
The lawyer taking on Uber and the rest of the on-demand economy - ph0rque
http://fusion.net/story/118401/meet-the-lawyer-taking-on-uber-and-the-on-demand-economy/
======
jkoudys
This right here is one of the driving forces behind American corporatism.
While these cases are always launched claiming to be on the side of the
angels, they ultimately ignore that all that extra legal overhead is not free,
and only the currently large companies will be able to manage it, essentially
barring any smaller competitors from entering the market. If a court rules
that Uber drivers must be employees, then Uber can easily sue any competitors
that try to enter the market unless they do the same. Uber will be able to
prevent competitors from receiving the same advantages they did.

Also, look at:

> Deep-pocketed companies like Uber, which has raised nearly $5 billion in
> venture capital since launching, could surely afford the additional expense
> of putting drivers on its payroll.

The implications of this are decidedly harmful to both consumers and drivers.
Once you set this precedent, it will only be the deep-pocketed companies that
can afford to put drivers on their payroll. This is especially problematic in
the States, where in spite of a substantial amount of their federal budget
being for healthcare, lacks a comprehensive public healthcare system, so
employee benefits can be quite expensive.

I've recently incorporated in Ontario, and working as/hiring people on
contract is very easy. A big part of that is because, apart from issues
relating to workplace safety, we're not responsible for paying for healthcare
services for people who do work for us. It was also very easy to leave my
cushy corporate job for a startup, because I didn't have to worry I'd be made
destitute if I had to pay for a few nights in a hospital were I to contract a
really bad flu or get hit crossing the street.

More and more I see the US turning into a country where you _must_ work for a
large, established corporation. Lawyers like this are just helping those
already on top stay there, at the expense of those in the middle or bottom.

~~~
rayiner
That's kind of an entitled attitude. Society puts certain obligations on
businesses, and providing certain benefits to employees is one of them. If
you're too small to meet those obligations, then you shouldn't get a free pass
on them. That just leaves the workers out in the cold.[1] I'm certainly
willing to entertain the notion that we should pay for those benefits with
taxes instead of pushing the burden on employers, but that's a separate
argument.

[1] Although I'm actually not convinced the premise of Uber drivers being
employees is correct.

~~~
jkoudys
_American_ society puts those obligations on businesses, and those obligations
have created an economy that rewards those who are either already wealthy, or
the backing of those who are. This is very directly giving more power to the
rich. I don't see how criticising the very necessity of health benefits, one
of the biggest costs of hiring employees, is at all a separate argument. There
are many other countries which don't have such strict requirements around
employee classification, yet are still serious about important obligations
such as workplace safety and protections against harassment.

I don't want to spend my morning dumping on the US, but I'm amazed at just how
often your poor and very poor are convinced to support causes that only help
the very rich.

~~~
tptacek
Don't the very richest companies in the US tend to lobby against employer
health care mandates? Wouldn't Walmart, for instance, be much better off in a
single-payer system?

~~~
jkoudys
Walmart was very in-favour of the PPACA, at least in favour of it applying to
other companies. In practice, they have teams of lawyers and accountants
making sure they pay as little as possible. It's the SMBs, on the other hand,
who now pay twice: once to meet their obligation to their own employees, and
again to pay for government assistance for all the Walmart employees we
expected would be receiving company benefits.

[http://www.forbes.com/sites/rickungar/2012/12/09/walmart-
bai...](http://www.forbes.com/sites/rickungar/2012/12/09/walmart-bails-on-
obamacare-sticks-taxpayers-with-employee-healthcare-costs/)

------
greggyb
An analog that sprang to my mind early in the article, and briefly raised with
the comparison to Craigslist, but which I feel is more apt than Craigslist:
eBay.

Some points:

* eBay can ban a seller for not following the rules.

* eBay absolutely requires its sellers to earn revenue.

* eBay can set expectations and incentivize behavior with its various seller-partner programs at different levels.

