
The Gig Economy Is Being Sued to Death - gregdewa
http://www.fastcompany.com/3042248/the-gig-economy-wont-last-because-its-being-sued-to-death
======
techsupporter
The rules, such as they are, seem fairly straightforward. If, in the case of
outfits like Handy and Uber and Instacart, the "employer" is laying down
rules, requiring certain performance, setting the price, and enforcing
metrics, they are an employer and the person doing the work is an employee who
should be treated as such.

If, in the case of outfits like Redbeacon, the site is collecting leads and
distributing them while letting the two parties work out the arrangement for
themselves, the site is a referrer and the contractor is a contractor.
Redbeacon doesn't require that the contractor who I hire to paint a room show
up in Redbeacon attire, only do work through Redbeacon, charge what Redbeacon
dictates, and follow Redbeacon's rules for how the work is done.

In the former case, people don't say "I hired J. Q. Driver to take me from my
office to the airport," they say "I got an Uber." It's not "Local Delivery
Service, LLC delivered my groceries today," it's "Instacart brought the milk."
Being a part-time or irregularly-scheduled employee doesn't make someone any
less of an employee than a 40-hours-per-week office worker.

The problem is one of enforcement. Just like how Uber got its nose under the
tent by bullying through existing rules, companies like these exploit the fact
that state Departments of Labor are politically hesitant (can't be crushing
those small businesses, after all) and the federal DoL is limited.

~~~
alwaysdoit
So if I hire someone to play Princess Elsa at my daughter's birthday party,
requiring her to wear a certain uniform on a certain day during certain hours
and setting a price, then she is therefore an employee?

Aren't setting prices and terms of contract a standard part of any contract?

If you are providing a marketplace for people to find contracts between
parties, and you are in any way filtering what you will or will not allow on
that marketplace, aren't you setting terms of that contract?

~~~
Retric
[http://www.careerusa.org/resources/career-
files/100-resource...](http://www.careerusa.org/resources/career-
files/100-resources/career-files/12g3-w2-or-1099/281-1099-vs-w-2-an-irs-
checklist-.html)

The IRS uses a 20 item check list. Reading though the list "So if I hire
someone to play Princess Elsa at my daughter's birthday party" would clearly
be a 1099. However, if they work though an agency then they might qualify as a
w-2 for that agency.

~~~
nulagrithom
Great link! I can't help but think this could be the root of the problem:

 _This 20-point checklist is only a guideline; it does not guarantee that a
person is correctly classified. Most agencies and courts typically look to the
totality of the circumstances and balance the factors to determine whether a
worker is an employee._

~~~
smacktoward
No, the root of the problem is companies that want staff who they can work
like employees but who they don't have to pay like employees, provide benefits
to like employees, or accept liability on behalf of like employees.

There's nothing remotely new or novel about that; it's a dodge that companies
have been trying to get away with for as long as labor law has existed.

~~~
alexqgb
The premise of Uber is that there were tremendous and ill-gotten gains being
nefariously produced by taxi cartels. By busting them up, they could provide
people with better service at an equal or lower price - all while ridding
cities of a nasty bunch of operators in the process. Behold the righteous
cleansing power of creative destruction!

Turns out that their case was a bit overstated (to put it politely). Sure,
this was a problem with the medallion model, and Uber is providing a
breakthrough solution. But they're not stopping there. To achieve the growth
that will justify their valuation, they've got to undermine perfectly
reasonable labor laws as well. So maybe not so socially beneficial after all.

Sociopathic tendencies of the leadership aside, one has to wonder if the real
problem isn't the VCs who poured their funds' money into a business that could
only win by undermining clear, reasonable, historically necessary, and broadly
popular legislation. Had they limited their investment to an amount that could
be returned simply by attacking cartels, that would be one thing. But
insisting that Uber illegally strip-mine their work force may have flipped a
once-good thing into the extractive menace column occupied by outfits
like...well, taxi cartels.

~~~
eli_gottlieb
>Sociopathic tendencies of the leadership aside, one has to wonder if the real
problem isn't the VCs who poured their funds' money into a business that could
only win by undermining clear, reasonable, historically necessary, and broadly
popular legislation.

