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Are Uber Drivers Employees? The Trial That Could Devastate the “Sharing Economy”

41 points by llamataboot 12y ago

itsbits 12y ago
"Independent contractors are generally treated as workers who serve multiple clients, have a high level of control over their work, and complete specific jobs over a limited period of time that fall outside the usual scope of their current employer’s business." By the definition looks like Uber and Lyft are in serious danger.
- pbreit 12y ago
  By that definition is looks like they are in the clear. Many drivers drive for multiple clients. They have a high level of control over their work. Not exactly sure I understand the third part beyond "specific jobs over limited periods of time" which is also the case.
  - icebraining 12y ago
    The part implies that you're more likely to be classified as an independent contractor if you're, say, a designer hired by a fishing company than if you're a fisherman hired by the same company.
    - pbreit 12y ago
      OK, I see. So a software company contracting with drivers sounds like your second example. So all three tenets support the contractor relationship. I think common sense is there as well. I've driven for both and didn't feel even slightly like an employee.
      - icebraining 12y ago
        Uber is not really a software company. They don't sell software, nor solutions based on software. They merely produce software to power their actual business, much like any other large company that has an internal development team. A software company version of Uber is more like Mowares: http://mowares.com/ http://mowares.com/
        dnautics 12y ago
        technically Uber is a software company, and Raisier is the transportation company. It's kind of a shady shell game.
  - itsbits 12y ago
    "complete specific jobs over a limited period of time that fall outside the usual scope of their current employer’s business" is more concerning.. Hiring a software Developer as contracter by a taxi company may be undernorms but A Taxi Management Company whose power is from Software hiring Taxi Drivers doesn't look like comes under this definition...
  - vertex-four 12y ago
    > They have a high level of control over their work. No, they don't. They are told when to pick up their passengers, and which route to drive, by their employers. They may not deviate from that route, they may not pick up passengers without Uber's say-so. They may not decline passengers without being penalised. While they are signed in to Uber, precisely what control do they have over their work? Additionally, "complete specific jobs over a limited period of time that fall outside the usual scope of their current employer’s business" means that the test falls on the side of being a contractor if you are doing a one-off job that is not usually what the company does, and an employee otherwise. The point is, a contractor is that person you bring in to write code for your SAP system, or fix the IT infrastructure, or build a new building, or program the A/C. Things where you give the contractor a task, and they complete it using their knowledge, where you don't get to define the specifics of how it's done. If you want control over precisely how they do their job, and it's part of what makes the company money on a day-to-day basis (you can argue that Uber are selling their software platform all you want, but the service it actually provides is getting you a taxi, not access to its software), I don't see how they're not employees.
    - Dylan16807 12y ago
      >They are told when to pick up their passengers, and which route to drive, by their employers. They may not deviate from that route, they may not pick up passengers without Uber's say-so. While they are signed in to Uber, precisely what control do they have over their work? Told when to enter in a period they signaled as available, told what areas they are allowed to walk in, no other visitors... All of that could apply equally well to someone contracted to fix the A/C. The drivers choose when and where to work. Most of what they lack control over is in the definition of the job, driving people to destinations. (Are you sure they have to follow a specific route?) The main thing they can't control is which specific person to pick up. That's pretty minor all in all. Your argument about having to "complete specific jobs over a limited period of time that fall outside the usual scope of their current employer’s business" is much stronger, but I don't think level of control over the work is going to get very far.
    - dnautics 12y ago
      > They may not deviate from that route, they may not pick up passengers without Uber's say-so. Come again? > They may not decline passengers without being penalised. The penalty is trivial. Sure, repeated declines are grounds for termination, but you really have to do a lot. When I was dual-driving for lyft and uber, I think I racked nearly 20-30% rejection rates on uber, they didn't even warn me that I was doing poorly and I think I'm still a "highly regarded" driver on their system.
- pudo 12y ago
  > Uber and Lyft are in serious danger. Worker's rights are being at least minimally protected. FTFY.
  - Dylan16807 12y ago
    If they have to be classified as employees to have worker's rights, perhaps the real problem is with the laws governing contractors.
venomsnake 12y ago
It will not devastate the sharing economy. It will devastate the "sharing" economy where you try to bypass government regulations by pretending you are not some kind of service. There are a lot of ways of people to share car rides, small jobs - just not so easy to heavily monetize.
- Dylan16807 12y ago
  I'm pretty sure that's what "sharing economy" means. And it's not even true to that extent; I don't see how this would have any effect on things like airbnb.
  - venomsnake 12y ago
    No it does not. A carpooling app for people that want to get from A to B and everyone chips for gas is sharing. Ordering a ride for person that does this all day is taxi. Couchsurfing - sharing. AirBNB - hotel. It is really simple.
    - Dylan16807 12y ago
      That's just sharing. You have to build mass infrastructure around something like that to get "sharing economy". I agree that the distinction between at-cost sharing and for-profit "sharing" is a mess. When you say hotel, I hope you mean that the person renting the room is running a hotel. That I can agree with. But I would not call AirBNB itself a hotel, as some people do.
brohoolio 12y ago
With the amount of money on the line I can only assume they'll get the laws changed in favor of those with the deep pockets.
Frondo 12y ago
The "sharing" economy is a misnomer--what Uber represents is the "mis-classified contractor" economy.
