
Uber and Lyft ordered by California judge to classify drivers as employees - uptown
https://www.theverge.com/2020/8/10/21362460/uber-lyft-drivers-employees-california-court-ruling
======
dustinmoris
Lots of HN comments are here like "I know people who prefer to be
contractors", "My sister's neighbours little brother actually doesn't want to
be treated with respect by Uber", blah

This is utter nonsense. Being a contractor means being self employed. You
don't get paid leave or sick pay. It's a risk taking and doesn't make any
sense in the gig economy where the wages are close to minimum rates.

If you are truly self employed then you have a skill which you can market, you
can charge fees which allows one to put money aside for things like unpaid
leave or sick days.

If you are truly self employed then part of your job is building customer
relationship, building up recurring customers, increasing your business
through marketing, word of mouth, etc.

You actually have to do entrepreneurial shit.

Uber drivers are NONE of this.

They clock into an app which belongs to someone else and they have no share
in. They can't hand out business cards to customers or market their services
on a board somewhere. They sit and wait until their master (Uber/Lyft) assigns
a ride to them. Then they have merely the chance to accept/decline it. They
can't even negotiate their own fees. That itself is fucked up. It's complete
nonsense in extremely disingenuous by anyone here to suggest that an Uber
driver is a self employed contractor and that this is good for them. They get
paid shit and can't save up like a real self employed person, because they
also have no say in the ride prices.

Fuck the gig economy. All gig workers are slaves and we should treat each
other with more dignity and upgrade them to employees. It's our bloody duty as
a decent human being.

~~~
jasode
_> All gig workers are slaves and we should treat each other with more dignity
and upgrade them to employees. It's our bloody duty as a decent human being._

Lyft/Uber can upgrade them to employees but the arithmetic of bottom-up
economics means Uber has to raise prices to cover full employment benefits.
The raised fares conflict with what _passengers are willing to pay_. E.g. even
though yellow medallion taxis often _cost more than Uber_ (especially for
suburb trips) -- those yellow cab drivers were _not employees_ with benefits
like unpaid leave and healthcare.

I believe what this really comes down to is that _society_ is not willing to
pay the higher prices for drivers to be treated as employees. Same situation
as not willing to paying higher prices at hair salons so hair stylists are
full employees (instead of being contractors) with healthcare. It does seem
like constantly blaming Uber for mis-categorizing employees conveniently
shifts the blame from the society/customers. The extra money to pay the
drivers comes from the passengers.

Let's look at comparison cases: The city of Austin TX temporarily banned Uber
from operating there. A non-profit rideshare (RideAustin[1]) was formed. Even
though they don't have to implement the same business practices as Uber/Lyft,
it's interesting that the RideAustin drivers _are also independent contractors
and not employees with full benefits_. Also as far as I can tell, there is no
worker co-op owned by the drivers anywhere in the world that treats
members/drivers as employees with benefits. Why is that?

Serious question about the framing of ethics: if (some) drivers see an
arbitrage opportunity because potential passengers think Uber-with-employee-
drivers "charges too much" so drivers _willingly choose_ a rideshare co-op
that treat them as contractors to undercut Uber, are the co-op drivers being
unethical towards the Uber-drivers-as-employees?

Yes, a judge can force Uber to convert everyone to employees but that same
judge can't force potential _customers to pay higher prices_. The alternative
entities of RideAustin and driver co-ops shows there's a limit to prices that
ride shares can charge.

[1] [http://www.rideaustin.com/](http://www.rideaustin.com/)

~~~
mercer
> I believe what this really comes down to is that society is not willing to
> pay the higher prices for drivers to be treated as employees. Same situation
> as not willing to paying higher prices at hair salons so hair stylists are
> full employees (instead of being contractors) with healthcare. It does seem
> like constantly blaming Uber for mis-categorizing employees conveniently
> shifts the blame from the society/customers. The extra money to pay the
> drivers comes from the passengers.

Generally I'd argue that society/customers, and in particular
employees/'contractors' don't have all that much leverage over big companies,
especially ones that capture a market. That's why we have regulation.

Blaming the customers for not keeping track of everything and going for the
cheapest option is like blaming climate change on the consumer. It's
technically sort of true, but practically speaking it makes no sense.

Consumers will keep buying cigarettes, marketeers will keep marketing them via
entertainment channels, and tobacco companies will keep rolling in the money
and do everything they can to encourage all this. But taxes, anti-smoking
campaigns and government-enforced restrictions on where you can smoke have
made a /ton/ of difference over the years.

There seems to be a trend to have 'flex-workers' (contractors) where in
practice they all quack like employee ducks, without many of the benefits and
guarantees. It mostly feels like a loop-hole and /of course/ the average
consumer will go for cheap and convenient when they can. doesn't mean it's a
good thing for society (and in particular the workers).

~~~
clusterfish
Businesses want more profit. Consumers want to pay less. Workers want to earn
more. Pretty much always.

This doesn't always result in an optimal outcome. Market power, externalities,
information asymmetry, etc.

This is why we have regulations. Forcing the society and Uber to pay for
drivers to be treated as employees seems like a very reasonable outcome. If
they don't like it they can hire less drivers, but the ones that remain will
at least have some minimum standard of living that developed countries pride
themselves for.

~~~
xapata
What does it mean to be "treated like an employee"? I'd like regulation to
give everyone healthcare. Are non-employees not worthy?

~~~
muffinman26
The biggest difference in the US is that "treated like an employee" also means
being paid a minimum wage. As an employee in the United States, your employer
is also responsible for paying a portion of your social security and medicare
taxes, and for making sure taxes are properly withheld from your paycheck.

Even before the gig economy became a big deal, businesses like yoga studios
would attempt to classify their skilled teachers as independent contractors so
they could pay them well below minimum wage, but take away their ability to
teach at the location if they taught somewhere else as well. Hair salons and
yoga studios sometimes go so far as to charge their independent contractors
rent, which would make sense if these people were truly renting the space and
could freely take their clients elsewhere, but these businesses also
frequently limit the contractors' ability to collect personal contact
information.

When I volunteered to help people with their taxes, a large number of
Uber/Lyft/DoorDash/etc. drivers were surprised to learn that not only did they
have to pay large amounts of income tax that would usually be automatically
deducted from their pay check, but they also had to pay double the social
security and medicare taxes because they had to pay the employer and the
employee portions. Companies that classify their workers as independent
contractors in this way are taking advantage of the fact it can take people up
to a year to realize that taxes and car maintenance will take what little
income they have made.

