before. Many drivers hold the opposite opinion as well and prefer to keep their job and only drive whenever they're free.
  • neuroanalysis 6y ago
    Profitability should have no bearing on whether drivers are classified as employees or contractors. If these companies can’t turn a profit while complying with the law then they don’t have a viable business model. That is entirely their problem. Furthermore, the assumptions you make regarding future hiring practices are unfounded. Nothing stipulates that resumes or interviews, let alone in person, would be required to extend employment.
• Causality1 6y ago
  1099 contracting is a cancer that's eating the entire sub-$50K job market. Most of my friends are 1099 contractors and every single one of them wishes they weren't.
• ummonk 6y ago
  If I were Uber and Lyft I'd dropped the issue in California and instead of paying drivers directly, pay intermediary companies with full time drivers on their payroll.
• ffggvv 6y ago
  i hate living in california so much. it’s terrible being tied in a place due to family despite terrible governance
• apta 6y ago
  As usual, these laws show the broken underlying system and then trying to patch it with more broken patches.
• jmpeax 6y ago
  To satisfy the "C" of "ABC", I reckon this provides an opportunity for small companies to start up, with drivers as employees, to contract out driving work for both Uber and Lyft.
• PHGamer 6y ago
  dont contractors get to write off their car? if they are employees they no longer get write offs correct?
• xiaolingxiao 6y ago
  There is another post on the front page from The CEO of Uber. It seems like the NY times article was written as a way to control the narrative?
• Animats 6y ago
  From AB5 (and yes, I posted this in another topic today, but few here seem to know it.) ...shall be considered an employee unless the hiring entity demonstrates that all of the following conditions are satisfied: (1) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. (2) The person performs work that is outside the usual course of the hiring entity’s business. (3) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. #2 is the key issue for Uber. Uber claims to be merely a booking agent, not a ride service. This is not believed by their customers, drivers, or the courts. Nor is it the message on Uber's web site, which says "Sign Up to Ride - Reliable rides in minutes". Uber is in the taxi business. Uber has been trying to get around #1 by allowing drivers a bit more flexibility. A tiny bit. Not too much.
• 40four 6y ago
  So if Uber & Lyft lose their appeals, I’m taking bets on how long it will take before they cease operations in California. I’ll set the over/ under starting at 65 days. In all seriousness, I’m not sure they will stop operating completely, but I have a hard time imagining this will be good for a large number of drivers who do it part time, or for consumers. If they have to be employees, then I imagine Uber/Lyft will only want to keep the most productive drivers around. The ones who do already do it full time. They will likely have to enforce real working hours/ actual schedules, based around demand. This means any of the fringe drivers, who do it part time for supplementary income will be out. They might not have the option anymore of just turning on the app and working a little bit when they decide. This will mean less choice and higher prices for riders.
  • Mirioron 6y ago
    What would happen if both Uber and Lyft would stop providing the service in California? Would other States follow with that kind of legislation or would it make them less likely to introduce such legislation? I can't imagine the customers would be too happy with Uber and Lyft gone.
• sytelus 6y ago
  This has been going back and forth too much. I am not even sure why single person (judge) wants to make such sweeping decisions. These drivers work on their own whims. They may decide to show up or not. They can cut short day anytime. Uber or Lyft don’t require them to start their shifts and work 40 hours a day. The drivers don’t commit to any full time work schedule. So at best things are muddy and lawmakers needs to come together instead of individual judges start writing laws according to their individual whims and philosophy. This will most definitely be get challenged and ultimately SC will not want to hear this anyway so it’s just massive waste of time for everyone. Only lawyers are getting rich in the process.
• c3534l 6y ago
  Before just randomly spouting out whether you personally feel like Uber and Lyft are employers, it might be helpful to look at the ELI5 criteria California lists at https://www.dir.ca.gov/dlse/FAQ_IndependentContractor.htm https://www.dir.ca.gov/dlse/FAQ_IndependentContractor.htm > Under the ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions: > The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; > The worker performs work that is outside the usual course of the hiring entity’s business; and > The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. It's not enough to just say "they feel like they don't work for Uber" you have to put forward a more coherent case than that.
  • Wolfenstein98k 6y ago
    This is oddly specifically drafted to capture gig economy workers like this. My employer employs people (on a permanent ongoing basis) who meet some of these conditions to be classed as an independent contractor...
    • baddox 6y ago
      As stated, all three conditions must be met for a worker to be considered a contractor.
  • Mirioron 6y ago
    That's the bill that cost hundreds of freelance journalists their jobs in California, right? I wonder what the full consequences of it are going to be.
• wayanon 6y ago
  Uber and Lyft are exploiting a system never intended for low paid workers.
• GoodJokes 6y ago
  It is absolutely stunning to to see people in here holding water for uber and lyft. Where do you all work and who is paying you?
• praveen9920 6y ago
  One of test in so called ABC test says "B test requires that the worker performs work that is outside the usual course of the hiring entity’s business" Isn't this a bad test in the first place. Let's take game studios, they need contract developers for a game, wouldn't that make them fail the test and make them an employee?
• TheMagicHorsey 6y ago
  I don't know how a judge can so cavalierly grant preliminary injunction in this case when the facts have not been examined. Anyway, it must be due to the recent law passed in California. Ultimately the citizens of California determine its shitty laws, and they can enjoy their rideless future and the bad old days of taxi cab monopolies because they went along with taxi medallion holder propaganda.