- icebraining 12y ago
  Taxi drivers were already classified as independent contractors, even when working for large cab companies. In fact, they sued four of them in Chicago just last year[1]. Despite of the jab in the headline, Uber et all didn't create this situation, and they may in fact have the (unintended) consequence of fixing this and other long lasting issues with the taxi industry. I don't like Uber, nor their business practices, but I do appreciate the kick in the status quo. [1] http://articles.chicagotribune.com/2014-03-26/news/chi-suit-taxi-drivers-should-be-considered-employees-20140326_1_taxi-drivers-yellow-cab-taxi-industry http://articles.chicagotribune.com/2014-03-26/news/chi-suit-...
  - rtpg 12y ago
    I don't get the kick in the status quo,since they're doing exactly the same shit other taxi companies are doing, but with a nicer app and sidestepping regulations. At least for drivers, this doesn't seem like a better deal in the long term
    - icebraining 12y ago
      Not the same thing. First, taxi drivers used to have to pay to lease the medallions. This article from 1995¹ talks about paying ~$100 per shift just for the lease. A quote from that article: In 1993, 32 to 45 percent of the income of a fleet or lease manager was profit, or $16,000 to $21,300 per car, up from $5,500 to $9,800 in 1986, according to the taxi commission. I very much doubt Uber makes anything close to that per car - even disregarding inflation. But besides that, do you think it's a coincidence that taxi drivers sued the companies last year, after decades of that system being established? When I said "kick the status quo", that doesn't mean they have any intentions of being better to drivers than taxi companies; but they still shook a broken system from its torpor and forced society to reevaluate it. To me, that's almost always an advantage. ¹ http://www.nytimes.com/1995/04/09/nyregion/driving-a-taxi-difficult-in-best-of-times-gets-tougher.html http://www.nytimes.com/1995/04/09/nyregion/driving-a-taxi-di...
jeswin 12y ago
> Their hours are flexible—but only to a point. Uber, for example, has threatened to suspend the accounts of drivers who accept less than 90 percent of rides. The second statement does not follow from the first. Uber is probably saying that if you're on the grid, you have to accept 90% of the rides. This totally makes sense; otherwise users will not be able to get a ride even when they see cars all around. Uber is (probably) not saying that drivers should log in for a certain number of hours every day.
- pbreit 12y ago
  And what does this mean: an employer’s “right to discharge at will, without cause” as “strong evidence in support of an employment relationship.” Aren't contractors easier to discharge?
  - jsprogrammer 12y ago
    Contracts typically have a term length.
    - rodgerd 12y ago
      As a Kiwi it seems bizarro land - you have to have cause to fire someone in permanent employment, but you can (generally) end contracts prematurely with appropriate terms.
      - jsprogrammer 12y ago
        What exactly is a contract if it doesn't have a length attached to it? In most US states it is legal to have, and most companies do have, policies that state something to the effect (and yes, it's often in all caps): EMPLOYMENT RELATIONSHIP IS AT WILL, NEITHER PARTY HAS ANY OBLIGATIONS TO THE OTHER PARTY AND EITHER PARTY CAN TERMINATE THE RELATIONSHIP AT ANY TIME FOR ANY REASON.
        Dylan16807 12y ago
rtpg 12y ago
Here's a link to the IRS's general test on misclassification of employees, can be interested in walking through http://www.oregon.gov/ODA/shared/Documents/Publications/NaturalResources/20FactorTestforIndependentContractors.pdf http://www.oregon.gov/ODA/shared/Documents/Publications/Natu... There are 20 points to consider in total. some of the ones that don't come up in these discussions but probably should: • Degree of business integration. Workers whose services are integrated into business operations or significantly affect business success are likely to be considered employees. • Control over discharge. A company's unilateral right to discharge a worker suggests an employment relationship. In contrast, a company's ability to terminate independent contractor relationships generally depends on contract terms. • Right of termination. Most employees unilaterally can terminate their work for a company without liability. Independent contractors cannot terminate services without liability, except as allowed under their contracts.
- aabajian 12y ago
  >...significantly affect business success are likely to be considered employees. If all the drivers were fired, Uber / Lyft would be out of business. If this point holds any weight, I'd say they'd have to be considered employees. Applies to taxi drivers as well.
  - Dylan16807 12y ago
    On the other hand individual drivers have next to zero affect on business success. And people contract out critical things all the time, it's not that simple.
  - rtpg 12y ago
    Well there's 20 factors, so I think even if 1 requirement is 100% filled, there's some other factors to take into account. (IANAL)
  - deleted 12y ago
    [deleted]
  - goodmachine 12y ago
    >...significantly affect business success are likely to be considered employees. If all the drivers were hired, Uber / Lyft would be out of business too.
stuaxo 12y ago
Of course they are bloody employees, end of !
carrotleads 12y ago
We play in the sharing economy too though not in the states. But some much needed clarity would be welcome and so will keep a keen eye on this. Would Uber/Lyft relaxing their regulations make the drivers more like contractors?
lsc 12y ago
I really hope we get some clarity out of this. Right now? The IRS has a very complex test for what constitutes an employee vs. a contractor. Personally, I don't much care where they draw the line, but my life would be easier if they were more clear about exactly where they were drawing the line.
jinushaun 12y ago
How about instead of trying to regulate Uber/Lyft, fix traditional taxis instead? Force them to accept credit cards, abolish tips, support e-hailing (make it a standard protocol that apps can adhere to), make empty/full indicators that actually work for street hails, don't artificially limit taxi supply with an idiotic medallion system, etc. Or make public transportation that works for the people so they don't need Uber (looking at you, Seattle and SF). I actually hate Uber and don't like to use them. But I've been burned so many times by traditional taxis that I hate them more. I'd rather use a subway.
dnautics 12y ago
The best counterargument is that Uber drivers are very much allowed to work for other rideshares simultaneously, and very often they do.