~~~
xapata
> Companies that classify their workers as independent contractors in this way
> are taking advantage of the fact it can take people up to a year to realize
> that taxes and car maintenance will take what little income they have made.

When I drove pizza delivery, I discovered car maintenance took what little
income I made. I was a W2 employee, paid less than minimum wage, because I
earned tips. Independent contractor status isn't the only method for
surprising people.

I take issue with the paternalistic idea that an employee is more deserving
than other types of people. The commenter above said, "This is why we have
regulations." I interpreted that as beginning a discussion of what regulations
we should have. If that was incorrect, I'm sorry for causing confusion. If
that was the intent, then I'll reassert that focusing myopically on the
distinction between an employee and a contractor is ignoring much better
solutions.

------
rdgthree
It strikes me that these articles are always biased in the direction of the
benefits of being an employee. I have several friends that actively choose to
be contractors because they prefer the (legally protected) flexibility to
decide their own hours, among other things. It's a personal decision, and
there are upsides and downsides in both directions.

Sure - some (non-insignificant) portion of Uber and Lyft drivers would like to
be employees. But surely some (also non-insignificant) portion would prefer to
be contractors for Uber and Lyft and keep the legal protections that come with
that.

These articles always make it seem like it's a no-brainer win for all drivers
no matter what, but it's never seemed so clear cut to me.

~~~
JMTQp8lwXL
Some things, like not being able to set their own rates, meant drivers were
never contractors, even if they wanted the perks of contracting (e.g, choose
your own hours). Saying 'I wish to be a contractor' isn't legally sufficient:
the agreement needs to permit setting rates.

~~~
taftster
I get what you're saying, but I don't think "setting their own rates" has
anything to do with it. Any driver would be able to set their own rates by
going at it alone, completely independent from a ride share company. They
would create their own service and charge what they want.

However, because the drivers choose to participate in the Uber/Lyft
marketplace and benefit from the network affects that they have created, it
follows that Uber/Lyft would have a say in the cost of goods sold in that
marketplace. Just because the drivers can't set their own rates doesn't mean
they aren't independent contractors.

If I hire you to mow my lawn, we mutually come to an agreement of what time
and price you would perform the service. Just because you want to work for
$100 / hour doesn't mean I'm willing to pay that. And because I'm only willing
to pay a certain price only for your services doesn't make you an employee.

I think it's that simple. Uber/Lyft have a price they are willing to pay for
services. They even allow their drivers to pick their own schedule (unlike my
lawn service example). Drivers are not setting the price directly with the
customers, they are getting paid by Uber/Lyft, but that doesn't make them
employees.

~~~
popinman322
In your lawn care example you used the word "mutually". That is a difference
between the Lyft/Uber relationship with drivers and your relationship with the
lawn care contractor.

Maybe if Lyft/Uber allowed drivers to bid on rides drivers would become more
contractor-esque? But then the latency would be much higher for users. The
system would likely also regress to the proposed price, as well, since drivers
would likely just accept the price proposed by the platform to save time.

~~~
taftster
You are expecting that Uber/Lyft creates an "auction" environment in order for
their drivers to be considered contractors? In my world view, an auction is
not requirement for a driver to be considered independent. Drivers can:

\- drive on their own schedule \- drive for competing ride share services
(concurrently even) \- drive for themselves \- not drive at all

Seems very independent contractor. Uber/Lyft created a marketplace; drivers
are agreeing to drive within the constraints of that marketplace. They can
also create their own customer relationships and ride share marketplace if
they choose.

If Uber/Lyft imposed restrictions on things like who a driver could give rides
to or restricted concurrent ride share engagements, then that starts to feel
like an employee. Rates have very little to do with it, in my humble opinion.

~~~
afiori
Part of the whole argument is not only whether drivers are technically
employees or contractor but also whether Uber/Lyft are stretching those
category so much that neither is a good fit for the situation.

As far as I understand one of the problems is that the drivers' market is so
saturated that both Uber and Lyft can act as if they where monopolies (or
maybe monopsonies). They can technically move to a competitor but that applies
no pressure on the market.

Again, what makes this situation tricky is that it is essentially creating a
new kind of employement-like relationship that current laws and regulation do
not really account for.

~~~
Jommi
This is not true, moving to a competitor definitely applies pressure and keep
both companies in check.

~~~
afiori
This is only true if either company ever risk running out of (good) drivers.
As I understand it currently there are more workers than jobs, so if a driver
decides to cut ties with one of the oligopsies they are unable to get the same
amount of work from the competitor.

So: "moving to a competitor definitely applies pressure" -> true; "keep both
companies in check" -> false

~~~
Jommi
There are not more workers than jobs, ive worked in the industry and this is a
fact. Workers on ridhailing platforms come in varying levels of quality and
amount of hours they can supply

You are thinking too much about just workers, when actually the smalelst
divisible unit is hours. There is portion of drivers that barely ever switch,
and then there is another portion that are constantly looking for the better
deal, switching through outh the day. Its a scale.

So to keep drivers happy and on your paltform, you need to implement bonus
schemes or have certain base pays.

Im not sure why so many people feel that they can comment on how the
ridehailing platforms work without having any real experience in driving for
them or working for them.

------
abvdasker
The consequences of this ruling are probably not going to be known for a
while. This is certainly bad for Uber & Lyft insofar as it will greatly
increase their operating costs. The question is what effect the ruling will
have on drivers.

