
California sues Uber and Lyft, claiming workers are misclassified - jbegley
https://www.nytimes.com/2020/05/05/technology/california-uber-lyft-lawsuit.html
======
jedberg
I feel bad for the drivers that are being taken advantage of, but AB5 was a
terribly written law with good intentions (aren't they all?).

The big companies they were obviously targeting have the resources to get
around it, but in the meantime it killed independent journalism in the state,
as an example.

I know a few journalists who can no longer work in CA, despite liking the
system they had. The publications won't touch them for fear of violating AB5.

There are lots of other folks in CA who like being contractors who are finding
it much harder now, because the people hiring them are afraid of running afoul
of AB5 but also can't afford to hire them as employees.

They really need to scrap AB5 and rewrite it, now that they've seen how much
it missed the mark.

AB5 has had a chilling effect on 1099 work in California.

~~~
cjlars
Regulators created the 1099 / W-2 distinction for a reason. There are probably
good reasons to adjust the rules to take into account the so called gig
economy, but making 1099 nearly illegal is not a net regulatory improvement
when considering all the collateral damage.

One option that seems very reasonable to me would be to introduce a third
option: Employee (W-2), Independent Contractor (1099), Dependent Contractor
(new gig economy group).

~~~
jedberg
> One option that seems very reasonable to me would be to introduce a third
> option: ... Dependent Contractor (new gig economy group).

Yeah that's my preferred option too if we must keep the system, but it has a
lot of the same problems.

Small orgs don't have the resources to hire lawyers to figure out if they can
do 1099 or "new thing", and so it will still have the same chilling effect on
1099 work.

~~~
toomuchtodo
There should be a chilling effect on some types of employment arrangements
where avoidance of worker protections and ancillary compensation was
occurring.

~~~
jedberg
Sure but don't do it by mandating what kind of contracts people can enter
into. Do it by supporting social services so that they don't have to accept
bad contracts.

~~~
toomuchtodo
I think we are destined to agree to disagree. Evidence has shown that people
will be economically coerced into contracts, or are not educated enough to
understand the consequences of the contract (gig drivers not knowing how
little they're making) and the social services currently do not exist to
protect them, nor are they likely to be spun up.

Sure, journalists get the short end of the stick, as well as gig workers who
don't need the income and just want to do it part time. Edge cases are
unfortunate.

~~~
jedberg
> and the social services currently do not exist to protect them

Exactly. Fix that problem instead.

~~~
toomuchtodo
So everyone should suffer until those exist because businesses are permitted
to take advantage of them?

I'm spending low six figures annually on political donations to those who
support universal healthcare. I still support shims like this until it gets
here. Sorry I'm not fixing it fast enough for you.

~~~
CodeWriter23
AB 5 has everyone suffering. Consider this for a moment, Silicon Valley: the
Tiger Teams you contract to pull your fat out of the fire when your
infrastructure starts melting down, well you can’t hire them under AB 5 if
they are California-based. Persons (which includes Corporations) cannot be
independently contracted to produce your main line of business. And when your
business is Tech and so it theirs...

------
pembrook
The journalists covering this issue have consistently gotten it wrong.

They have the power to direct the attention of millions to the solution, yet
continue to miss the forest through the trees and get swept up in the us vs.
them techlash BS.

Uber and Lyft are not screwing over workers. Our _system of government_ is
screwing over workers by not providing the benefits of every other developed
nation with similar tax rates for the average person.

Companies and workers (whether as a collective or as individuals) should be
free to arrange employment simply around time and money.

The fact that this is impossible indicates a problem with the system itself,
not with the individual actors in the system.

~~~
bhupy
> Our system of government is screwing over workers by not providing the
> benefits of every other developed nation with similar tax rates for the
> average person.

I would argue that the system is fine, the government just did the wrong thing
here. If the same group of voters that passed AB5, instead passed a bill
guaranteeing some minimum basic income, or even some state-tax funded single
payer healthcare system, then we wouldn't even be in this predicament.

~~~
pembrook
What happens to your healthcare as a Californian the minute you travel out of
state?

Something so important should not be in the hands of states. There's a reason
we don't have every state building separate armies and nuclear arsenals. Why
have them create their own disparate patchwork of healthcare approaches?