41 points by llamataboot 12y ago

"Independent contractors are generally treated as workers who serve multiple clients, have a high level of control over their work, and complete specific jobs over a limited period of time that fall outside the usual scope of their current employer’s business." By the definition looks like Uber and Lyft are in serious danger.

pbreit 12y ago
By that definition is looks like they are in the clear. Many drivers drive for multiple clients. They have a high level of control over their work. Not exactly sure I understand the third part beyond "specific jobs over limited periods of time" which is also the case.
- icebraining 12y ago
  The part implies that you're more likely to be classified as an independent contractor if you're, say, a designer hired by a fishing company than if you're a fisherman hired by the same company.
  - pbreit 12y ago
    OK, I see. So a software company contracting with drivers sounds like your second example. So all three tenets support the contractor relationship. I think common sense is there as well. I've driven for both and didn't feel even slightly like an employee.
    - icebraining 12y ago
      Uber is not really a software company. They don't sell software, nor solutions based on software. They merely produce software to power their actual business, much like any other large company that has an internal development team. A software company version of Uber is more like Mowares: http://mowares.com/ http://mowares.com/
      - dnautics 12y ago
        technically Uber is a software company, and Raisier is the transportation company. It's kind of a shady shell game.
- itsbits 12y ago
  "complete specific jobs over a limited period of time that fall outside the usual scope of their current employer’s business" is more concerning.. Hiring a software Developer as contracter by a taxi company may be undernorms but A Taxi Management Company whose power is from Software hiring Taxi Drivers doesn't look like comes under this definition...
- vertex-four 12y ago
  > They have a high level of control over their work. No, they don't. They are told when to pick up their passengers, and which route to drive, by their employers. They may not deviate from that route, they may not pick up passengers without Uber's say-so. They may not decline passengers without being penalised. While they are signed in to Uber, precisely what control do they have over their work? Additionally, "complete specific jobs over a limited period of time that fall outside the usual scope of their current employer’s business" means that the test falls on the side of being a contractor if you are doing a one-off job that is not usually what the company does, and an employee otherwise. The point is, a contractor is that person you bring in to write code for your SAP system, or fix the IT infrastructure, or build a new building, or program the A/C. Things where you give the contractor a task, and they complete it using their knowledge, where you don't get to define the specifics of how it's done. If you want control over precisely how they do their job, and it's part of what makes the company money on a day-to-day basis (you can argue that Uber are selling their software platform all you want, but the service it actually provides is getting you a taxi, not access to its software), I don't see how they're not employees.
  - Dylan16807 12y ago
    >They are told when to pick up their passengers, and which route to drive, by their employers. They may not deviate from that route, they may not pick up passengers without Uber's say-so. While they are signed in to Uber, precisely what control do they have over their work? Told when to enter in a period they signaled as available, told what areas they are allowed to walk in, no other visitors... All of that could apply equally well to someone contracted to fix the A/C. The drivers choose when and where to work. Most of what they lack control over is in the definition of the job, driving people to destinations. (Are you sure they have to follow a specific route?) The main thing they can't control is which specific person to pick up. That's pretty minor all in all. Your argument about having to "complete specific jobs over a limited period of time that fall outside the usual scope of their current employer’s business" is much stronger, but I don't think level of control over the work is going to get very far.
  - dnautics 12y ago
    > They may not deviate from that route, they may not pick up passengers without Uber's say-so. Come again? > They may not decline passengers without being penalised. The penalty is trivial. Sure, repeated declines are grounds for termination, but you really have to do a lot. When I was dual-driving for lyft and uber, I think I racked nearly 20-30% rejection rates on uber, they didn't even warn me that I was doing poorly and I think I'm still a "highly regarded" driver on their system.
pudo 12y ago
> Uber and Lyft are in serious danger. Worker's rights are being at least minimally protected. FTFY.
- Dylan16807 12y ago
  If they have to be classified as employees to have worker's rights, perhaps the real problem is with the laws governing contractors.

