
Lyft Settles Worker Classification Lawsuit for $12.25M - ndirish1842
http://techcrunch.com/2016/01/27/lyft-will-pay-12-25m-to-settle-worker-classification-lawsuit-in-california/
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mc32
These lawsuits expose a couple of things, one there needs to be more kinds of
work classifications than employee and contractor. Two, the benefits system,
healthcare, whatever, is still not fixed and has a long way to go to cover all
citizens, regardless of employment type and status.

Another thing, is these platforms have more than one kind of participant, ones
who utilize them as their main source of income, and those who utilize them as
complementary source of income or as a part time/college/uni job.

If these platforms would simply be a platform (who like yelp) let the provider
sink or swim based on ratings, then they could avoid the problems stemming
from their requirements [which makes the platform less ad hoc and more rule
based thus leaning toward employee - yet the fear would be a degradation in
service to end users and thus a threat to platform viability]

One thing I'd like to know is whether people doing lyft or über full time do
on average better or worse than their yellowcab counterpart.

~~~
tyingq
Uber and Lyft get out of more than just paying benefits by classifying their
workers as independent contractors. They also avoid paying their portion of
the payroll taxes, liability for workman's comp, protective laws (minimum
wage, unemployment coverage, for example).

Edit: For those downvoting...you really think these exact things weren't
discussed when Uber & Lyft were deciding how they would comp drivers? Heh.

~~~
tzier
Portion of payroll taxes is ~7.5%, plus an extra 2.5-10% for workers comp/etc
depending on your rates.

If they had to reclass as employees, they would just raise prices to end
consumer 10-20% to compensate (or fund it via other's money like they're doing
now to price out rest of market).

They'd also put a cap on hours per week so drivers couldn't drive more than 30
hours per week. Companies aren't legally required to give benefits to part-
time workers (up to 30 hours).

The big draw of independent contractors is that you've just converted labor
from a fixed cost to a variable cost. There are tons of Uber/Lyft drivers
(namely, anyone not doing it full-time, which is the majority of drivers) who
prefer this since they can drive as much or as little as they want.

~~~
azylman
> If they had to reclass as employees, they would just raise prices to end
> consumer 10-20% to compensate (or fund it via other's money like they're
> doing now to price out rest of market).

I think saying that they would "just" raise prices 10-20% is trivializing the
problem. One of the reasons that Uber took off was because it was so much
cheaper than regular taxis. Would Uber look the same now if it had had 20%
higher prices from the beginning? Almost surely not.

~~~
rayiner
I take Uber almost daily from the train to my office because it's about 30%
cheaper than a cab. If it wasn't I'd just grab a cab at the cab line. It's so
much easier.

~~~
harryh
Of course if uber has to raise rates because their employee costs go up, you'd
have to expect cab companies to do the same because all their employees aren't
getting benefits either.

~~~
tyingq
They are, however, paying their portion of the payroll taxes, disability,
unemployment, etc. And perhaps softer benefits that still have costs, like
paid time off.

~~~
harryh
I am nearly certain that's not true in the majority of circumstances. Cab
drivers are generally self employed and issued 1099s not W2s.

~~~
mc32
I think what happens in the media is small outfit bias.

Über is big, so what they do must be judged in that light, yellow cab is
small, so they get a pass even though they engage in similar practices.

I listen to NPR and they had a bit about über and them being "unfair" to
drivers, but never was that compared to how drivers are treated at yellow cab
for example. So, because they are big they are looked at more suspiciously,
plus they are "tech" so there must be a bad angle there somewhere. People have
a thing for underdogs, I do too, but not so much in this case because cabs can
often be worse for the drivers, at this time. No telling in the future when
automation takes over. The point will be irrelevant then.

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Apocryphon
One wonders that if the American health system had a public option- never mind
single-payer- it would relieve a lot of stress on startups.

Higher taxes are one thing, but if the American government ran essential
benefits such as this, businesses can then focus on, well, their businesses.

~~~
trustfundbaby
... and democrats have been making that exact argument for donkey years.