The strength of any nation's economy relies on the health of its citizens, as
we are now learning the hard way.

~~~
GhostVII
Canada is probably one of the countries most similar to the US in terms of the
divide between the federal and provincial government, and it's healthcare
system is largely managed by the provinces/territories. It works fine,
different provinces have different funds and different needs so they have
their own system. Also it is a lot easier to get started at a
provincial/territory/state level than trying to get a national system working
all at once.

~~~
pembrook
I completely agree, it'd probably be easier for the US if done on a state by
state basis (similar to the rapid legalization of marijuana).

However, with the way tax revenues are collected in the US (with anywhere from
80-100% going to the federal government, not states), a vast majority of
states would not be able to pay for such a big program.

It seems Americans have the worst of both systems. A strong, wealthy, do-
nothing federal government; and motivated, weak, underfunded state
governments.

------
thoraway1010
You can read Uber and Lyfts proposed solution here:

 _Earnings Guarantee_ :

Drivers always receive at least an amount equal to 120% of minimum wage, plus
30 cents per mile compensation toward expenses, with the potential to earn
more and no limits on how much drivers can make.

 _Health care_

Health care contribution equal to 100 percent of the average employer payment
toward a Covered California Plan, or $367 per month to a driver on average.

Drivers start earning this amount at 15 hours per week and reach the full
amount at 25 hours per week

Drivers can earn multiple contributions from multiple companies

 _Occupational accident insurance to cover on-the-job injuries_

 _Automobile accident and liability insurance_

It looks like this may be settled at the ballot box.

[https://protectdriversandservices.com/get-the-
facts/](https://protectdriversandservices.com/get-the-facts/)

Full initiative:
[https://www.oag.ca.gov/system/files/initiatives/pdfs/19-0026...](https://www.oag.ca.gov/system/files/initiatives/pdfs/19-0026A1%20%28App-
Based%20Drivers%29.pdf)

~~~
yhoneycomb
> Drivers start earning this amount at 15 hours per week

willing to bet they'll just cap everyone at 15 hrs/wk

~~~
FireBeyond
Mmhmm, how many other corporations do exactly the same thing?

"Benefits kick in at 30hrs / week"

Oh, you're scheduled for 28 hours every week and no more, no matter how short
staffed we are? Sucks to be you.

~~~
frockington1
"Benefits kick in at 30hrs / week" is a direct result of the ACA. At the time
I was working retail and saw that one coming. I have no idea if politicians
are dumber than an 18 year old, or just don't care

~~~
tick_tock_tick
They don't care it sounds good on the campaign trail and most people voting
don't put two and two together to figure out why they went from 40hrs/week to
29.

------
amacneil
If the goal of AB5 was to force Uber/Lyft to pay benefits for drivers, why did
the legislation not focus directly on mandating companies to contribute
towards healthcare expenses for all 1099 contractors (similar to SF mandates),
rather than trying to force them all the classify their drivers as W2
employees? It seems like the latter path has many more unwanted side effects
(e.g. many drivers do not want full time employment with required hours etc).

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thoraway1010
Can lyft drivers work for uber? I've seen that happen I think.

This seems different than google employees working for microsoft - which I
think would be prohibited.

If these workers are misclassified will they have to work for just one
company? Will uber/lyft then be able to set their working hours?

~~~
gnopgnip
CA employment law does not allow a company to universally ban moonlighting and
fire you unlike most other states. They can only do that if it interferes with
your work, or it creates a conflict of interest

~~~
bhupy
Typically employees are prohibited from simultaneously working for competing
companies, due to conflicts of interest.

Do you think that an Uber driver driving for Lyft can be construed as a
"conflict of interest"?

~~~
hamandcheese
Not any more than working part time at, say, two different restaurants, which
is common.

~~~
bhupy
It appears that it is legal for employers in California to prohibit their
employees from working for competitors, as an explicitly defined exception to
its Moonlighting law.

~~~
gnopgnip
Working for a competitor is not automatically a conflict of interest. Working
at two restaurants, or two retail stores, or driving passengers would all
likely not be a conflict of interest

~~~
thoraway1010
That's not what someone paying on a W2 basis is going to say. Is this is a
winning arguement in front of a jury? I worked for company A and then started
working for company B - their direct and primary competitor (!!) AT THE SAME
TIME I WAS WORKING AND GETTING PAID by company a(uber and lyft drivers drive
for both at same time).