Uber is not a profitable company with fat margins like Google, Facebook,
Amazon, Apple or Netflix. I don't see any way for Uber to absorb the increased
costs that come with full employment without reducing the number of drivers
and increasing the cost of rides in California.

The change in employment classification means that drivers will no longer be
able to choose when they work. Uber will choose when they work, and for how
long. The barrier to becoming an Uber driver will increase. Currently, in most
cities it's possible to sign up to drive entirely online and basically just
requires a license and a completed background check. Going forward people who
want to drive for Uber will have to interview like any other job, probably in-
person with a resume, and jump through the many hoops which that process
entails.

My guess is that for new drivers who can pass the interview and existing full-
time drivers who don't get laid off this will bring a big improvement in
quality of life and provide some much-needed financial security and benefits.
The rest will be out of a job.

I think it's unfortunate that some kind of compromise couldn't be reached
which would have provided some economic security for these workers while
accounting for the real differences between gig work and regular employment.

~~~
neuroanalysis
Profitability should have no bearing on whether drivers are classified as
employees or contractors. If these companies can’t turn a profit while
complying with the law then they don’t have a viable business model. That is
entirely their problem.

Furthermore, the assumptions you make regarding future hiring practices are
unfounded. Nothing stipulates that resumes or interviews, let alone in person,
would be required to extend employment.

~~~
WC3w6pXxgGd
> If these companies can’t turn a profit while complying with the law then
> they don’t have a viable business model

Are you seriously telling me that if people don't interact freely in the way
bureaucrats want them to interact, then those people should, by law, not be
allowed to interact?

Big Brother knows best, huh.

~~~
huntertwo
What is a minimum wage?

~~~
michaniskin
A minimum wage is nothing more than a mechanism higher skilled workers use to
command higher wages at the expense of lower skilled workers.

------
blisterpeanuts
The judge does not understand what a "gig" is. Uber drivers can choose to
drive one, twelve, or zero hours in any given day. They can suddenly stop
working by simply not accepting any more ride requests. It's the ultimate
remote, self-directed, self-managed job.

An employee can't make such decisions; they do as they are told or they are
fired.

Uber drivers are private, self-owned businesses that rent out their time and
equipment to a corporation on a completely arbitrary basis. The company counts
on an oversupply of such drivers to meet demand and does not need to manage
the supply other than to continually recruit more people.

I suspect this ruling will be overturned, if not in the Ninth Circuit Court of
Appeals, then in the Supreme Court.

~~~
quadrifoliate
> Uber drivers are private, self-owned businesses that rent out their time and
> equipment to a corporation on a completely arbitrary basis.

As far I know, this is not true. Uber dictates the prices that drivers can
charge, they cannot set an arbitrary price for their own labor. Is that not
the case?

~~~
exhaze
Uber has been rolling out a feature to allow drivers in California to set
their own prices, and today rolled it out to the entire state.
[https://www.independent.co.uk/news/world/americas/uber-
calif...](https://www.independent.co.uk/news/world/americas/uber-california-
driver-rates-new-policy-pricing-money-wage-a9613286.html)

~~~
rsanek
Small correction: not today, this article is from over a month ago.

------
KKKKkkkk1
It's interesting how often Silicon Valley companies blitzscale an
unsustainable business model and then leave public investors holding the bag.
In the Uber and Lyft case, the time bomb was the regulatory issue. Which
investors should have known about, given that these companies have been
breaking the law since day 1. Tesla with their full self driving is also an
example of this dump the risks on the bag holders pattern.

~~~
cocktailpeanuts
To be fair, the founder didn't want to do IPO and according to rumors that was
the reason why he was kicked out. All the toxic workplace stuff was just a
narrative tool to make it happen more easily.

Also, it's a public market. No one is "holding the bag". This may be true if
Uber crashed before the IPO because private investors can't easily sell, but
once on the public and liquid market, it is the public investor's own choice
to invest or divest in these companies.

~~~
aggie
> All the toxic workplace stuff was just a narrative tool

That's a pretty bold claim. What of all the reports of a toxic workplace? I've
heard first-hand accounts.

~~~
belval
I think he was arguing that the execs at Uber didn't really care about the
toxic workplace stuff until Uber's founder said he didn't want to IPO, then
they used it as a way to kick him out.

So basically the workplace is toxic, but that's not the real reason why he was
kicked out (according to the comment you were replying to).

~~~
neuroanalysis
He effort you have him ousted was led by Bill Gurley of Benchmark and several
other VC investors in Uber. Essentially the board asked him to step down and
he did.

~~~
cocktailpeanuts
If you look it up, there are plenty of articles of rumors saying that the VCs
schemed to kick him out because they wanted to IPO and the founder didn't.

------
cocktailpeanuts
If Uber and Lyft are forced to classify drivers as employees, doesn't that
mean these companies will try to lock them in? For example Uber won't allow
their drivers to work for Lyft, and vice versa.

If this is the case, I think Lyft will die very quickly because as far as I
know, most drivers prefer Uber over Lyft.

~~~
microtherion
IANAL, but to my knowledge, in California, a company cannot[ _] legally
prevent their employees from working a second job in their spare time, so this
kind of lock in would not work.

[_] some exceptions apply, mainly related to IP I think.

~~~
cocktailpeanuts
But it's not a "spare time". A driver literally has to constantly make
decisions whether to take the next Uber call or Lyft call. A lot of drivers
have both Uber and Lyft apps running and take the ones they prefer at the
moment. Some have become tired of this and just choose Uber.

If Uber or Lyft are required to legally hire these drivers as employees, they
will probably develop a technology to track the drivers so that they won't
take a Lyft call when there's an Uber passenger nearby, for example. This
effectively means lockin.