• aborsy 6y ago
  Uber provides a platform connecting riders with drivers, not employment. The driver is employed by the rider. The driver is free to work his or her own hours, routes, work or not work etc. Uber overseas the platform to ensure it operates properly and there won’t be victims. There are many of these platforms. It makes no sense to force LinkedIn classify job seekers as employees.
• whiddershins 6y ago
  If you think about this dispassionately, the biggest likely effect of implementing this is as follows: Uber rides become more expensive. That money largely will go to the government in the form of various payroll taxes. No one will remember this in a couple of years. Because of the forgetting, we will in the future be skeptical that labor compliance was so important to the price. The idea that gig workers could have ever existed without all this compliance will seem alien and barbaric. If anyone suggests removing all this compliance, they will be called a free market purist. It’s odd, because I think most people actually think what is going on with gig workers right now isn’t horrible oppression, but rather adults agreeing to working conditions and having a ton of freedom. I don’t think we will see it that way in the future. And I don’t think we will ever be able to deregulate this after the fact.
  • WanderPanda 6y ago
    I mostly agree, but shouldn't the competition between states in the US be able to lead to the best solution? Maybe that is overriden by the large variance in the bag of different things (regulations etc.) one gets from being in one particular state vs another. This does not play well with the low dimensional action space of moving from one to another state. Maybe it is time to think about "virtual" citizenship so there is competition between states on may distinct levels
• dustinmoris 6y ago
  Lots of HN comments are here like "I know people who prefer to be contractors", "My sister's neighbours little brother actually doesn't want to be treated with respect by Uber", blah This is utter nonsense. Being a contractor means being self employed. You don't get paid leave or sick pay. It's a risk taking and doesn't make any sense in the gig economy where the wages are close to minimum rates. If you are truly self employed then you have a skill which you can market, you can charge fees which allows one to put money aside for things like unpaid leave or sick days. If you are truly self employed then part of your job is building customer relationship, building up recurring customers, increasing your business through marketing, word of mouth, etc. You actually have to do entrepreneurial shit. Uber drivers are NONE of this. They clock into an app which belongs to someone else and they have no share in. They can't hand out business cards to customers or market their services on a board somewhere. They sit and wait until their master (Uber/Lyft) assigns a ride to them. Then they have merely the chance to accept/decline it. They can't even negotiate their own fees. That itself is fucked up. It's complete nonsense in extremely disingenuous by anyone here to suggest that an Uber driver is a self employed contractor and that this is good for them. They get paid shit and can't save up like a real self employed person, because they also have no say in the ride prices. Fuck the gig economy. All gig workers are slaves and we should treat each other with more dignity and upgrade them to employees. It's our bloody duty as a decent human being.
  • neetrain 6y ago
    Meanwhile in Japan, We never get sick pay (treated as leave pay) nor usually leave pay even when employed...
    • dustinmoris 6y ago
      Meanwhile Japan is also the only country which has an actual word in the dictionary to describe "Death through overwork". It's called Karoshi. No modern society should have such a common problem that you have to invent a specific word for it. https://en.wikipedia.org/wiki/Karoshi https://en.wikipedia.org/wiki/Karoshi
    • miganga 6y ago
• LatteLazy 6y ago
  I find it really interesting how rigid this all is. No one is willing to accept that Gig-work might be a thing and that we need a third category of work to cover it. It seems to me (the outside observer) that the US labour market is deeply dysfunctional. But the best anyone can muster is trying to force Uber drivers into the OTHER deeply dysfunctional category...
• Gasp0de 6y ago
  "Uber and Lyft say drivers prefer the flexibility of working as freelancers" laughs in german
• jerzyt 6y ago
  I would agree that someone who drives for Uber about 40 hours a week is effectively an employee, however it leaves out a lot of drivers who only want to offer certain rides at certain time. For example, if every weekend I drive to my vacation home, which is in an area not practically reachable by public transport, and offer a ride, does that make me an employee? That's nonsense.
• dmch-1 6y ago
  These companies were losing billions already. What will happen with them now?
• fergie 6y ago
  What a lot of people in this thread dont seem to understand is that the article is not making the case for Uber/Lyft drivers to be classified as employees (traditionally cab drivers have almost always been self-employed contractors), its simply reporting that under the current arrangements, Uber/Lyft drivers clearly _are_ employees. Legal scholars frequently cite the ability to set a price as a key criterion for being classed as a contractor. Maybe all Uber needs to do is to introduce some kind of "bidding" system in order to maintain the status quo. (They probabably wont though because Ubers entire value proposition to its shareholders rests on its ability to drive down the pay and conditions of its drivers)
  • sida 6y ago
    You know because of this regulation, uber already introduce price setting to drivers. This is literally what drivers do today in California.
• JulesPierre 6y ago
  What does this mean for other on-demand type of businesses like Handy (on-demand cleaning) that also employ Independent Contractors? Would they bring on their ICs as employees or would it be too cost-prohibitive and thus they'd opt not to operate in California? Finally, California tends to set trends for the rest of the country. Would we see other states go the California way and change classification of ICs to employees?