
Uber CEO says its service will probably shut down temporarily in California - dionmanu
https://www.cnbc.com/2020/08/12/uber-may-shut-down-temporarily-in-california.html
======
pininja
I work at Uber outside of the rides/eats business and observed many feature
releases to adjust the business after AB5.

What I saw released:

\- Enabling drivers to see where a rider is going before accepting the trip
[0] [2]

\- Removed a main penalty for declining rides, “No More 85% Acceptance Rate
Requirement For Uber Pro” [2]

\- Drivers get set their own fare with a multiplier [1] (the article details
screenshots and backend balance rules)

Now every dollar coming in seems to very clearly go from rider to driver.

\- removed upfront pricing in California and once again charging riders the
precise trip amount based on time and distance. [0] [2]

\- A new driver incentive was released too tied to purchasing the service fee
at a lower rate [3] (since every dollar is supposed to flow clearly from the
price breakdown)

\- “Favorite Driver Feature”, so even if they set higher fares, riders will be
able to request one of their favorite drivers if they’re nearby [2]

These seemed primarily to try to address the flexibility evaluated by “Prong
A” of AB5, however some public experts were concerned it wouldn’t address
“Prong B”, which requires the “drivers’ work is outside ‘the usual course of
the company’s business,’” [0]. This might have been where the judge focused
their ruling.

Other companies didn’t make changes for drivers, “Lyft [also afaik Postmates,
and DoorDash] continues to operate as if it’s business as usual.” [0]

[0]
[https://www.latimes.com/business/technology/story/2020-02-03...](https://www.latimes.com/business/technology/story/2020-02-03/uber-
ab5-driver-app)

[1] [https://therideshareguy.com/set-your-own-rates-uber-
feature/](https://therideshareguy.com/set-your-own-rates-uber-feature/)

[2] [https://therideshareguy.com/uber-rolling-out-new-driver-
feat...](https://therideshareguy.com/uber-rolling-out-new-driver-features/)

[3] [https://therideshareguy.com/uber-drive-
pass/](https://therideshareguy.com/uber-drive-pass/)

~~~
rubatuga
This is horrible for customers, the worst part is when drivers don't want to
pick you up.

~~~
adrianN
Here in Germany proper Taxis have to pick you up (as far as I know, I almost
never need one). That's apparently the main reason they offer why they should
be protected against services like Uber.

~~~
sneak
That’s the law in most places in the US, too. Uber was founded because it
wasn’t really true in practice. You couldn't order a taxi in most places
without giving your destination, and frequently they just wouldn't show.

Uber was, and remains, a huge improvement over the pre-Uber status quo.

~~~
DEADBEEFC0FFEE
For drivers or riders?

~~~
fosk
Both. As a driver, no medallion mafia and astronomical prices to deal with. As
a rider, no taxi drivers and their horrible service to deal with.

Taxi companies are monopolies allowed by the state, it sucks for the last ones
who paid $300,000 for a license to operate just before Uber took off, but
technology finds its way.

------
rrrazdan
Well this just sucks. As a frequent SF visitor, Uber/Lyft used to be my
primary way of moving around. I don't drive.

I also don't see who benefits from this. You had a well functioning service
for the users that will be disrupted. You had a flexible way to earn for
drivers that will be disrupted.

I chat with drivers a lot (to practise my English) and lots of drivers really
like chatting too ( A lot of them were recent immigrants as well and perhaps
like to practise their English with a non native). Many drivers were doing
this as a part time thing. Or doing this before they went on to better things.
One for example was studying Architecture. I have even had a Porsche pick me
up and the driver just wanted to get out of his house.

A lot of drivers were sure forced to drive for Uber for lack of other
alternatives but that is not Uber's problem. They did not add to the problem.
Society failed there. This law helps no one and is a clear example of no skin
in the game virtue signalling trumping common sense.

~~~
Barrin92
> also don't see who benefits from this.

Long term society by establishing that Uber doesn't get to write the law and
dodge their responsibility as an employer. It's about time they get knocked
down a notch after their campaign against DeBlasio.

~~~
jjcon
I agree with you but I also think that they should have waited.

Right now is a terrible time to wipe out the gig economy. So many people are
turning to it and it is creating value. Economic/employment changes like this
one are best suited when the market is strong because people job mobility is
higher etc.

~~~
jonahhorowitz
There was no choice to "wait". AB5 was passed to fix the law because of a
court decision [0]. Had they (the CA Legislature) not passed AB5, the court
finding in Dynamex would be just as bad for Uber.

The court doesn't have an option to "wait" just because it's a recession.

Uber doesn't have a choice to "wait" because this ruling is going to go into
effect in ~10 days unless the stay is extended.

[0] - [https://scocal.stanford.edu/opinion/dynamex-operations-
west-...](https://scocal.stanford.edu/opinion/dynamex-operations-west-inc-v-
superior-court-34584)

~~~
diebeforei485
The authors of AB5 took the liberty of exempting certain professions
(presumably influential voter blocs and donors) from Dynamex.[1]

If you drive delivering beverages, whether you're an employee or contractor
under AB5 depends on whether or not that beverage is milk.

I don't see why they couldn't have anything in there for rideshare.

[https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...](https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5)

~~~
techslave
I detest uber. yet AB5 is an abomination, an embarrassment. sad

------
jacobn
We’re legally unequipped to deal well with gig workers.

They’re arguably neither contractors nor employees, and shoe horning them into
either category will inevitably lead to some absurdities.

~~~
yaur
I think it's more like "gig workers" were created to try to do an end run
around hard won protection for workers. The idea that someone driving (or
waiting for pickups) 40+ hours a week is somehow different is different than
somehow different than someone (e.g.) doing tech support for 40+ hours a week
is absurd.

~~~
GhostVII
It is entirely different, since you can start or stop your work at any time,
can choose to only work when the pay is good enough, and are not committed to
a single company. I don't think a job where you can start working by just
installing and app, and get paid by the job, should be treated as the same as
one where you are required to work some amount each week and get paid the same
every week.

------
lhh
> Becerra said in an interview on CNBC on Tuesday that he was unconcerned
> about the potential for Uber to leave the state as a result of the order.
> “Any business model that relies on shortchanging workers in order to make it
> probably shouldn’t be anywhere, whether California or otherwise,” he said.