Well many of those VCs are ideologically opposed to the very concept of
legislation being passed to regulate business in the first place, so they
effectively got a double return on their investment in Uber:

* First return: actual financial gains when the business takes off

* Second return: a few more paid mercenaries elbowing their way through the rule of law

~~~
alexqgb
Weirdly enough, none of these guys has set up shop in Lagos. Or Moscow.

------
al2o3cr
"Lose this workforce structure—either by a wave of class-action lawsuits,
intervention by regulators, or through the collective action of disgruntled
workers—and you lose the gig economy."

Hang on, lemme get my tiny violin to properly eulogize the loss of an
opportunity for VCs to get rich on the backs of low-wage workers. Won't you
please think of the billionaires?

~~~
savanaly
Hard to know whether the bulk of the surplus is being captured by consumer or
producers in this situation (from your tone I would assume that you prefer the
consumers would capture it?) without knowing the elasticities of the forces at
play-- but don't rule either one out just yet.

~~~
altcognito
Fancy words that cover up the fact that efficient markets are not necessarily
the best ones for human beings.

~~~
savanaly
I'm sorry for the fancy words. I truly don't know what other words to use to
express the concepts here. It really is a fact that there is something called
elasticity, and it has influence over whose welfare is increased after a price
change. And I feel like that might just matter here.

------
toomuchtodo
The title should be:

"Startups with business models based on sidestepping worker protections and
labor regulations are being sued to death". As they should be.

~~~
aceperry
Absolutely! Glad to see that most commenters here see that this gig economy is
really bsed on exploitation.

~~~
bkmartin
Is it really based on exploitation? Take for instance one of my best friends
who lives in the D.C. area. He was just raving to me about how he made of $300
in one night driving for Uber. Now, of course he has to pay for his own gas
and wear and tear on his car, but he did not feel exploited. Not saying that
every "gig economy" company pays well, but I don't think you can say it is all
based on exploitation. I think that it really starts out as something more
innocent. The idea that there is a certain population with need A. There is
another population willing to perform tasks to satisfy need A. Somebody builds
a platform to bring those two together and take a slice of the pie because it
looks like a really big pie. Then once it is created, they don't execute it
well or find out that the people with need A don't really want to pay that
much, or some other factor that leads to squeezing the people satisfying need
A because the company wants to be profitable. Squeezing the people doing the
work was probably not the idea from the outset, it was probably much more
positively thought of as in they thought they could give people a chance to
truly earn a respectable amount of money.

~~~
vinceguidry
> Now, of course he has to pay for his own gas and wear and tear on his car,
> but he did not feel exploited.

Contract law is funny. In a perfect world, anybody should be able to make a
contract with anybody else to perform a legal act for them. But the world
isn't perfect. You have to take into account that the contract you just made
might well be replicated hundreds, thousands, or millions of times, in
countless different contexts.

Sex is legal. Forming a contract involving sex is not. Even if nine times out
of ten, it's perfectly fine, that would generate huge social costs. It's why
gambling is so controversial and tends to be relegated to a select few adult
playgrounds that are set up to handle those costs.

Labor laws came into force awhile back to reduce the risks of employment.
Before labor laws, if you got hurt on a job, it had the very real potential of
ruining your life. Your employer would not pay for your care, you'd be fired,
even if it was no fault of your own. And managers were often ruthless about
coercing employees into performing dangerous tasks with no safety protocols.
Labor laws protect you against yourself, no one should be exposed to some
risks even if it means putting more food on the table.