venomsnake 12y ago

It will not devastate the sharing economy. It will devastate the "sharing" economy where you try to bypass government regulations by pretending you are not some kind of service. There are a lot of ways of people to share car rides, small jobs - just not so easy to heavily monetize.

Dylan16807 12y ago
I'm pretty sure that's what "sharing economy" means. And it's not even true to that extent; I don't see how this would have any effect on things like airbnb.
- venomsnake 12y ago
  No it does not. A carpooling app for people that want to get from A to B and everyone chips for gas is sharing. Ordering a ride for person that does this all day is taxi. Couchsurfing - sharing. AirBNB - hotel. It is really simple.
  - Dylan16807 12y ago
    That's just sharing. You have to build mass infrastructure around something like that to get "sharing economy". I agree that the distinction between at-cost sharing and for-profit "sharing" is a mess. When you say hotel, I hope you mean that the person renting the room is running a hotel. That I can agree with. But I would not call AirBNB itself a hotel, as some people do.

brohoolio 12y ago

With the amount of money on the line I can only assume they'll get the laws changed in favor of those with the deep pockets.

Frondo 12y ago

The "sharing" economy is a misnomer--what Uber represents is the "mis-classified contractor" economy.

icebraining 12y ago
Taxi drivers were already classified as independent contractors, even when working for large cab companies. In fact, they sued four of them in Chicago just last year[1]. Despite of the jab in the headline, Uber et all didn't create this situation, and they may in fact have the (unintended) consequence of fixing this and other long lasting issues with the taxi industry. I don't like Uber, nor their business practices, but I do appreciate the kick in the status quo. [1] http://articles.chicagotribune.com/2014-03-26/news/chi-suit-taxi-drivers-should-be-considered-employees-20140326_1_taxi-drivers-yellow-cab-taxi-industry http://articles.chicagotribune.com/2014-03-26/news/chi-suit-...
- rtpg 12y ago
  I don't get the kick in the status quo,since they're doing exactly the same shit other taxi companies are doing, but with a nicer app and sidestepping regulations. At least for drivers, this doesn't seem like a better deal in the long term
  - icebraining 12y ago
    Not the same thing. First, taxi drivers used to have to pay to lease the medallions. This article from 1995¹ talks about paying ~$100 per shift just for the lease. A quote from that article: In 1993, 32 to 45 percent of the income of a fleet or lease manager was profit, or $16,000 to $21,300 per car, up from $5,500 to $9,800 in 1986, according to the taxi commission. I very much doubt Uber makes anything close to that per car - even disregarding inflation. But besides that, do you think it's a coincidence that taxi drivers sued the companies last year, after decades of that system being established? When I said "kick the status quo", that doesn't mean they have any intentions of being better to drivers than taxi companies; but they still shook a broken system from its torpor and forced society to reevaluate it. To me, that's almost always an advantage. ¹ http://www.nytimes.com/1995/04/09/nyregion/driving-a-taxi-difficult-in-best-of-times-gets-tougher.html http://www.nytimes.com/1995/04/09/nyregion/driving-a-taxi-di...