This type of attitude drives me crazy. These companies have paid billions of
dollars to drivers, who voluntarily decided to work and earn this money. If
drivers felt the arrangement was unfair, wouldn't they do something else? How
is anyone better off by these companies being legislated out of existence?
They're already hemorrhaging cash as is.

It's astonishing to me that government leaders believe workers are better off
with fewer options, regardless of the perceived quality of them. Or maybe they
don't actually believe it but are willing to inflict the damage anyway for the
sake of virtue signaling.

~~~
slipheen
That's a really harmful outlook.

If company A decides that they are going to pay their workers (say) $3/hr, and
illegally bypass the minimum wage, it _DOESN'T MATTER AT ALL_ if they can find
workers willing to work for that amount.

As a society, we've decided that certain offers aren't acceptable, even if you
can find someone desperate enough to take the offer.

You shouldn't get to just ignore the law because you're big enough.

(And Yes, in practice big companies do ignore laws more than they should.
That's a bad thing, and a reason to do better, not a reason to give up).

~~~
twblalock
There is a floor to what people will be willing to accept -- if they can make
more money from unemployment benefits than from working, they won't work.

Many Uber drivers are facing a choice between gig work and unemployment, and
they chose gig work. If they had better options they would have chosen those
instead, but they didn't. Clearly they prefer gig work to unemployment, and
for most of them, those were the only two options.

Taking away gig work does not help gig workers. It removes the only option
they had, and it forces them into unemployment. If that is the outcome they
wanted, they would have chosen it already.

~~~
newacct583
That's not the way UI works. Benefits must be qualified for; you generally
have to have had a job that you lost (gig economy jobs complicate this
severely and often disqualify people). You can't just "quit" and pick up
benefits. And there is a time limit in all states after which the benefits
terminate.

Very, very few people at any given time have a "choice" as to whether to get
unemployment or work a gig job.

------
slipheen
Them shutting down is a perfectly acceptable outcome.

California has essentially told them "You're doing an illegal thing". They're
response is essentially "Oh yeah? Well then, we'll stop doing the illegal
thing!"

Thank you? That's what you were asked to do in the first place?

If they aren't interested in operating legally, then pivot or disband the
company.

~~~
valuearb
Yes, a terrible solution for drivers and riders both. Back to the taxi
monopolies.

~~~
JKCalhoun
Or an opportunity for a new ride-share company that doesn't claim their
employees are contractors.

~~~
remote_phone
Even taxis claim their drivers as contractors.

~~~
Slartie
An individual taxi driver owning a cab, a license if necessary, paying for his
insurance and getting the money from his passengers is an individual
contractor, yes.

It's just that he contracts with the individual riders, not any higher-up
monopolistic business entity that sets arbitrary business-driven rules that
all taxi drivers have to follow.

~~~
valuearb
Very few drivers own their cars (or more importantly their monopoly
medallion). Those are owned by investors like the presidents former lawyer,
Michael Cohen.

[https://www.google.com/amp/s/www.cnbc.com/amp/2018/08/23/tax...](https://www.google.com/amp/s/www.cnbc.com/amp/2018/08/23/taxi-
commission-warns-michael-cohen-they-may-revoke-his-medallions.html)

~~~
Slartie
Isn't that only the case in certain metropolitan areas? It is a huge problem
indeed, but the problem there is the medallion system having degraded to
become a shady get-rich-quick investment scheme. This is unrelated to the way
in which the drivers are operating.

They just lease their car and medallion from someone, paying that guy a fixed
rate per day for that lease, but that does make them neither a contractor nor
an employee of the guy who owns car and medallion.

If they also were to lease the clothes they wear while working from a tailor
instead of buying them, that wouldn't make the drivers in any way into
contractors or employees of that tailor.

~~~
remote_phone
Absolutely false. Most taxi drivers don’t own the medallion, and in fact when
they start their shift they owe the taxi cab company $80-100, so they need to
work for a few hours just to get to break even.

Your mental gymnastics to try to justify why taxi drivers aren’t employees but
Uber drivers are is showing.

------
ghaff
Maybe I'm cynical but "temporarily shut down" sounds like a formula to:

\- Inconvenience a certain class of urbanites who have grown accustomed to
being driven around in the hopes that they

\- Complain loudly to their representatives and other governmental officials
in the hope that

\- The state will reverse this judgement

~~~
aqme28
Uber isn't the only company who provides this commodity.

If Lyft continues to operate, that certain class of urbanites will switch to
Lyft before they complain to their reps.

~~~
ghaff
Lyft certainly has the option to comply with the law and jack up their prices
to compensate. There are probably fewer "frivolous" reasons to use ride-
sharing at the moment anyway and a decent percentage of that class of
urbanites aren't all that price sensitive.

~~~
dragonwriter
> Lyft certainly has the option to comply with the law and jack up their
> prices to compensate

They also have the option, if they can find the financing, to comply with the
law and burn money building an entrnched user base _before_ jacking up prices
to compensate.

I mean, even on the old model, that's how Uber got itself entrenched and hard
to displace.

------
stephencoyner
“If the appeal doesn’t work out for Uber, it will be banking on voters to
determine its fate. Khosrowshahi said if that’s the case, the service would
likely shut down in California until November, when voters in the state decide
on Proposition 22, which would exempt drivers for app-based transportation and
delivery companies from being considered employees.”

It’ll be REALLY interesting to watch this all unfold.

------
paulcnichols
Decoupling “benefits” like healthcare and retirement from employment is the
real issue. Should be a government responsibility, given out equally, paid for
by taxes.

~~~
asdff
We already have social security and medicare. The problem is that we refuse to
expand these excellent social programs, opt to hobble them, and then point out
how bad they are after we've bled them out. The American way.

------
Grimm1
Uber has generally seemed like a net benefit and I've taken a lot of rides
(hundreds to low thousand) and have generally conversed with most of the
drivers I've had and the gig work has been beneficial to them, they make a
decent standard of living for a HCOL area enough for a family and get to set
their own hours. Hard pass on regulation like this and good to see Uber push
back with the levers they have.