Also, Uber (or lyft) may even compensate these behaviors by giving the drivers
base salary as long as they don't take their competition's calls. Of course,
this is until one becomes the dominant player and the other goes out of
business.

~~~
microtherion
> A driver literally has to constantly make decisions whether to take the next
> Uber call or Lyft call.

Under an employee model, they would do this while on the clock of a particular
company (and being paid by it). Sure, Uber could choose to employ a driver for
16 hours a day, but they'd have to pay for that time.

------
nknealk
So I think the biggest question here is whether, as an employee, Uber/Lyft can
set hours for a driver. Some specific implications:

* Will we see employees (drivers) get a say in their shifts? An employee can be asked to work a 3AM - 9AM shift for example.

* Can not arriving to shifts on time be grounds for dismissal?

* Can refusing a shift be grounds for dismissal?

* Can incurring unapproved overtime be grounds for dismissal?

* If a driver is incurring overtime, is that reflected in the pricing that consumers pay?

* Can Uber/Lyft systemically set employee hours to like 29 per week to avoid FTE status?

* Will multihoming (ie working for multiple "gig" apps) be grounds for dismissal as a conflict of interest?

I see a lot of ways Uber/Lyft could retain significant power over drivers.

~~~
ogre_codes
> Will we see employees (drivers) get a say in their shifts? An employee can
> be asked to work a 3AM - 9AM shift for example. > > Can not arriving to
> shifts on time be grounds for dismissal? > > Can refusing a shift be grounds
> for dismissal?

If Uber requires someone to work a "Shift", then they have to pay them for
that shift regardless of miles driven. Uber doesn't want that. I don't believe
the state is requiring Uber to pay hourly and Uber almost certainly doesn't
want to pay people hourly either so none of this is relevant.

> Can Uber/Lyft systemically set employee hours to like 29 per week to avoid
> FTE status?

This is what most low-wage jobs do so why wouldn't they?

> Will multihoming (ie working for multiple "gig" apps) be grounds for
> dismissal as a conflict of interest?

Maybe. But since a big chunk of the appeal of working for Uber is flexible
hours that work around the hours of other jobs or responsibilities, why would
they?

If Uber prevents drivers from doing other gig-jobs, they will have a hard time
finding drivers.

~~~
jccooper
> I don't believe the state is requiring Uber to pay hourly and Uber almost
> certainly doesn't want to pay people hourly either so none of this is
> relevant.

Pay may be calculated based on metrics other than time, but must be at least
the minimum wage, which is based on time at work. For employees, if you want
to pay on trips/widgets/sales/whatever, you have to also track hours. So, yes,
the state is requiring Uber to pay hourly.

Uber may allow flexibility of when you're on the clock, though they won't have
to, but you can bet they'll require a certain amount of productivity.

------
criddell
> Uber and Lyft say drivers prefer the flexibility of working as freelancers

What would prevent Uber and Lyft from continuing to let employee drivers set
their own hours?

~~~
Cookingboy
Nothing, but since now they have the added cost of health insurance, minimal
wage, etc, it would make more sense for them to arrange pre-set shifts for the
drivers to optimize for supply/demand based on time of the day.

Some drivers would like that arrangement, especially if that's their full time
job. But some drivers who do this for supplemental income may not be able to
meet the demand of the new fixed schedule set by Uber/Lyft.

~~~
munk-a
I think Uber & Lyft are just using flexible hours as a red-herring. They
certainly can offer flexible hours to full time employees - no where does it
say "Americans shalt work from nine until five so sayeth we the founders".
They're just griping that they need to start paying benefits.

~~~
Cookingboy
>They certainly can offer flexible hours to full time employees - no where
does it say "Americans shalt work from nine until five so sayeth we the
founders".

I don't think you understand how a business like this works. For a customer
serving business, they need to make sure they are staffed appropriately.

Would it make sense for a restaurant to offer all of their staffs "flexible
hours"? Is it ok for the waiter to show up at 3am when he has trouble sleeping
and just get paid doing nothing?

It's not about 9-5, but it's about when the customers show up.

~~~
kec
I seriously doubt there's anything in labor law which would prevent Uber from
allowing flexible (fractional) hours to their workers, so long as those hours
pay at least minimum wage.

Uber isn't against this because it would make it impossible to run their
business, they're against this because they're being forced to pay into things
like unemployment which will make it more difficult for them to be profitable.

------
40four
So if Uber & Lyft lose their appeals, I’m taking bets on how long it will take
before they cease operations in California. I’ll set the over/ under starting
at 65 days.

In all seriousness, I’m not sure they will stop operating completely, but I
have a hard time imagining this will be good for a large number of drivers who
do it part time, or for consumers.

If they have to be employees, then I imagine Uber/Lyft will only want to keep
the most productive drivers around. The ones who do already do it full time.
They will likely have to enforce real working hours/ actual schedules, based
around demand.

This means any of the fringe drivers, who do it part time for supplementary
income will be out. They might not have the option anymore of just turning on
the app and working a little bit when they decide. This will mean less choice
and higher prices for riders.

~~~
Mirioron
What would happen if both Uber and Lyft would stop providing the service in
California? Would other States follow with that kind of legislation or would
it make them less likely to introduce such legislation? I can't imagine the
customers would be too happy with Uber and Lyft gone.

------
droidno9
The relevant statute:[0]

2750.3. (a) (1) For purposes of the provisions of this code and the
Unemployment Insurance Code, and for the wage orders of the Industrial Welfare
Commission, a person providing labor or services for remuneration shall be
considered an employee rather than an independent contractor unless the hiring
entity demonstrates that all of the following conditions are satisfied: (A)
The person is free from the control and direction of the hiring entity in
connection with the performance of the work, both under the contract for the
performance of the work and in fact. (B) The person performs work that is
outside the usual course of the hiring entity’s business. (C) The person is
customarily engaged in an independently established trade, occupation, or
business of the same nature as that involved in the work performed.