* An eBay seller may depend on eBay for their livelihood.

I am not proposing this as a slam-dunk against the case, but I'd love to see
some discussion on these points.

I will state clearly and unambiguously, though, that I do not believe Uber
should have to treat all of its drivers as employees. This does not imply that
I am opposed to discussion or hearing opposing viewpoints.

Ninja Edit: Typoes (grammar-oes?).

~~~
Bahamut
The article points out some aspects that make this a not so great analogy - in
particular, companies like Uber set the rates, and put the burden of costs on
the workers for stuff like gas, wear and tear, etc. Uber in particular is
taking half of the tips according to the article, which sounds unethical.

My only opinion on this is that the balance should probably be tilted a little
more in the workers' favor for these arrangements, although I am not sure full
categorization as an employee would be the correct approach.

~~~
greggyb
>The article points out some aspects that make this a not so great analogy -
in particular, companies like Uber set the rates, and put the burden of costs
on the workers for stuff like gas, wear and tear, etc. Uber in particular is
taking half of the tips according to the article, which sounds unethical.

These are very good points and I am glad you brought them up.

I think the rates and tips are very valid concerns here, but categorically
different from one another.

I think that offloading costs to drivers still fits the eBay analogy, though
it is certainly weaker. A seller must store goods, prepare them for shipping,
and in many cases add value to the product in some way (e.g. refurbishing is
common, which includes cost for all related equipment). Again, not a perfect
analogy, but offloading costs to the seller/driver seems to bear some
resemblance between the two.

Setting the rates is a strong argument in favor of a relationship more toward
the traditional employee end of the spectrum. I think I need to think about
this more.

As to the tips, I glossed over that section so I am glad you've raised it
here. I do not know the exact details of the agreement between Uber and
drivers as regards tips, but this seems at first glance to be a pretty severe
violation of _any_ relationship between driver and Uber. I agree this needs to
be addressed, and a class-action suit does seem appropriate here. I think this
can and should be viewed independently from any classification as
partner/employee.

>My only opinion on this is that the balance should probably be tilted a
little more in the workers' favor for these arrangements, although I am not
sure full categorization as an employee would be the correct approach.

I think you're right on this point. I am still unsure as to what I think is
best to achieve this. My initial reaction is to ensure that there is an
environment where competitors are likely; I believe a strict requirement on
the type of relationship between company and driver will only hamper this
(limit the type of relationships => limit the viable business models => limit
the possible solution space).

~~~
SomeStupidPoint
I think the real point of challenging Uber is this: they can either set the
rates or they can push the cost of materials on to drivers, but they can't do
both.

That is, they must either embrace the full employee or full contractor
package, and not just take the parts they like of each with none of the
liabilities.

~~~
greggyb
Do you think that it is really that binary?

I think that this quote from the article is apt:

>U.S. District Judge Vince Chhabria, who is overseeing the Lyft case, said
that existing labor law doesn’t map well with these companies’ business
models. Lyft drivers don’t seem exactly like employees or independent
contractors, he wrote in his motion. “The jury in this case will be handed a
square peg and asked to choose between two round holes,”

Just because we have two clearly delineated buckets to drop people into
doesn't mean that these accurately describe those individuals.

~~~
SomeStupidPoint
Running a business that relies on questionable legal intrepretations doesn't
necessarily have to be something we support.

That Uber set themselves up in such a way that they can't relate to their
workers in a clearly legal way is suspicious -- which is exactly the
accusation: they're dodging liabilities they should have by making up their
own kind of square peg.

------
lotsofmangos
_Proponents of on-demand startups argue the Craigslist side of the analogy. In
their view, these workers do have more independent agency than a typical
employee, and therefore are properly classified as contractors. After all,
Uber drivers and Homejoy cleaners aren’t required to work a certain number of
hours per week, and they set their own schedules, even though some companies
try to steer them to busy times by incentivizing them with “surge pricing.”_

I have been an employee without being required to work a set amount of hours
per week, is called a zero hours contract and didn't make me any less of an
employee, it just meant it was really difficult to plan anything.