I will add that some regulation would probably be beneficial but not this one
in particular.

~~~
dangus
You can set your own hours with W2 employment. There’s nothing that says that
Uber can’t give their W2 employees that flexibility.

They could hire W2 employees right through the app, there is no technical
barrier.

Uber just wants to avoid their fair share of payroll taxes and employee health
regulations that their upper caste office employees enjoy. They want to
provide benefits to some employees but not all, purely based on their job
description.

I bet your ridesharing gig worker friends you know would love no longer
covering the full payroll tax bill, and they’d love to be covered with workers
compensation if they got into a car accident while driving for Uber.

If companies don’t want to pay for healthcare and benefits anymore, maybe they
should start putting their lobbying efforts toward making healthcare paid
through tax revenue rather than through the inequality and inefficiency of
employer subsidy and for-profit private insurance companies.

~~~
Grimm1
You're only partially correct I as a salaried employee could technically set
my own hours but If my employer pinged me at 2am and asked me to do something
and I said no I wouldn't have recourse if they fired me. If I'm a contractor I
can set those hours in the agreement with the company with legal backing if I
then refuse to work during hours I've said I do not wish to work.

But you're debating regulation in general and I'm specifically arguing AB5 is
overly restrictive.

Edit: I can clarify as well, it may very well be the case they are employees
but this isn't the regulation to do it because it is actively harming workers
in multiple industries besides ride sharing.

~~~
dangus
I’m confused, what does Uber have to do with salaried employees?

This is the workflow.

1\. Gig worker applies for Uber in the app.

2\. Uber approves the employee as a W2 employee. Their schedule is...whatever
they want. They never get scheduled for a shift. They never get “fired” unless
they do something that would get them get kicked off the platform just as it
works today.

3\. When the driver starts the driving mode, they start the clock on their
shift. This counts the number of hours for the purposes of healthcare and
other benefit requirements. Perhaps if they deny a ride request, the clock
stops or considers the previous ride to be the end time.

There is no legal requirement for an employer to fire a W2 employee over being
unwilling to work a shift. There’s no legal requirement for a W2 employer to
set a predetermined schedule.

What is the problem here, can you explain?

~~~
Grimm1
[https://www.integrated-
payroll.com/difference-w2-employee-10...](https://www.integrated-
payroll.com/difference-w2-employee-1099-employee/)

The setting your own working hours part. You're just a bit wrong there.

~~~
dangus
Okay, so Uber mixes both those scenarios.

I wonder if Uber has filed SS-8 to have the IRS evaluate the situation.

They have fixed performance guidelines (star ratings) and fire employees for
not picking up jobs (rides). The employee also only works for Uber (not the
individual customer, who is anonymous until the job is accepted), who
determines the rate and is the ultimate decider if the completed work is
accepted (they resolve all customer disputes and are the final say on whether
you get paid, not the customer). Uber determines the method of completing work
(e.g. how long you have to wait for customers before canceling).

Critically, these “contractors” are integral to Uber’s regular business
operations. 100% of Uber’s product relies on its drivers.

On the other hand, they don’t provide equipment or set schedules. Clearly
their mode of work blends aspects of W2 and 1099. But also, because these
drivers are integral to Uber’s business, it’s possible they’re in violation by
_not_ compensating for/providing equipment. Again, the drivers are told who to
pick up and where to go, and if they don’t do it while they’re on shift, they
get “fired.”

The only factor that comes close to making them a contractor is the lack of
schedule, and maybe the fact that they can go work for Lyft too. But every
other aspect of the job looks like W2 to me. More checkboxes are on the W2
side of the guidelines.

So, California’s law fills in that logical gap by determining that, in this
scenario, the workers are W2 employees.

If the IRS has a problem with the law in California, I assume they might have
said something by now, or sued the state?

------
dreamcompiler
There is zero barrier to entry for a rideshare service. (Just ask the city of
Austin.) Absent COVID, competitors would be coming out of the woodwork to
supply this market with fairly-paid drivers. That means the cost of a ride
will double, but that simply means we'll be paying taxicab rates for much
better service than taxis provided in the past. We've known all along that
Uber's prices were too low to be sustainable anyway.

~~~
ars
> Just ask the city of Austin.

[https://communityimpact.com/austin/central-
austin/impacts/20...](https://communityimpact.com/austin/central-
austin/impacts/2020/06/12/rideaustin-shuts-down-operations/)

"RideAustin shuts down operations"

"Other ride-hailing companies that entered the market in 2016 have also since
suspended their operations in Austin. Fasten ceased its U.S. operations in
2018, and Fare closed in June 2017."

~~~
ntsplnkv2
That's because the business model just doesn't work, it requires ridiculous
scale and the ability to exploit workers to function - that is why Uber is so
aggressive with this and even more reason to shut it down.

------
jamesliudotcc
I mean, consider the alternative, which is how taxis used to work. Investors
like Gene Friedman would own fleets of medallions, and drivers would rent the
medallioned cars. Or drivers would own their own medallion. Definitely, for
sure, the drivers were not employees.

One big difference was that there were no big public companies to sue. In
Chicago, clever class action lawyers tried suing the city, since they set all
of the standards that are the basis of the employee/contractor distinction. It
got up to the 7th Circuit, where Posner wrote an an opinion that went
basically "uh, no."

------
skapadia
I don't know what kind of background checks and interviewing (if any) Uber
drivers have to currently go through (beyond having a valid driver's license
and good driving history?), but if I'm hiring someone as a full time employee,
you better believe I'm going to be more rigorous and it will cost me more, and
that will limit the number of available Uber drivers IMO, or the number Uber
will allow to work for 40+ hours. In turn that lowers supply, driving up Uber
prices even further. I don't know how this makes sense overall. If a driver
chooses to Uber as their primary (or sole) source of income, that's their
choice. Do drivers that hustle more for Uber get a larger cut? (I think that's
fair).

This is not about Uber, but about how a government can force something on a
business model. Something seems off about forcing a company that created
massive opportunity for people in the first place. (I am in no way supporting
Uber because I think their leadership and culture have very questionable
ethics).

How much more are local, state, and federal governments going to reap from
taxes once drivers are classified as full time employees?

~~~
Aeolun
> If a driver chooses to Uber as their primary (or sole) source of income,
> that's their choice.