[0]
[https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml...](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB5)

~~~
sudosysgen
This seems to pretty conclusively result in Uber drivers being employees,
then. Specifically, in B. It's going to be hard for Uber to argue that driving
cars is outside of the usual course of Uber's business.

~~~
tomerico
I actually don’t think that point B is the ones they failed off. They claim
that they are in the business of facilitating a connection between drivers and
riders, in the same way that Youtube connects creators to viewers without
employing them.

The main thing they failed on is that the court thinks that they exert too
much control on the drivers. For example, they don’t allow users to choose
their own drivers. They also don’t allow drivers to price their ride.

~~~
sudosysgen
>They claim that they are in the business of facilitating a connection between
drivers and riders, in the same way that Youtube connects creators to viewers
without employing them.

This doesn't stand. If YouTube hired every single YouTuber as a contractor it
would be forced to reclassify them as employees. Because Uber doesn't
facilitate connections between two third parties, it facilitates connections
between clients and their contractors. If drivers on Uber were neither
contractors nor clients and if contractual obligations were between drivers
and riders then it would make sense.

------
twblalock
The corollary to this is that Uber and Lyft will now be able to exert more
control over drivers.

Contractors have certain legal freedoms that employees do not, such as setting
their own hours, being able to turn down work, driving for both Uber and Lyft,
etc -- that last one seems pretty common.

I wouldn't expect those freedoms to last long after they are reclassified as
employees. After all, this is Uber and Lyft we are talking about. We know how
they behave. Now the government has both increased their operating costs and
given them the ability to exert more control over their drivers.

------
marcrosoft
This is an example of regulation getting in the way of innovation again.

It’s like they want the medallion taxi system again.

~~~
LargeWu
Regulation, in general, exists primarily as a response to exploitation.

If drivers felt they were getting paid equitably, had fair dispute resolution,
had access to benefits, etc., there wouldn't be a need for this.

~~~
nickff
The parent's point brings up the fact that the medallion system wasn't
particularly beneficial to all drivers (or riders); medallions are good for
medallion-holders, which are usually taxi companies.

~~~
Pfhreak
Has anyone suggested the solution to this is to make another medallion system?
It seems like the OP was putting the cart before the horse.

~~~
marcrosoft
The medallion system was regulation at its worst. I’m suggesting we look to
our past so we don’t repeat it.

~~~
three_seagrass
How is California enforcing it's laws a repeat of a medallion licensing
system?

------
rogerdickey
It seems inevitable that the government will make reactionary, uninformed
decisions. The question is, how do we revert to normal (a freer market) and
begin to teach those in power some basic economics lessons? I'm not hopeful
that an op-ed by Uber's CEO will help. Perhaps it needs to look more like a
grass-roots movement.

~~~
Daishiman
This doesn't sound reactionary or uninformed at all. There's a decision that
the benefits of stable employment are more important than flexibility. You can
be free to argue whether it's better or worse bit it's not about ignorance.

------
LatteLazy
I find it really interesting how rigid this all is. No one is willing to
accept that Gig-work might be a thing and that we need a third category of
work to cover it. It seems to me (the outside observer) that the US labour
market is deeply dysfunctional. But the best anyone can muster is trying to
force Uber drivers into the OTHER deeply dysfunctional category...

------
BurningFrog
The reality is that these "gig economy" jobs are neither "Employee" nor
"Contractor".

It's a new kind of working relationship, and jurisdictions insisting on one of
the old categories can't really have a modern gig economy.

------
lhh
Leave it to California to stick it to a company losing $7 billion per year
trying to find its footing.

Drivers are voluntarily entering into the current work arrangement. Why does
the government need to have an opinion on the matter?

~~~
ccday
Regardless of whether this decision is correct or not, Uber's financial
situation is of their own making and shouldn't factor in to the ruling.

~~~
lhh
Fair enough, the court's job is just to interpret the law; it's the law I
object to. But a lot of people advocating for these types of laws make the
moral argument that companies are exploiting workers. Given the evidence, I
think that's a pretty difficult case to make in good faith.

~~~
websight
It seems like a very easy case to make. Regardless of whether the abstract
corporate entity is losing money, Uber's founders, employees, and early
investors have all done very well for themselves.

~~~
lhh
How does it follow that someone was exploited for that to have happened?

------
sparrish
I'm confused how they are violating Assembly Bill 5 (workers can generally
only be considered contractors if they perform duties outside the usual course
of a company’s business)? Do any employees working at Uber or Lyft currently
do any driving?

Their business is providing riders with drivers. The driving is not their
business.

~~~
gruez
>Their business is providing riders with drivers. The driving is not their
business.

Can't you use this excuse to bypass that clause altogether? eg. a pizza
restaurant that classifies its delivery drivers as contractors: "their
business is making the pizza. delivery is not their business".

~~~
tick_tock_tick
I mean it's that how contracting is supposed to work? If your core competency
is in making the product expecting you to become experts on delivering it too
is crazy.

------
thekyle
What I'm guessing will happen if Uber/Lyft are forced to treat drivers as
employees is that those driving full-time will be hired and everyone else will
be let go. The employees will lose some control over what hours they work and
may be forced to sign non-compete agreements (not sure if that would fly in
CA).

What I don't understand is why Uber/Lyft don't just allow drivers to set their
own prices. Whatever their pricing algorithm is it cannot possibly be better
than an efficient market of riders and drivers bidding on trips.

~~~
jcims
Probably because they would end up losing money, drivers would be willing to
work for less.

------
dangus
There’s a lot of discussion in this thread about whether or not it’s a good
idea to force Uber and Lyft to classify drivers as employees.

I think that discussion is a tangent the real issue.

California’s elected officials already ended that discussion by writing it
into law. If you live in California and don’t like the law you can call or
write your representative and see if they’ll repeal or change it.

But that law is the law. It seems unlikely that Uber and Lyft will win this
appeal.

What we have here are two corporations ignoring the law because they don’t
agree with it, and the “hire lawyers to endlessly fight this” number is lower
than the “paying payroll tax for all our drivers” number on the spreadsheet.