~~~
Apocryphon
So is it a valid claim, or not? Aside from the higher taxes to support a new
program (not that the gov't doesn't already spend huge amounts in healthcare
already) and the insurance industry, who loses out?

~~~
trustfundbaby
Yes absolutely. Its just that in the USA this debate has taken on a religious
tenor to where facts and logic essentially mean nothing. It just comes down to
who can yell the loudest or push their legislation through

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rockarage
Lyft is an inadequate competitor to Uber. You can't compete with Uber if you
have a very similar business plan, a plan that involves taking too much money
from drivers. The problem with all these platforms is that they believe they
have to become fat middle men to satisfy their investors. I'm working on a
platform that will exploit this inefficiency in the market.

~~~
brianwawok
So like Uber but with lower fees?

Uber is losing hundreds of millions of dollars with "high" fees. So I guess
you need an investment of 20 billion or so to compete?

~~~
rockarage
Yes lower fees for drivers and passengers. Uber is wasting too much money on
shtick marketing, too many managers & executives and expanding to other
countries with anticompetitive laws. My approach will involve a relatively
smaller operating team. We will not need 20 billion to compete directly with
Uber, because our goals are different from Uber. Having Uber as a competitor
provides a clear contrast for potential drivers and customers. Easier to
compete when you are lean & understand the market.

~~~
brianwawok
Have you ever grown a two sided marketplace? Especially in a marketplace with
popular competitors? How do you plan to do this without advertising or
throwing money at people (like driver signup bonuses)?

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Laaw
It'd be pretty damn cool if Lyft/Uber/Instacart/etc. could find a way to give
their drivers benefits. I hope this ends up in Lyft doing more than just
"looking into" those things.

There's _got_ to be a way to do this such that drivers don't get shafted,
while still making a profit...

~~~
hkmurakami
Someone's gotta pay. Right now it's the drivers paying via not having
benefits.

We can have a world where (1) costs are transferred to riders, (2) costs are
eaten by Lyft, (3) costs are diffused through increased efficiency and
utilization of the workforce -- this tends to manifest itself in overworking
of employees though (ex: paying overtime rather than hiring more workers, as
is often the case in manufacturing)

I suppose that we could have a scenario for (3) where the goodwill entices
riders to use Lyft more, which increases utilization of drivers (ex:
collecting fares for X minutes / hour goes to X + N minutes / hour) and that
can pay for the increased costs.

~~~
ProAm
> Someone's gotta pay. Right now it's the drivers paying via not having
> benefits.

As a contractor you always pay for your own benefits. Every contractor does
this (or chooses not to on their on volition). Every driver KNOWS they are a
contractor, they should know what comes with being one, and it's no ones fault
but their own if they don't.

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tyingq
I bet that Lyft and Uber would greatly reduce the contention with their
drivers if they changed the app so that riders could optionally tip the
driver.

I'm sure that enabling tips would create other issues, but the bump in
compensation would probably go a long way toward improving the relationship.

~~~
pbreit
Lyft offers in-app tipping. Uber inexplicably does not.

~~~
tlrobinson
1\. The absence of tipping is a feature. Uber was originally a premium
service. Many premium services explicitly discourage tipping.

2\. Driver ratings replace the primary function of tipping, which is to
incentivize good service and leave feedback.

That said, I very occasionally leave a tip in extraordinary circumstances, and
would not be opposed to a way to do that in-app, as long as it was very clear
it's not expected (hide behind 5-star rating, call it a "bonus" or something).

~~~
st3v3r
Ratings don't replace the feature, as you don't really choose your driver.

~~~
tlrobinson
Uber fires drivers with low ratings, so you do, just not directly.

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revelation
What stops new drivers from filing the same lawsuit? What if they don't settle
and force the issue after Lyft has already previously agreed to a settlement?

~~~
bsbechtel
I don't know with 100% certainty, but I am guessing rules for class action
suits state that once an agreement is reached, the 'class' bringing the suit
(i.e., the drivers in this case) cannot sue again for the same reason. That
is, because new drivers would be a part of the same 'class' as the previous
class action suit, they have technically agreed to the previous agreement,
whether or not one individual driver agrees.

~~~
CPLX
This is broadly correct. The part that preserves the rights of prospective
plaintiffs to sue individually is contained in the opt-out provisions that are
always a part of a class action, and involve notice and deadline requirements.

~~~
revelation
Hence why I qualified "new drivers". Obviously new drivers (after the
settlement) can not have opted out or been part of the class.

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bsbechtel
Does anyone know if the terms of the settlement agreement are public record
anywhere?