Government partially exists to protect people against themselves.

~~~
x3n0ph3n3
That's a rather contentious statement. Many would say it is solely to protect
people from each other and outside forces.

------
slicebo123
Civic safety nets should be the responsibility of duly elected governments.
Pushing health care, sick leave, etc., onto businesses is so backwards.

Our body politic wants all these protections but can't muster the will to do
it "properly". I see this as "pass a law, and make it someone else's problem".

~~~
ntsplnkv2
> Our body politic wants all these protections but can't muster the will to do
> it "properly".

This simply isn't true - one party runs on being against all of these
policies.

------
bhupy
Lyft announced that it would do the same:
[https://www.cnbc.com/2020/08/12/lyft-president-says-it-
may-h...](https://www.cnbc.com/2020/08/12/lyft-president-says-it-may-have-to-
suspend-service-in-california.html)

------
xiaolingxiao
Could this be posturing to get the state to back down on the enforcement of
its decision? And does anyone have a guess if Uber is making money in
California right now? Given the state is still in lock down.

~~~
throw_m239339
it is. Airbnb tried to pull the same trick in New York City. All Uber has to
do is follow the law. Of course they can't since their business model is based
on violating labour laws. If your business model relies on doing something
illegal to make money then you are no better than the mafia, it's just
organized crime.

As for people here who invoke "freedom of work". Most people doing these jobs
don't have much choice at first place, in order to survive. But eventually
Uber will backstab them, one way or another.

~~~
paulgb
> Airbnb tried to pull the same trick in New York City

I think this is a good comparison, with the caveat that there is a major
difference in the political calculus: the people who get the most benefit from
AirBnB in NYC are people visiting NYC (i.e. people who can't vote in NYC).
AirBnB is generally not popular among the people who live here because people
don't like transients in their buildings and perceive it (probably rightfully)
as driving up rents.

Uber/Lyft on the other hand are used by locals (i.e. voters) as well as
tourists. They are perceived as bringing prices down by breaking the supply
constraints of the medalian system.

It will be interesting to see how this plays out.

------
hbarka
Can we talk about the upside of being a contractor? It takes more effort to
keep tabs of what you do but there are many benefits to being a single person
entity. I believe lack of education about being an LLC or incorporated
entrepreneur or maybe the high bar of understanding its benefits contributed
to the opinion that being W2 for Uber is much better.

------
vadym909
Great- I think this will bring forth the root cause of the problem which is
employer tied benefits and employer tied taxes. Right now there are entire
business models based on avoiding taxes and benefits.

You can have protections like min wage, sick leave, etc and still make it
really simple os that evvery individual pays the entire tax (employer and
employee payroll taxes) for every dollar they earn. It can be scaled based on
annual amounts just like they are now. It'll be transparent and everyone will
pay it.

~~~
ThrustVectoring
The nominal burden of who "pays" employment-related taxes or benefits is
completely separate from who the actual tax incidence falls on. Would you
rather get paid $10k that you owe $1000 of taxes on, or get paid $9k with the
$1k of taxes already withheld for you? Either way, the total cost of employing
you remains the same for the company, and the take home pay after taxes
remains the same.

~~~
lawnchair_larry
Not quite, taxes are actually higher if you are self-employed. You have to pay
SECA, which effectively includes the portion that your company would have paid
otherwise (on top of the amount that they withhold and pay on your behalf).

~~~
ThrustVectoring
That's not taxes being "actually higher", that's taxes being paid in a way
that increases the total cost of hiring someone without showing up anywhere on
the pay stub of full-time W2 employees. Like, it changes the numbers to
something like "$9k with $1k withheld and $1k of employer taxes" vs "$11k with
$1k of income taxes and $1k of 'employer' taxes that you now have to pay"

------
drtillberg
Golden opportunity for the taxicab industry to get its act together and
compete on a semi-level playing field.

~~~
temp667
The corruption here is incredible - the taxi cab industry had insurance of
like $20K per accident (talk to the women who got brain damage), would never
pickup in bad areas AND paid their workers as.... independent contractors!!

You think your taxi driver is a W2 employee - please think again.

The number of carve outs in this new "principled" rule is incredible, and more
industries keep asking for them (freelance writers, gig musicians etc). Laws
should ideally be broadly and equally applied, not this here is the rule
except for a, then b, then c,d,e depending on who can lobby in their
exceptions.

Pathetic.

~~~
mayneack
What are the taxis doing with AB 5 then?

~~~
temp667
This is a law with numerous carvouts (ie, pretty garbage in first place) and
HIGHLY selective enforcement.

The discussion is no longer logical. You can't say here is the law - here are
facts - here is result. Now it's here is law (with lots of totally random
elements and exceptions that are confusing for everyone involved if you
actually try and comply with it - I've had folks says they promise they are
independent businesses, and they look and act like it, but the law says things
like if they don't have all the business licenses setup they are not, and some
cities like SF require that if you do work for a company that has business in
SF that work can be considered happening in SF and so you need to get licensed
there etc etc).

I used to be a stickler for trying to get folks to comply with AB5 - but I'd
guess we are at 70% noncomplaince still against letter of law - and it's not
worth fighting employers AND contractors to get everyone to switch when they
don't want to.

One workaround I've been recently is to hire out of state or look at
offshoring - freelance writers are a good example where I don't think there is
a way to really hire them legally in CA, but you can still hire them outside
of state as I understand it. The mechanics of turning all authors into W2
employees is such a big leap, but most authors don't have all the right
business licenses setup in every city they might have work appear.

------
asdff
I've been bearish on Uber recently when they fleeced me with their credit card
rewards recently. That barclaycard used to offer straight cash back, 4% at
bars being the big one, which made it one of the best credit cards out there.

Then one day I checked my rewards balance and lo and behold, it was converted
into useless uber bux that I can only spend on uber eats, which I avoid given
the premium, or rides, which I am not going to ever do unless I've been
inoculated for covid 19.

Very slimy anti consumer and anti driver practices, and I hope this statewide
pull out means the writing is finally on the wall for Uber. I lust for the day
ever since they ruined my favorite credit card.

------
ocdtrekkie
Seems like a fair outcome to me. If they can't operate within the law, they
shouldn't operate.

~~~
sjroot
Sounds like a great outcome for the people who are relying on that work for
income right now.