Just my opinion, it’s frankly disturbing how many people are ready to jump to
these companies’ defense. They’re proclaiming imminent disaster, that this
business model can’t possibly work with W2 employees, but I doubt that’s true.

Nothing stops Uber and Lyft from allowing their W2 employees to make their own
schedules, and nothing stops them from hiring directly from the app with quick
approval. They just don’t want to pay their share of the payroll tax, and they
don’t want to provide family and medical leave that their upper caste
employees enjoy.

------
Animats
From AB5 (and yes, I posted this in another topic today, but few here seem to
know it.)

...shall be considered an employee unless the hiring entity demonstrates that
all of the following conditions are satisfied:

(1) The person is free from the control and direction of the hiring entity in
connection with the performance of the work, both under the contract for the
performance of the work and in fact.

(2) The person performs work that is outside the usual course of the hiring
entity’s business.

(3) The person is customarily engaged in an independently established trade,
occupation, or business of the same nature as that involved in the work
performed.

#2 is the key issue for Uber. Uber claims to be merely a booking agent, not a
ride service. This is not believed by their customers, drivers, or the courts.
Nor is it the message on Uber's web site, which says "Sign Up to Ride -
Reliable rides in minutes". Uber is in the taxi business.

Uber has been trying to get around #1 by allowing drivers a bit more
flexibility. A tiny bit. Not too much.

------
chrischen
Seems like crux of this disagreement is that there is a large group of drivers
that do it full time as their primary source of income, and they want
protection from all the part time gig workers that flood the market and
depress their earnings.

Changing to employee model will result in fewer drivers (better protected),
but lose out on the gig workers or even those doing multiple jobs just to make
ends meet.

------
c3534l
Before just randomly spouting out whether you personally feel like Uber and
Lyft are employers, it might be helpful to look at the ELI5 criteria
California lists at
[https://www.dir.ca.gov/dlse/FAQ_IndependentContractor.htm](https://www.dir.ca.gov/dlse/FAQ_IndependentContractor.htm)

> Under the ABC test, a worker is considered an employee and not an
> independent contractor, unless the hiring entity satisfies all three of the
> following conditions:

> The worker is free from the control and direction of the hiring entity in
> connection with the performance of the work, both under the contract for the
> performance of the work and in fact;

> The worker performs work that is outside the usual course of the hiring
> entity’s business; and

> The worker is customarily engaged in an independently established trade,
> occupation, or business of the same nature as that involved in the work
> performed.

It's not enough to just say "they feel like they don't work for Uber" you have
to put forward a more coherent case than that.

~~~
Wolfenstein98k
This is oddly specifically drafted to capture gig economy workers like this.

My employer employs people (on a permanent ongoing basis) who meet some of
these conditions to be classed as an independent contractor...

~~~
baddox
As stated, all three conditions must be met for a worker to be considered a
contractor.

------
lotophage
> labor unions and elected officials contend this deprives them of traditional
> benefits like health insurance and workers’ compensation

This is the real problem that needs to be fixed. Most other developed nations
have affordable, if not universal health care that isn't tied to their
employment. The status of Lyft/Uber drivers wouldn't be as much of an issue if
this was solved.

------
shrimpx
This debate seems to be about what's a user vs. a contractor vs. an employee.
Does the fact that I walk a Google device around enabling Google to record
rich profitable data, in exchange for extracting some value from their
services, make me a contractor or an employee? Because for sure it doesn't
sound like it makes me a user.

Edit: spelling.

------
jdeibele
It would be interesting to let passengers have a slider that let them show how
price sensitive they were and the drivers were able to set a minimum price for
total (driving to passenger + driving to destination). Maybe you'd be willing
to wait for 15 minutes if Driver B would be cheaper than Driver A, even though
Driver A was 3 minutes away.

Even better (if drivers are really treated as contractors) would be to show
you the rates from Driver A, Driver B, and Driver C and you can pick one:

Driver A: 23 minutes, $20 Driver B: 35 minutes, $15 Driver C: 30 minutes, $18

The issue for Uber/Lyft is they're focusing on the ride and that's nice - I
don't know that drivers rejected me since they're just showing the ride cost
from Point A to Point B. But that ignores actual driving time for the drivers,
plus that they might end up in an undesirable area.

------
whiddershins
If you think about this dispassionately, the biggest _likely_ effect of
implementing this is as follows:

Uber rides become more expensive.

That money largely will go to the government in the form of various payroll
taxes.

No one will remember this in a couple of years.

Because of the forgetting, we will in the future be skeptical that labor
compliance was so important to the price. The idea that gig workers could have
ever existed without all this compliance will seem alien and barbaric.

If anyone suggests removing all this compliance, they will be called a free
market purist.

It’s odd, because I think most people actually think what is going on with gig
workers right now isn’t horrible oppression, but rather adults agreeing to
working conditions and having a ton of freedom.

I don’t think we will see it that way in the future. And I don’t think we will
ever be able to deregulate this after the fact.

~~~
WanderPanda
I mostly agree, but shouldn't the competition between states in the US be able
to lead to the best solution? Maybe that is overriden by the large variance in
the bag of different things (regulations etc.) one gets from being in one
particular state vs another. This does not play well with the low dimensional
action space of moving from one to another state.

Maybe it is time to think about "virtual" citizenship so there is competition
between states on may distinct levels

------
alex_young
Uber wants you to believe that the cost of paying drivers as employees is that
you won’t be able to get a car in most places.

This can’t be true.

Uber replaced a poorly run system that actually covered most places and
employed it’s labor force.

If Uber and other car services were forced to recognize their workforce as
employees, there would be market incentives to support doing so.

American taxpayers pay for Uber and Lyft driver’s subsidized medical plans and
other public benefits they receive because they are not paid as employees with
the right to organize. Your ride may seem cheap, but you pay for it in your
tax bill.