~~~
SeanDav
Zero hours contracts are just another method that companies use to avoid
paying employee benefits. This is precisely the type of behaviour that is
being targeted by this lawyer. You have the responsibilities of being an
employee but the company does not have a corresponding duty to you as an
employer.

~~~
lotsofmangos
I had a funny conversation when I left after they repeatedly failed to provide
working equipment while still wanting the job done.

I told them I wouldn't be coming back and they told me that my contract
required me to give notice and that I would have to turn up to work for two
more weeks on whichever shifts they wanted.

I pointed out that the contract also stated that I had zero hours contracted
and that shifts had to be agreed on a week by week basis, so if they really
wanted I could give them 2 weeks notice but for that 2 weeks I would not be
agreeing to do any more than the hours they had written on the contract.

I also asked if they could go and count them for me.

------
Tloewald
Actually it seems to me like she is utterly correct and Uber is fucked if
there's any justice in our legal system.

------
ahallock
I love how lawyers and the gov assume what my preferences are and what's best
for me. I work as an independent contractor and I don't want any benefits from
the company I'm providing services. I want to provide my services and get
paid. That's the only benefit I want.

And this: "..but the company also gave them strict guidelines for
participation which made them look like employees according to the IRS’s
20-prong test. Uber screened and trained its drivers, and drivers could get
deactivated by Uber for having their rating dip below what local managers set
as a cut-off, for not accepting a certain percentage of trip requests, or for
customer complaints."

How are those strict guidelines? So now contractors are exempt from any
scrutiny in the services they provide? Makes no sense. Then Uber would be
getting sued for putting passengers at risk by having zero QA.

------
eykanal
> Fiona Ramsey, the director of communications for Peers... added: “We worry
> the share economy will cease to exist if these cases are successful.”

> That worry may be exaggerated, however. Deep-pocketed companies like Uber,
> which has raised nearly $5 billion in venture capital since launching, could
> surely afford the additional expense of putting drivers on its payroll.

What a silly argument! Raising a ton of money in venture capital doesn't mean
that the business model itself is profitable, and in the long run that's what
matters. If the profitability of the entire business model is built on illegal
classification of workers, then the model is a failure (within this legal
framework, at least) and won't work.

Either change the law or change the model, but something will have to change.

------
s54b32dd
I actually like this lawsuit, as if I'm honest, I don't think Uber/Lyft, etc.
should have gone the contract-service offering route. I think they might have
been just as well off as a middleware provider, connecting customers with
existing cab services, and offering their tools as a SaaS.

It's interesting to think about how different the world would be right now if
Uber had gone into software sales as opposed to attempting to be a cab
competitor.

I realize the inventors largely created the service as an
alternative/competitor to cabs, which they disliked for various reasons. It's
still interesting to think about what could have been, if only they'd been
more interested in fixing the logistics of cab companies than "inventing an
industry".

If this attorney is ultimately successful, I can easily see Uber/Lyft's
business model morphing as a result. I don't think there's enough profit in
their business if they have make all their contractors W-2 workers.

------
xanadohnt
The thing is Uber drivers _are_ independent contractors. The ability to work
whenever the hell you want or to drop into any city and make money, at will,
are fundamental motivators to driving for Uber. Regular benefits means minimum
regular work hours. When that's it play it completely changes Uber's
marketplace and value-add.

~~~
tashoecraft
In the article it states that drivers have been fired for not taking a certain
percentage of passengers. While it isn't a strict hours, it is firing someone
for not meeting their determined amount of work.