~~~
ceejayoz
If Uber hasn't been preparing internally for the possibility of losing this
suit, they've been irresponsible in the hopes that California would go "oh
shit, they're gonna shoot the hostage".

~~~
ericmay
Well, I'm sure they have. They fundamentally disagree with the outcome, and so
they will just not operate in California. Nobody will because the business
model won't allow you to pay people enough money without charging too much. I
also fundamentally agree with Uber and others here. They created a platform
for someone to make a few bucks. If I sell something on Etsy they don't have
to all of a sudden pay for my healthcare costs. The fact that people have
turned to driving for Uber (and others) highlights problems with our
government, economy, and priorities, not the companies. I really wish people
would stop giving government a pass and wanting corporations to come save
them. Go vote, educate yourself, and do something with your democracy. If
people have to resort to driving for Uber to live, then that's something we
need to fix at a state-wide or country-wide level.

Many people depend on rideshare like Uber to get to work like a public
utility. Maybe if California (and this is true of other areas) actually built
and invested in bike able neighborhoods and public transport, then they
wouldn't need Uber.

California will lose this one eventually. You don't know what you have until
it's gone.

~~~
asa4akj
comparing uber and etsy is dishonest at best.

The only freedom an uber contractor has is "when to work". All the pricing and
trips are decided by uber, and they can't even reject properly. They are in
fact an employees in everything but legal status.

In etsy, you choose your prices, what you sell, and even to whom you sell to,
it's definitely a market place.

~~~
deminature
Drivers have been able to set their own prices in California for some time now
[https://www.uber.com/blog/california/set-your-
fares/](https://www.uber.com/blog/california/set-your-fares/)

~~~
omgwtfbyobbq
What Uber did likely isn't sufficient. Uber restricts the maximum drivers can
set, only allows increases in 10% increments, does not allow passengers to see
the rates of more than one driver at a time, does not let a passenger set
their own rates, does not allow drivers to go below auto-pricing, and still
sets surge pricing themselves instead of letting passengers and drivers set
pricing when demand is high.

 __ _Starting Tuesday morning, drivers at the three test airports can either
accept Uber’s original price for outgoing rides, or ask for up to five times
more, in increments of 10%. After next week they will have the option to ask
for less than Uber’s original price.

Essentially those drivers now are bidding against one another for riders. Uber
passengers will see only the lowest proposed fare range. If that driver
rejects their ride request, they could see a new, higher fare range, as Uber
would then show the request to the next-cheapest driver._

[https://www.sfchronicle.com/business/article/Uber-tests-
lett...](https://www.sfchronicle.com/business/article/Uber-tests-letting-
California-drivers-set-own-14992943.php)

Uber likely wouldn't be in this position if they stayed out of
pricing/visibility and let passengers/drivers set whatever rates they wanted
to. Just provide a platform for people to get rides and stay out of pricing
entirely.

------
ashtonkem
Couldn't pick a less impactful time to shut down if they tried. I'm personally
not using Uber right now because I have nowhere to go; I literally won't miss
them.

------
bryanlarsen
If a ridesharing platform can't classify drivers as contractors for legal
reason, and if they can't classify drivers as employees for business
reasons[1], can they classify drivers as owners? It's certainly legal for
small businesses not to pay reasonable wages or benefits to their owners.

This ruling may give a substantial advantage to a ride-sharing service
structured as a worker's co-operative. That'd be awesome, IMO.

1: this is a very big if

~~~
psoots
I don't know if there is a platform co-op specifically for ride-sharing yet,
but it's not out of the question.

[https://www.yesmagazine.org/economy/2018/01/04/the-
platform-...](https://www.yesmagazine.org/economy/2018/01/04/the-platform-co-
op-is-coming-for-uber/)

The problem is that the co-operative model is not successfully funded in the
initial phases. There is little infrastructure for worker-owned businesses in
this country. There is little guidance for getting investment and start-up
capital when the overall aim is to primarily put profits into owners' hands
and not investors'.

We need a government that supports these efforts first. A good first step
would be to pass first-right-of-refusal laws.

------
bogomipz
>"If the appeal doesn’t work out for Uber, it will be banking on voters to
determine its fate. Khosrowshahi said if that’s the case, the service would
likely shut down in California until November, when voters in the state decide
on Proposition 22, ..."

I'm curious has the current situation with Covid-19 affected the likelihood of
this passing? Would't the fact that CAREs Act allowed gig worker to collect
unemployment assistance have swayed public opinion on upside of being
designated a full time employee and the ability to collect unemployment when
things go south?

For all the talk by the companies behind Prop 22 about a "third way", why
wasn't the this third classification made a ballot initiative instead of
simply saying they should be classified as a an independent contractor? Does
it not seem odd to believe in a "third way" but have your legislation call for
classification using one of the existing two?[1]

[1] [https://ballotpedia.org/California_Proposition_22,_App-
Based...](https://ballotpedia.org/California_Proposition_22,_App-
Based_Drivers_as_Contractors_and_Labor_Policies_Initiative_\(2020\))

------
ekianjo
> Uber has argued its drivers prefer working as independent contractors,
> though California AG Xavier Becerra rejected that claim as a "bogus
> argument."

The link on the "California AG Xavier Becerra" is a google search link instead
of CNBC's actual article. A mistake?

------
oneng
This law sounds like it's putting the cart before the horse.

The real problem is the cost of healthcare and how everyone should be (but
aren't) aligned with lowering the overall costs without compromising on
individual care or the treatment of caregivers.

------
manigandham
AB5 is a colossal failure and it was done for taxes, not worker protection.

Full-time driving jobs already exist. Shuttles, buses, taxis, limos, etc. Uber
Black is mostly private transport employees. It was a choice for drivers to
willingly work for Uber instead. The lawsuit was backed by a handful of people
who went against the 99.9% of drivers who wanted freedom and flexibility to
work above all.

It's a tyranny of using a tiny minority to unlock massive tax potential. If
protecting workers was really the goal then they should've created a 3rd
option instead of shoving everyone into the W2 extreme, and it's affecting all
kinds of freelance workers.

------
namesbc
I'm sure both Uber and Lyft have contingency plans to quickly hire drivers as
employees. It is more they don't want to switch to the employee model and then
back again if the Prop passes

------
maerF0x0
I used to use a service called car2go in previous cities I lived in. It was
extremely convenient and approximately as expensive as Uber. Car2go dealt with
all of vehicle asset, maintenance, gas, insurance, parking.

IMO paying someone to drive you around is just inefficient when you can easily
do it yourself (though lack the vehicle). This is the wall that uber is
running up against and is now trying to skirt regulation in order to cut
costs.