~~~
skybrian
If you mean taxi drivers, apparently they were usually contractors, until this
new law was passed, anyway.

[https://www.sfchronicle.com/business/article/California-s-
gi...](https://www.sfchronicle.com/business/article/California-s-gig-work-law-
targets-Uber-and-14565001.php)

~~~
alex_young
Thanks for pointing this out - in SF there was an intentional effort to
destroy the employee taxi driver system in the late 70s. This is talked about
at length in the article you linked to.

Many other places still have working employee systems for taxis. SF could too
if they wanted to change this law.

------
TheMagicHorsey
I don't know how a judge can so cavalierly grant preliminary injunction in
this case when the facts have not been examined.

Anyway, it must be due to the recent law passed in California. Ultimately the
citizens of California determine its shitty laws, and they can enjoy their
rideless future and the bad old days of taxi cab monopolies because they went
along with taxi medallion holder propaganda.

------
ffggvv
i hate living in california so much. it’s terrible being tied in a place due
to family despite terrible governance

------
apta
As usual, these laws show the broken underlying system and then trying to
patch it with more broken patches.

------
sabujp
I'm sure someone has thought of this, but why don't we have ridehailing apps
where the contract literally is between the driver and the passenger(s)? The
app can merely suggest a rate but the driver can set whatever price they want.
The app takes a very small finder's fee.

~~~
umvi
What if drivers can't make a living wage using such an app because there is
too much supply driving prices down? The app will be crucified for "exploiting
drivers"

~~~
sabujp
Why would there be any more or less supply than what's available via uber or
lyft and why would the app be at fault when decisions are made by the driver?
Now there are more choices you can be your own contractor or work for
uber/lyft as an employee. People who have older cars and can charge less may
drive down prices but I think there will always be a market for being driven
in newer cars, suv's, luxury cars, etc. You can schedule rides ahead of time
and set contract breakage penalties. All these can be suggested by the app but
again it's up to the final decision made between the customer and driver.

------
sytelus
This has been going back and forth too much. I am not even sure why single
person (judge) wants to make such sweeping decisions. These drivers work on
their own whims. They may decide to show up or not. They can cut short day
anytime. Uber or Lyft don’t require them to start their shifts and work 40
hours a day. The drivers don’t commit to any full time work schedule. So at
best things are muddy and lawmakers needs to come together instead of
individual judges start writing laws according to their individual whims and
philosophy. This will most definitely be get challenged and ultimately SC will
not want to hear this anyway so it’s just massive waste of time for everyone.
Only lawyers are getting rich in the process.

------
tehjoker
Bear in mind that these ridesharing companies are basing their entire business
model vs taxis not on some dumb app, every taxi company tries to get you to
install its app. Instead its innovation, is reducing labor and capital costs
in order to offer cheaper rides than taxis to corner the market. In order to
reduce capital costs, they have workers bring the cars. To reduce labor costs,
they pay less. Uber is a cash inferno and they have been fighting against
employee status because for various reasons the workers get paid more overall.

------
cmckn
Honestly, I've lost track of the actual argument in this app-taxi space. Is it
primarily health insurance? What is the employee benefit that is the crux of
the issue for the average driver?

------
JulesPierre
What does this mean for other on-demand type of businesses like Handy (on-
demand cleaning) that also employ Independent Contractors? Would they bring on
their ICs as employees or would it be too cost-prohibitive and thus they'd opt
not to operate in California?

Finally, California tends to set trends for the rest of the country. Would we
see other states go the California way and change classification of ICs to
employees?

------
surround
Drivers in less population-dense areas such as my own keep both the Uber and
Lyft apps open in order to fill enough time. Would this still be possible if
they were an employee?

------
ummonk
If I were Uber and Lyft I'd dropped the issue in California and instead of
paying drivers directly, pay intermediary companies with full time drivers on
their payroll.

------
jerzyt
I would agree that someone who drives for Uber about 40 hours a week is
effectively an employee, however it leaves out a lot of drivers who only want
to offer certain rides at certain time. For example, if every weekend I drive
to my vacation home, which is in an area not practically reachable by public
transport, and offer a ride, does that make me an employee? That's nonsense.

------
Cakez0r
Why doesn't Uber just let Californian drivers set their own rates? Would it
really be such a huge deal to their business model if drivers could set their
own price per mile, or similar? Uber still takes a percentage cut and I assume
the free market cost would work out to be in the same ballpark as Uber's
pricing model.

------
aborsy
Uber provides a platform connecting riders with drivers, not employment. The
driver is employed by the rider.

The driver is free to work his or her own hours, routes, work or not work etc.

Uber overseas the platform to ensure it operates properly and there won’t be
victims.

There are many of these platforms. It makes no sense to force LinkedIn
classify job seekers as employees.

------
praveen9920
One of test in so called ABC test says

"B test requires that the worker performs work that is outside the usual
course of the hiring entity’s business"

Isn't this a bad test in the first place. Let's take game studios, they need
contract developers for a game, wouldn't that make them fail the test and make
them an employee?

------
fergie
What a lot of people in this thread dont seem to understand is that the
article is not making the case for Uber/Lyft drivers to be classified as
employees (traditionally cab drivers have almost always been self-employed
contractors), its simply reporting that under the current arrangements,
Uber/Lyft drivers clearly _are_ employees. Legal scholars frequently cite the
ability to set a price as a key criterion for being classed as a contractor.
Maybe all Uber needs to do is to introduce some kind of "bidding" system in
order to maintain the status quo. (They probabably wont though because Ubers
entire value proposition to its shareholders rests on its ability to drive
down the pay and conditions of its drivers)

~~~
sida
You know because of this regulation, uber already introduce price setting to
drivers.

This is literally what drivers do today in California.

------
jmpeax
To satisfy the "C" of "ABC", I reckon this provides an opportunity for small
companies to start up, with drivers as employees, to contract out driving work
for both Uber and Lyft.