Even if not at the same time, if Company A is having to pay for the vehicle or
whatever other costs and equipment are being used - in what world can someone
driving the comcast truck start installing for AT&T?

This logic is so twisted.

~~~
gnopgnip
Legally there is a big difference between using your personal car and getting
reimbursed, and working for two different companies at different times
throughout the same day, and working for two companies at the same time. If
you are not handling trade secrets or making decisions for the business a
conflict of interest is much less likely.

------
renewiltord
If you're on Upwork, it's pretty easy to shift to non-Californians. There are
also lots more of them and you can switch them up if you're worried about
hitting the 35 hour cap.

Fortunately, not too much of a problem. I just stopped hiring Californians
there.

------
cft
This is an important case for the future of the small business and
bootstrapped startups outside of the sanctioned VC ecosystem. I know that my
bootstrapped software company would not have made it without 1099s and
multiple contractors. In the proposed regime, I would either have to shut it
down or seek VC funding- but the market niche was not big enough.

~~~
smeyer
Can you elaborate a bit on how your company used 1099s, whether they'd be
classified as employees under law, and why that classification would/wouldn't
be reasonable?

I think it's reasonable to say that companies that can't be started without
treating their employees fairly shouldn't be started, and that improvements in
regulations around employee treatment may impact which businesses are started.
That said, I assume you weren't mistreating workers so am curious to hear
more.

~~~
cft
I initially hired Berkeley and MIT interns as contractors and one of them
worked for us as a contractor for a year while on leave of absence. He was
paid about 6700/mo. I would be envious when I myself was a sophomore to get
paid this much. But he lived with his parents mostly, getting health insurance
through his family as he was 20 and he got 1099s from us. Another one was paid
about 7500/mo, also on 1099. This was five or six years ago. I did not have
enough money to commit to an employee long term back then, although _none_ of
these interns were terminated by me- they all went on doing other things, I am
in touch with most of them and they are thankful for my recommendation letters
and references for Google, Amazon, etc where they are working now.

In the past, it was market that decided whether a business should exist or
not, and that involved the decisions of the employees or contractors to work
there. But now you are proposing a new, "fair treatment" decision process,
that is extraneous to the market. Has this been successfully tried before, in
any country that has become wealthy due to such business selection process?

~~~
smeyer
The United States already does what I'm proposing, it's just a question of
implementation. For example, the minimum wage dictates that if your business
is only profitable when you pay employees $5 an hour your business doesn't
exist.

Capitalism in the US isn't so unfettered that only the market determines
whether businesses exist. Some countries have stricter regulations around
employee treatment (France started mandating paid vacation in the 1930s) and
some have less strict (Singapore doesn't have a minimum wage), but this isn't
some new idea.

------
Plasmoid
The only thing California cares about is having these companies collect and
remit payroll tax. It's too much to work to chase down 200,000 contractors for
$500, so they want Uber to just cut them a cheque.

------
sunaurus
Can somebody explain the argument against companies like Uber and Lyft being
able to provide "gig platforms"?

And where should the line be drawn? For example, web browsers are also apps
that facilitate different kinds of transactions, but surely nobody wants
Google to be responsible for paying benefits to anybody whose services can be
bought through Chrome.

~~~
jeffbee
Uber sets the price. Uber drivers have no ability to set price other than
choosing to not use the platform. Uber drivers do not form relationships with
Uber riders; they are assigned randomly, by Uber. Uber drivers do not enjoy
most of the aspects we associate with truly independent contractors.

~~~
threatofrain
But being a traditional employee means traditional employee lock-in. That
means only working for Uber and not for Lyft or Google Shopping, and Uber
chooses when you work.

~~~
gnopgnip
That is not true in CA. Employers cannot prohibit moonlighting and fire
employees unless it affects their work performance, or it creates a conflict
of interest

~~~
ping_pong
What you say doesn't apply to a real job. I can't have a Google laptop and
Facebook laptop and work for both companies at the same time. It's a huge
distinction that drivers can pick and choose what they want to do at a
particular time, by having both apps open and accepting whichever ride they
please, or just stop working for the day altogether.

~~~
jeffbee
Doesn't sound like you have much experience having "a job". What you are
talking about is exempt employment. There is a three-part test for exemption
in California and Uber drivers don't meet any of the administrative,
executive, or professional criteria. They also do not pass the salary basis
test. Unless Uber wants to start paying their drivers a regular salary, Uber
drivers are non-exempt. Uber drivers are not even hourly wage workers, they
are paid by the piece. This is the lowest form of employment.