~~~
maerF0x0
Edit: looks like it's been shutdown and is now [https://www.share-
now.com/](https://www.share-now.com/)

------
catsarebetter
So basically, Lyft wins in CA? Ubers out and Lyft will comply and can finally
raise the prices on rides however they want. Am I missing something?

~~~
nwallin
Lyft is also a target of this injunction. It isn't clear yet that Lyft will
begin complying with AB5.

~~~
justinzollars
Margins are already negative. How can they possibly afford to?

~~~
nwallin
I don't know.

Financials aside, I don't even know what this is supposed to look like from an
organizational perspective. IMHO the biggest problem Lyft and Uber are facing
is not an increase in cost, it's a reduction in flexibility.

You can't afford to pay extra people to sit there on the clock if there's no
demand. (plenty of drivers turn the app on in their house and go about their
regular day, maybe only getting 1-2 rides in between eight hours of playing
video games) Do you forcibly clock people out?

You now have to be really careful about the 40 hours. You definitely can't
afford to pay people overtime, and for all intents and purposes you can't
allow people to work enough hours to constitute "full time" either. So if
someone hits 35 hours or whatever, you have to clock them out.

How do you handle drivers who turn down lots of rides? You have to fire them I
suppose?

This is not a problem you can just throw money at. I'm glad I'm not a product
manager at Lyft/Uber right now. I'm not convinced it's possible to operate in
California anymore.

~~~
catsarebetter
I guess another thing is that a lot of uber drivers could get fired b/c of
just cost and the ones that stay on full-time are going to get thrashed around
with little choice in what rides they want to pick.

Yeah, this is a huge mess, it kind of makes sense why they choose to fight in
legal battles in the past, it's just easier than figuring this out from a
product perspective.

------
beaunative
Uber's model would work fine in a country where the government provides
medical insurance, disability insurance and the protective net you need.

In the US, unfortunately, those protective nets are liabilities of the
companies to their staff, not a service provided by the government.

One could argue a third solution where the driver would unionize and the
protective net should be offered by the union.

~~~
arez
we have all that in germany but we also have minimum wage, which uber can't
pay, that's why they're basically a "normal" taxi company here.

------
jonathanlydall
Regardless on where one stands in regards to the issue of whether or not gig
workers should be employees, I don’t see how anyone could see Uber’s choice of
action here as anything other than malicious obedience.

The court proceedings have been going on for a very long time, and now, only
on practically the eve of the ruling becoming effective, do they start making
plans for it?

------
caycep
I may be a bit behind the loop as to what efforts has been done before, but
has there been efforts at doing a "taxi platform" vs. a full ride hail-service
app, i.e. just providing an app as a common platform for different taxi
medallion holders to ride hail and maybe handle payments but without handling
full fledged ride recruitment and rates?

------
DeonPenny
California is bullying freelance. And honestly I don't see the realistic end
goal. They can bring on all their drivers full time it would be a nightmare to
pay and manage for a company that makes no money. Or uber treats driver worst
and the quality of rides gets worse by lowering standard.

------
komali2
Why would they bank on voters? Do they really think people are going to vote
against driver protections in california?

~~~
justinzollars
How about consumer protections?

"Driver protections" are the reason we have Uber and Lyft to begin with. Cab
companies were very well regulated and paid. But the service sucked. I was
hung out to dry in areas of San Francisco in 2009 - where cabs would simply
not come because it was inconvenient for them.

------
12xo
Taxi drivers are almost always 1099 as well... So have they basically killed
on call transportation for CA?

------
djinnandtonic
This is fantastic news! Now there's a huge market available for a rideshare
app that wants to prosper by actual good service rather than wage theft and
outright hostility to the regulations of the market they operate in.

I hope some hungry founders-to-be are working on this now.

------
djohnston
if ridesharing leaves cali politicians will be skewered

~~~
dvfjsdhgfv
This is what Uber wants them to think so that they get scared and drop it.

~~~
djohnston
i agree, it is a tactic from uber's perspective, but it's also a reality
regardless of uber's strategy

------
hartator
Why the burden of drivers being an employee fall on Uber and not the driver?
One can argue that there is just a marketplace and a payment processor, the
actual "management, directions, and compensation" are determined by the rider.

------
thedogeye
If drivers are employees they can only work for one service, which for most of
them will be Uber since they'll have the most demand. This law should be
really good for Uber, terrible for its smaller competitors.

~~~
thinkharderdev
I was wondering about this too. Most Uber/Lyft drivers in my area drive for
both services but it seems like they could prevent people from doing that as
part of a formal employment contract (I'm guessing IANAL).

------
arrty88
Big question for the room - are current taxi drivers W2 or 1099?

~~~
s1artibartfast
They are generally 1099 contractors, which have been reclassified as employees
under AB5. In addition, they often have to rent their cars from the shop and
pay the city for medallions to operate.

------
sjg007
Seems like a good opportunity for a pure market exchange solution. Just have a
service that lets drivers charge a flat fee or maybe use taxi rates... then
take a cut.

------
SrslyJosh
You know what'd make this whole employee/contractor thing moot? A robust
driver's union that was willing to shut down Uber on their own.

------
topicseed
Isn't this a strategy from Uber to get the people of California to vote for
the most Uber-supporting candidate in the next election?

------
_alex_
Dara: we need to take better care of gig workers

Also Dara: if you force us to pay our gig workers more we’ll pull out of your
market.

------
rainyMammoth
And once again, Uber is trying to socialize the losses and privatize the
profits. We should all be shocked by this company losing billions a quarter
but still paying its execs and (initial) shareholders way above what they
produce.

The difference here is that by having drivers as contractor, Uber is making us
ALL pay social security, medicare etc for the drivers [1] .

Uber should fail as it has proven numerous time that its business model simply
doesn't work at scale. I will say it once more but there was a good reason why
taxis were expensive...

I find it embarrassing that so many urbanites, socialites, and other coastal
elites got tricked into rooting for Uber's success by getting artificially
cheap rides.