As she says these companies are square pegs that are trying to be forced into
round holes. Uber drivers are not normal independent contractors, but nor are
they full employees. I really like Uber, but forcing employees to pay for gas,
maintenance, insurance, etc is abusing their position. There needs to be a
reclassification that can work for the on demand companies. Place these
employees somewhere in between and require certain things be met, maybe pay
for gas whilst they are driving passengers, or a stipend for maintenance
costs.

~~~
fancyketchup
> In the article it states that drivers have been fired for not taking a
> certain percentage of passengers. While it isn't a strict hours, it is
> firing someone for not meeting their determined amount of work.

Drivers are only fired for not taking a certain percentage of rides offered
while the driver is logged in and active. That's an _enormous_ distinction.

Drivers don't have be active, and they can go inactive at any time. In fact,
over half of the drivers with whom I've ridden are logged into both Uber and
Lyft while waiting for a fare, and then log out of the other app when they
accept a fare from one. (Yes, I quiz my drivers on the particulars of driving
for these services and keep track of what they tell me).

The whole point of threatening to fire (and actually firing) drivers for not
meeting acceptance rates seems to be to incentivize them to log out during the
times they aren't actually willing to take a fare.

------
michaelt

      If cases like Liss-Riordan’s are successful, on-demand 
      companies would have to pay overtime, deductions from 
      wages, and, in California, the expenses incurred by their 
      service providers. Those costs would mount into the 
      millions, and proponents of the on-demand economy worry 
      that they could force successful companies out of business.
    

Surely taxes and expenses still have to be paid, and the "independent
contractors" set their prices accordingly?

I mean, either Uber pays an independent contractor $10, they pay $2 in tax and
$3 in expenses and end up with $5 in their pocket; or Uber pays out $2 for
tax, $3 for expenses, and pays the employee $5. In both cases, Uber pays $10
total and the driver takes home $5.

I assume Uber's business model doesn't rely on contractors tax-dodging or
skimping on vehicle maintenance!

So why should they worry about the reclassification putting them out of
business?

~~~
wpietri
> I assume Uber's business model doesn't rely on contractors tax-dodging or
> skimping on vehicle maintenance!

I'm not sure that's a good assumption.

Nobody is valuing taxi companies at $40b. Part of why they're so appealing
from an investment perspective is that Uber's model is a heads-I-win-tails-
you-lose proposition. Any time money gets made, Uber gets a big cut. Costs and
most downside risks are transferred to the drivers.

That includes risks that the capital costs (that is, buying the cars) and the
maintenance costs aren't really justified by the revenues. It also includes
the risk that there are too many drivers available.

If I were in Uber's shoes, I would worry about the defensibility of the
business model. At least here in SF, drivers often participate in multiple
services. For consumers, switching is as easy as installing a new app. If Uber
is consistently more expensive, then I could imagine a lot of people
switching. One way to keep costs low is to screw the workers as much as
possible, and pretending that employees are contractors is a pretty popular
way of screwing workers.

~~~
gaius
_Nobody is valuing taxi companies at $40b_

A legal Uber already exists (in London): it's called Addison Lee. Smartphone
app and everything. It's worth £300M, not $40Bn!

[http://www.bbc.co.uk/news/uk-england-
london-22230868](http://www.bbc.co.uk/news/uk-england-london-22230868)

~~~
oh_sigh
Addison lee had 4500 drivers at their time of sale. I don't think the number
of uber drivers is disclosed, but it is at least 162,000 active drivers as of
this past December:
[http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/22/n...](http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/22/now-
we-know-many-drivers-uber-has-and-how-much-money-theyre-making%E2%80%8B/)

------
jingo
"Just because your services are dispatched through a smartphone doesn't make
you a technology company."

------
davidgerard
> If Uber had indeed misclassified its drivers, the company’s entire business
> model was built on a legal mistake.

Uber's business model is based on violating regulations.

------
oh_sigh
The opening lines are crazy. The moment she heard about the app, before she
knew anything about it, she had the idea "to put them out of business"? That
doesn't seem like the behavior of an altruistic person. Shouldn't she have,
you know, researched the structure of uber before deciding that she wants to
destroy them? How would she know that the employment status of the drivers
from her friend saying "You have to see this"?