~~~
SamReidHughes
No, that's describing not being an employee, accepting contracts on a gig-by-
gig basis.

~~~
jeffbee
The whole point of AB5 was to render your statement incorrect by law.

~~~
SamReidHughes
And... the post in question wasn't reciting what AB5 says.

------
okareaman
This really sucks. I guess I'll be out of job soon. It was a retirement gig to
supplement my income working part time on my schedule. The Uber/Lyft drivers
who whined constantly about being taken advantage of were incompetent drivers
who played right into the hands of very strong California unions and their
political allies in Sacto. Incompetent as in, one of their driver spokesman in
San Francisco went on TV complaining about how he only made $67 a 12 hour
shift in the City. To only make $67 a day in SF you either have to be very
lazy, very picky about rides, very mentally slow with personality problems or
some combination of all. The type of person who can't wait to file workman's
comp so they can sit home and watch daytime TV ruined it for the rest of us.

It was fun while it lasted. I have some great memories. I guess I'll go back
to programming for extra cash.

------
nightshadetrie
Kicking a man when he's down (IMO this is probably the hardest time for a
compromise. It could even lead to lose-lose with the company going under.)

------
theaceoface
There is a massive wave of layoffs in the tech industry and the Californian
government seems content to gleefully drive the knife in further.

------
LatteLazy
What's the actual plan here? Ban services like Uber? I am not comment on
whether that's a good idea, I'm just asking as it doesn't seem anyone can
operate this sort of business and comply...

~~~
SpicyLemonZest
California regulators think Uber is just being greedy and could operate fine
with drivers as employees. There's no plan for what'll happen if they're
wrong.

~~~
asdff
In my eyes, they are. Uber doesn't own any cars, they don't pay maintenance on
these vehicles, so no matter what uber states you make, your actual take is
far lower. I had a driver whose car had been totaled and was being held by the
dealership, the driver was using a rental car to try and save up enough to pay
the dealer. The people who drive for uber are often desperate and struggling,
and given these two rideshare companies are famous for burning millions of
dollars in VC money with little to show for it, quarter after quarter since
they began, why not burn just a little bit more and actually offer benefits
that any other employee in any other profession would already be entitled to?

~~~
bhupy
> no matter what uber states you make, your actual take is far lower.

It depends. For a lot of drivers, the car is a sunk cost. That is to say, they
would own the car regardless of whether or not they were driving for Uber
because they need to meet their own personal transportation needs regardless
of Uber/Lyft. For example, you can't take into account vehicle depreciation,
because the vehicle depreciates regardless of whether or not you drive for
Uber/Lyft.

The one significant cost that increases strictly as a consequence of driving
for Uber/Lyft is vehicle wear-and-tear. However, when you take into account
vehicle maintenance, Uber/Lyft drivers still make far more than minimum wage.

~~~
asdff
Uber requires that you have a certain car. I've had drivers who have leased a
newer car to drive for uber, and I've had drivers that were renting their car
from Hertz. It's a huge assumption that most uber drivers already had a
sufficient car, and even if they did, the maintenance costs will surge as they
pound on the mileage. Same problems with being a pizza delivery boy, but you
can't get away with a 'disposable' 1k car.

~~~
malandrew
For food delivery, I think you can get away with a 'disposable' 1k car.

------
kkotak
If AB5 was written for protecting the workers then they should've been given
an opt-out option for those who don't need/want a change.

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outlace
So if you are reclassified as an employee of Lyft then can you still decide
how many hours you work? What if you want to work 40 hrs a week for 2 weeks,
then travel the world for 2 months and come back and work 10 hrs a week for
Uber. How can a company possible deal with compensating health insurance etc
for situations like these?

------
namesbc
There are jobs where independent contractor vs. employee classification is
difficult, but Uber and Lyft are the most straightforward classification.

Of course, taxi drivers are employees of taxi companies. What other industry
are the primary workers not considered employees?

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theaceoface
AB5 is a terrible law that was only passed because of corrupt union power in
California.