Also, Uber is losing billions each quarter with no clear view on ever being
profitable. Why is that stock still so high?

[1]: [https://www.forbes.com/sites/ebauer/2019/12/16/is-uber-
cheat...](https://www.forbes.com/sites/ebauer/2019/12/16/is-uber-cheating-on-
social-securityfica-taxes/)

------
dominotw
i had this question on the other thread,

If uber drivers are employees can they still 'decline' a ride?

Employees aren't free to decline work that their boss assigns them.

------
mountainboy
there are a lot of drivers in California with extra space and free time.

there are a lot of people that need rides.

There was a company that facilitated these two meeting and took a cut of
payments.

It does not need to be a company. It can be an autonomous entity, eg a smart
contract. Think ethereum + ipfs. just by way of example.

in other words, cut out the middle-man. Remove the target for governments to
pressure and tax.

At that point, the free market decides.

~~~
cwkoss
Not sure ridesharing is the best fit for decentralized solutions. A big role
of these companies is performing background checks and dispute resolution, and
those seem hard to do in a trustless decentralized system without exposing
loopholes that can be exploited.

------
ehosca
shutting down your business is a great way to drive operating costs down to
zero...

------
throwmamatrain
A couple points here: Uber/Lyft are 100% better than taxi services in every
way. You might get a bad driver, but I've never had a bottle of piss hit me in
the feet in a ride share. Also, try not paying cash in a Philadelphia taxi.
I've had a wheel fall off a cab while I was in it, zero recourse. Rear ended
accident, same. Told to pound sand with the PPA. Anecdata, sure, but about ten
years of it.

Taxis still exist, with no benefits, still pulling 60+ hours, as an entrenched
monopoly via medallion systems. This is sort of a from of driver share
cropping, and is equally if not more exploitative.

If CA wanted to regulate it, they could use the data from ride shares and
create limits etc. Instead, they're going to put them to pasture.

As for them operating illegally, it is a better system and more efficient than
cab services. Sharing rides alone is a multiplier for gas, and app routing is
a better system that taxis refused to implement for the longest time, "getting
lost" to pump up fares.

If taxis disappeared tomorrow, I would shed zero tears.

Is uber a good company? No, they are a giant capital fueled destroyer. They
went toe to toe with entrenched cabs and made some changes. Maybe that's what
it takes in a hypercapitalist society, I don't know.

I used cabs for a decade coming home from an interstate train commute and
would never use one again. I'd rather take the bus, and in Philly that's
saying something.

Hope we see more innovation in this space, if not Uber or Lyft, something.

------
horizontech-dev
wondering does the same law applicable to Instacart, Postmates etc..?

------
nullc
And here I was thinking that they were shutting down due to covid19 to protect
people's health.

Silly me.

------
cityzen
"I Am the C.E.O. of Uber. Gig Workers Deserve Better."

what an absolute coward.

------
nouveau0
Translation: We're pouting until we get what we want

------
klickitat
the same thing has happened in Turkey.

------
Aaronstotle
Good riddance

------
ekianjo
> "What worker doesn't want to have access to paid sick leave?" Becerra said.
> "What worker doesn't want to have unemployment insurance at a time of
> Covid-19 crisis? What worker doesn't want to know that they'll get paid for
> overtime if they work 60 hours in a week or 12 hours in a day?"

Since when are we reasoning about workers starting from what they want? If we
go by that reasoning, "What worker does not want to be paid 3 trillion dollars
per year?". Work only exists in a narrow space between a consumer and a
service. Increase the costs of running the service, and you don't have work
anymore. That's not very hard to understand.

~~~
ac29
> Increase the costs of running the service, and you don't have work anymore.

This hasn't been found to be the case when increasing the minimum wage,
though.

~~~
therealdrag0
It absolutely has. Minimum wage prevents some possible jobs. There are studies
showing this [0].

The fair debate is only about whether more jobs is better than less jobs with
higher pay.

[0] [https://www.vox.com/the-
highlight/2019/7/13/20690266/seattle...](https://www.vox.com/the-
highlight/2019/7/13/20690266/seattle-minimum-wage-15-dollars)

------
merpnderp
Want to be free to have a random part-time gig you can pick up whenever you
want? Nope, do-gooders are going to do-good you into a wage slave job like
everyone else.

~~~
XMPPwocky
Tragically, the state has also taken away my right to sell my kidneys for
money, just trying to "protect" me. I'm an adult, if I want the money isn't it
strictly better than I have the freedom to cash in on my human resources?

~~~
lghh
> I'm an adult, if I want the money isn't it strictly better than I have the
> freedom to cash in on my human resources?

Yes.

~~~
typest
To add onto this —- living with only one kidney rather than two only barely
increases your risk of dying, and many people each year die due to lack of
kidneys. So, creating a market here (regulated of course) would save a lot of
lives.

~~~
teachrdan
It would likely coerce poor Americans into selling their kidneys to the
wealthy so that they could pay off their student debt. Is coercing the poor to
sell their organs to the rich a net benefit for society?

For anyone who thinks this is hyperbole, ProPublica has done excellent work
investigating how lenders use the court system to imprison Americans who can't
pay back their debts:
[https://www.google.com/search?q=propublica+debtors+prisons](https://www.google.com/search?q=propublica+debtors+prisons)

~~~
exolymph
"Coerce" in the sense that poor people would notice a way to make money and go
after it?

~~~
teachrdan
Coerce in that someone will now have the "choice" of selling an organ or going
to jail.

------
justinzollars
I recommend reading the book Atlas Shrugged by Ayn Rand. California will
attack and attack and attack because those in government believes they are
morally superior. The only way they will learn is when Capitalists fight back
by "turning off the engine of the world".

Who is John Galt?

~~~
chillacy
In case someone actually wants to read Atlas Shrugged, I did actually read it.
It's a fictional world where the strawmen business people are happen to always
be good and moral, and are oppressed by the strawman government people who are
bad and greedy. Also the author occasionally has her characters go on multi-
page speeches, for instance about how we ought to be using gold for currency.

In case it's not clear, Atlas Shrugged is a piece of fiction and using it to
draw parallels to reality is like saying "I recommend watching Disney's The
Lion King. Zoos keep hogs apart from lions because they think they can't get
along".