------
crobertsbmw
I kind of hope that both companies just decide to not shut down the app in
California. Otherwise I’m nervous that other cities might end up subsidizing
the California market.

~~~
mav3rick
CA subsidized others before. Time's up

------
c3534l
I'm not surprised. Uber and Lyft try co classify their workers as contractors
when it comes to taxes and benefits, yet undermine workers abilities to
actually be independent contractors when it suits them to do so. If you want
to be a platform that helps connect drivers with passengers, then be that app.
You can't then go in and set rates, not pay per client, not give contractors
the ability to work for the customers they want, etc. These companies have
such a strange culture of hubris and trying to skirt the law, its only a
matter of time for that to catch up with them.

~~~
julienb_sea
Part of the reason Uber and Lyft work so well for riders is due to how they
structure the relationship between drivers and their platform. Drivers are
required to conform to the platform's payment structure. This enables
predictable up-front pricing for rides before they are even requested. This
enables the surge pricing system, which rapidly ramps up supply to match
surges of demand.

Drivers can decline rides at will, but if a driver excessively declines rides
there is punishment for this. This makes perfect sense as the platform
calculates projected rates and surge pricing based on driver availability.
Unnecessarily declining rides provides a poor user experience for riders, and
riders ultimately can choose to take their business elsewhere. This means
drivers need to be disincentivized to decline rides in order to maintain the
quality of the platform.

Ultimately the relationship between driver and platform is structured to
ensure a consistent driver and rider experience. The benefits arguments are
more interesting, and maybe there does need to be a system for driver benefits
like health insurance if they are working full time for the company, but
ultimately these costs will fall squarely on consumers.

~~~
c3534l
If your points are true, then all that really means is that there is a
structural, economic incentive to not be structured as a platform and that the
old model, of having cab companies with drivers who are employed by that
company, is the most naturally efficient structure. That's fine, except for
the part where they claim their employees are independent contractors, which
would be tax fraud if they didn't try to structure in plausible deniability as
best they could. That was the criticism I started with: they want to treat
their workers as independent contractors when and to the extent that it
benefits to do so, and they want to treat them like employees when it doesn't.
"the relationship between driver and platform is structured to ensure a
consistent driver and rider experience" \- yes, that relationship has a
specific name and that name is "employer." Uber and Lyft want to employ
drivers to work for them, but want to avoid paying taxes on it. This is a
dangerous game they're playing.

------
xiaolingxiao
There is another post on the front page from The CEO of Uber. It seems like
the NY times article was written as a way to control the narrative?

------
CarbyAu
Look to history to see why Uber/Lyft/gig-economy is a backwards step for
society. We've been here already.

Historically low wage rise. People lining up hoping to be picked for the next
piece of work.

It ended up with the labor movement to fight for 40 hr weeks, protections for
employees etc.

Uber hasn't done anything new in terms of labor use. Merely communication and
organisation.

But society judged the labor use to be a poor outcome in the past so where do
we think it will go now?

------
Gasp0de
"Uber and Lyft say drivers prefer the flexibility of working as freelancers"
_laughs in german_

------
dmch-1
These companies were losing billions already. What will happen with them now?

------
wayanon
Uber and Lyft are exploiting a system never intended for low paid workers.

------
catsarebetter
I can't see Uber not doing everything they can to fight this

------
Causality1
1099 contracting is a cancer that's eating the entire sub-$50K job market.
Most of my friends are 1099 contractors and every single one of them wishes
they weren't.

------
PHGamer
dont contractors get to write off their car? if they are employees they no
longer get write offs correct?

------
koolba
I hope they retroactively collect unemployment tax from both companies.
They’ve been playing this shell game for long enough.

------
zackmorris
Funny, unlike whatever these busybodies in California are doing, I'm actively
working to go the opposite direction in my own life - from full time work to
the gig economy. I'm hoping to write about this some more, but so far so good
a year and a half in. Here are a few directions I'm working towards:

    
    
      - 40 hours -> 20 hours or less
      - boss -> employee-owned
      - office -> remote or shared workspaces
      - set schedule -> set our own schedule
      - being on call -> tech to free us from obligation
      - brands -> anonymity
      - benefits -> societal evolution towards public healthcare
      - egalitarianism -> shared prosperity
      - job security -> a scalable job market in the gig economy
      - scraping by to make rent -> substantial cashflow (donating plasma, Uber, Lyft, Grubhub, Airbnb, etc etc etc)
    

I think that last point is the one that the status quo will go after, since
they always start with the $$$. I'm dismayed that California has chosen to go
this route, as they used to be at the forefront of tech and innovation.

The above points are loosely based on concepts from Burning Man (although I've
never attended, sadly). Mostly regarding humanism and decommodification.

Can anyone think of some more points to add, or other sources of cashflow?

------
yeswecatan
Interesting that Dara wrote this holier-than-thou opinion piece as this came
out. I find it hard to think this is a coincidence.

[https://www.nytimes.com/2020/08/10/opinion/uber-ceo-dara-
kho...](https://www.nytimes.com/2020/08/10/opinion/uber-ceo-dara-khosrowshahi-
gig-workers-deserve-better.html)

------
jquery
California gets more stupid by the day, I have no words for how stupid this
is.

------
cityzen
Uber CEO: "Gig workers deserve better!"

CA: "Uber drivers are employees, how bout dat?"

Uber CEO: NOT THAT MUCH BETTER....

------
xenospn
"Uber and Lyft say drivers prefer the flexibility of working as freelancers"

Doesn't this lawsuit prove otherwise?

~~~
pacificmint
This lawsuit isn’t being filed by drivers, according to the article it’s being
filed by “the California Attorney General Xavier Becerra, along with city
attorneys of Los Angeles, San Francisco, and San Diego”.

I mean drivers may or may not prefer freelancing, and certainly Uber will say
whatever supports their case, but I don’t think the State suing Uber proves
what drivers want in any way.