jeswin 12y ago

> Their hours are flexible—but only to a point. Uber, for example, has threatened to suspend the accounts of drivers who accept less than 90 percent of rides. The second statement does not follow from the first. Uber is probably saying that if you're on the grid, you have to accept 90% of the rides. This totally makes sense; otherwise users will not be able to get a ride even when they see cars all around. Uber is (probably) not saying that drivers should log in for a certain number of hours every day.

pbreit 12y ago
And what does this mean: an employer’s “right to discharge at will, without cause” as “strong evidence in support of an employment relationship.” Aren't contractors easier to discharge?
- jsprogrammer 12y ago
  Contracts typically have a term length.
  - rodgerd 12y ago
    As a Kiwi it seems bizarro land - you have to have cause to fire someone in permanent employment, but you can (generally) end contracts prematurely with appropriate terms.
    - jsprogrammer 12y ago
      What exactly is a contract if it doesn't have a length attached to it? In most US states it is legal to have, and most companies do have, policies that state something to the effect (and yes, it's often in all caps): EMPLOYMENT RELATIONSHIP IS AT WILL, NEITHER PARTY HAS ANY OBLIGATIONS TO THE OTHER PARTY AND EITHER PARTY CAN TERMINATE THE RELATIONSHIP AT ANY TIME FOR ANY REASON.
      - Dylan16807 12y ago

rtpg 12y ago

Here's a link to the IRS's general test on misclassification of employees, can be interested in walking through http://www.oregon.gov/ODA/shared/Documents/Publications/NaturalResources/20FactorTestforIndependentContractors.pdf http://www.oregon.gov/ODA/shared/Documents/Publications/Natu... There are 20 points to consider in total. some of the ones that don't come up in these discussions but probably should: • Degree of business integration. Workers whose services are integrated into business operations or significantly affect business success are likely to be considered employees. • Control over discharge. A company's unilateral right to discharge a worker suggests an employment relationship. In contrast, a company's ability to terminate independent contractor relationships generally depends on contract terms. • Right of termination. Most employees unilaterally can terminate their work for a company without liability. Independent contractors cannot terminate services without liability, except as allowed under their contracts.

aabajian 12y ago
>...significantly affect business success are likely to be considered employees. If all the drivers were fired, Uber / Lyft would be out of business. If this point holds any weight, I'd say they'd have to be considered employees. Applies to taxi drivers as well.
- Dylan16807 12y ago
  On the other hand individual drivers have next to zero affect on business success. And people contract out critical things all the time, it's not that simple.
- rtpg 12y ago
  Well there's 20 factors, so I think even if 1 requirement is 100% filled, there's some other factors to take into account. (IANAL)
- deleted 12y ago
  [deleted]
- goodmachine 12y ago
  >...significantly affect business success are likely to be considered employees. If all the drivers were hired, Uber / Lyft would be out of business too.

stuaxo 12y ago

Of course they are bloody employees, end of !

carrotleads 12y ago

We play in the sharing economy too though not in the states. But some much needed clarity would be welcome and so will keep a keen eye on this. Would Uber/Lyft relaxing their regulations make the drivers more like contractors?

lsc 12y ago

I really hope we get some clarity out of this. Right now? The IRS has a very complex test for what constitutes an employee vs. a contractor. Personally, I don't much care where they draw the line, but my life would be easier if they were more clear about exactly where they were drawing the line.

jinushaun 12y ago

How about instead of trying to regulate Uber/Lyft, fix traditional taxis instead? Force them to accept credit cards, abolish tips, support e-hailing (make it a standard protocol that apps can adhere to), make empty/full indicators that actually work for street hails, don't artificially limit taxi supply with an idiotic medallion system, etc. Or make public transportation that works for the people so they don't need Uber (looking at you, Seattle and SF). I actually hate Uber and don't like to use them. But I've been burned so many times by traditional taxis that I hate them more. I'd rather use a subway.

dnautics 12y ago

The best counterargument is that Uber drivers are very much allowed to work for other rideshares simultaneously, and very often they do.