As a sidenote to balance my scathing review, I rather liked one of her earlier
novels, Fountainhead. If you want to read an Ayn Rand novel I'd go for that
one, as it's more about a type of "rugged individualism" than an economic
system. It directly grapples at the question of the nature of
invention/innovation: whether as a product of individual genius or standing on
the shoulder of giants. Obviously the novel has an answer but it's not exactly
a solved question in real life, and at least some of Ellsworth Toohey's quotes
aren't half bad.

~~~
justinzollars
Francisco D'Anconia's Money Speech - Atlas Shrugged (poor quality):
[https://youtu.be/u-T0ey0IKDA](https://youtu.be/u-T0ey0IKDA)

~~~
chillacy
I recall reading that. It's all very true, but it also glosses over the fact
that some people acquire money through regulatory capture, violent crime,
inheritance, etc, etc.

I think capitalism is the best system we have, but Atlas Shrugged espouses a
rosy picture of anarcho-capitalism like Marx espouses a rosy picture of
anarcho-communism that doesn't work when real humans come into play.

I've come to believe that having market forces bring out the best in society
is a state of constant work to cultivate those forces in a human direction.

------
brooklyndude
Just an update from an old guy.

From my favorite capitalist, an oil futures trader on WS:

Between 9:30-4:00 I’d kill my own mother to make a dime a trade. Kill my own
fucking mother.

Do we seriously think Uber would not slash wages to shit, deny healthcare,
work drivers till they dropped, and then killed someone’s mother if they could
make a dime and get away with it?

People seriously believe they would not do that unless someone (AKA The State)
does not stop them?

I’ve worked in corporate America, they would kill you for a nickel if it could
lift their stock price.

Welcome to the “system.” Now back to work!

Your boss has their eye on a new house. And YOU are going make sure they have
that downpayment. :-)

~~~
r29vzg2
That’s a very cynical view. What about You and I who also have a down payment
and a mortgage? You can argue that Uber was exploiting workers, but at the
same time, none of them were forced to work. All made a free choice. And now
“The State” has essentially legislated them out of their jobs. The State has
literally said, “you’re too stupid to realize you’re being taken advantage of,
so you can’t work this job”. I’d say that “The State” is far more of a problem
here than Uber.

~~~
chillacy
I definitely agree with you on this issue, but want to point out that "free
choice" can lead to suboptimal outcomes. Here's an excerpt by Singer:

> Suppose I live in the suburbs and work in the city. I could drive my car to
> work, or take the bus. I prefer not to wait around for the bus, and so I
> take my car. Fifty thousand other people living in my suburb face the same
> choice and make the same decision. The road to town is choked with cars. It
> takes each of us an hour to travel ten miles. In this situation, according
> to the liberal conception of freedom, we have all chosen freely. Yet the
> outcome is something none of us want. If we all went by bus, the roads would
> be empty and we could cover the distance in twenty minutes. Even with the
> inconvenience of waiting at the bus stop, we would all prefer that. We are,
> of course, free to alter our choice of transportation, but what can we do?
> While so many cars slow the bus down, why should any individual choose
> differently? The liberal conception of freedom has led to a paradox: we have
> each chosen in our own interests, but the result is in no one’s interest.
> Individual rationality, collective irrationality…

Taken from [https://slatestarcodex.com/2014/09/13/book-review-singer-
on-...](https://slatestarcodex.com/2014/09/13/book-review-singer-on-marx/)

------
goldenManatee
They’re protesting. Shocker. Not surprising, given their business model is
built on taking advantage of their drivers working themselves and their
vehicles into the bone. They did not design their company to equitably
distribute the share of profit and productivity gains, they are an extractive
company.

------
habosa
Bullsh*t. You know they have a team somewhere that was preparing for the
situation where they lost this case. They have a Plan B. They're just playing
chicken with us right now.

This statement is part of Dara's week-long media blitz to scare everyone into
letting Uber be its own regulator. Check out the NYTimes op-ed he wrote.

They will not shut down. They will blink.

------
Abishek_Muthian
COVID-19 situation has clearly showcased the vulnerability of the drivers
regardless of the platforms, there's no merit for the drivers to be treated as
contractors as they are algorithmically made to work beyond office hours to be
eligible for the incentives.

I hope other states and countries follow the suit if California forces Uber to
treat the drivers as employees.

~~~
thunkshift1
What do you mean by “algorithmically made to work beyond office hours”? You
know the drivers set their own hours right? There are some who prefer to drive
exclusively at night.

~~~
Abishek_Muthian
Yes, that's why I said- >made to work beyond office hours to be eligible for
the incentives

I said that based on complaints I received from Indian drivers, • Need to work
X hours to be eligible for incentives, incentives are used to meet fuel costs.
• Algo punishes when rides are not taken during peak hours. • Majority don't
own the vehicles, they are working office anyways for someone who owns it.

Anyways, main issue is many of the drivers are out of their work due to
COVID-19 and if they were employees; at least some protections would ensue.

------
KKKKkkkk1
The Uber situation seems to be echoing the deregulation of the CA energy
market [0]. First, hopes of new efficiencies through unleashed market forces,
then bad-faith actors (Enron), then clusterfuck, then taxpayers left worse
off.

[0]
[https://en.wikipedia.org/wiki/California_electricity_crisis](https://en.wikipedia.org/wiki/California_electricity_crisis)

------
schalab
Just make the whole service distributed. Cut out Uber. Connect me directly to
a driver through open source software.

Person A exists who is willing to drive from point a to point b for x price. I
am willing to pay x price. An open source software exists to connect us both
in real time.

Who will the government regulate in this scenario?

~~~
8jy89hui
I think that you’re underestimating just how much infrastructure goes into
running something like Uber. A friend of mine does ML work at Grab (South East
asia ride hailing company) and the amount of data processing that goes into
getting a good fast and cheap ride is incredible.

It might be possible to somehow distribute it and pay people at home for spare
compute time, but it would still run into latency and spike problems.

------
tathougies
Uber, lyft, and related services have single handedly saved lives by reducing
the drunk driving rate in California. Moreover, they have kept many cars off
the road. Previously, it was impossible to have a night out responsibly, or
for people without cars to get around. Now, with uber and lyft, California
finally became somewhat more liveable.

Good to see the state deciding to make things worse.