~~~
bkmartin
But does that really apply in the case of Uber? Honest question. You are
agreeing to perform a task, in this case, driving an individual from point A
to point B for a set $ amount. You can see that dollar amount and decide to
take it or not, correct? So, if you get injured in a car accident you are
covered by your or the other driver's insurance. If this is a side job, not
your full time work then you could have health insurance on top of that. So
where exactly is the problem here? Now, this isn't speaking to the so called
"gig economy" in general because I think that each company is responsible for
its own rules and actions when it comes to labor. If one company fails to pay
an honest wage and exploits its workers, that doesn't incriminate every
company that creates a contract platform.

~~~
vinceguidry
> So, if you get injured in a car accident you are covered by your or the
> other driver's insurance.

Not necessarily. Most car insurance companies won't cover you if you're using
your vehicle commercially unless you get a commercial policy. You could be put
into the position of having nobody to foot the bill in the case of an
accident. The market will eventually adjust to these new kinds of insurance
customers, but if the insurance companies start catering to Uber drivers, that
could cause problems for them seeing as how ride-sharing is illegal in many if
not most places.

So the insurance companies could be exposed to legal risk for facilitating
illegal businesses, just as banks would be exposing themselves to criminal
liabilities if they start catering to the marijuana industry. So they have to
be careful. All increasing the risk of you getting into an accident and having
no one but yourself to pay the hospital bills and getting sued by the other
party or your customer for failing to carry proper insurance. The ride-sharing
companies offer to shoulder the risk themselves by carrying policies, but it's
unclear as to whether this is really enough.

------
mr_luc
This will not kill it.

The Gig Economy will be a thing, and it should be.

But it needs to be legitimate, and it should lead to _more_ autonomy and
freedom for the Giggers, not less.

To accomplish this, businesses that treat contractors like employees should
absolutely be punished!

If we really are to replace the old "master-servant relationship with a purely
economic one, between equals," (like Paul Graham said so beautifully in his
fantastic 2005 OSCON talk) then _autonomy_ is important.

Those people who worked for Handy -- they were ostensibly contractors, but
only labor contractors. The value that they create is cleaning + peace of
mind. But as contractors for Handy their relationship isn't with the client;
it's with Handy.

Okay, so they're labor contractors. Extremely fungible.

But, as independent contractors, one of the freedoms that the law guarantees
them is a certain degree of autonomy.

They get to choose (varying from state to state, and the nature of the work)
where and when they work, whether to listen to music, when to go to the
bathroom, whether or not to scratch their butts on the job ... or at least
that should be the case.

If it wasn't, that's a problem.

~~~
toomuchtodo
This will never occur, as businesses employing these workers want employee
level of control with independent contractor costs.

~~~
shawnee_
Bingo. What all of these supposed "gig" economy jobs have in common is the
parent company's tendency to shift all the risk to non-employees / ICs while
reaping most of the economic value of the reward -- taking a heftier cut than
it should from the business transaction.

The value derived from being an IC that's truly independent is being able to
charge more for the "temporary" nature of the work and the risk of end-client
fickleness. But this chunk of value is getting eaten by the middlemen
(marketplace and escrow).

As such, this is especially evident in companies that have integrated a
"marketplace payments platform" directly into their systems -- AirBnB, Uber,
Kitchit, Instacart (any one of the companies whose payment processor is a
member of the cartel: [http://ink.hackeress.com/2014/12/crowdfunding-is-too-
expensi...](http://ink.hackeress.com/2014/12/crowdfunding-is-too-expensive-
payments.html)).

~~~
mr_luc
Right, that's all context around this situation. Obviously companies want
whatever they can get.

But it's actually less grim than it seems:

1\. there are laws,

2\. the price pressures exist for the coordinating companies as well, as long
as there continues to be competition, and

3\. 'real' autonomy has a lot of benefits for people who are into that.

So first, there are already laws for this. (Which may or may not be sufficient
regulation, but they cover a certain amount of what's discussed in the
article, hence the lawsuit). Existing laws already stipulate what is/isn't a
private contractor, for instance.

Ie, for work like programming, usually one can't be mandated to work in a
specific office, or on specific hours, unless there's something about the job
that particularly demands it. (Not that this sort of thing comes up a lot in
programming, but there are definitely laws around this).

And in fact it's much easier for companies like Uber and Handy to be targeted
for misclassification of workers than the more informal economies of
construction workers, etc. So if there are holes in the law and they get
plugged, that could be cool.

Secondly, "taking a heftier cut than it should from the business transaction"
isn't a very damning indictment. But if Uber faces real competition with Lyft,
for instance, the cut they can take is dictated by the market, both for
drivers and passengers!

Lastly, it's not just workers taking on risk. Workers also gain freedom.

That sounds comical to some.

But I know a lot of people who are very passionate about volunteer work, and
absolutely love jobs that they can do for a few hours a week and forget about
-- even if it means they're living very simply. (I'm one of those people
myself).

~~~
ryanobjc
I do think things are as the grandparent noted. These companies are shifting
risk around and attempting to reap reward.

I have a feeling that your 'there are laws' is more a general rallying cry
rather than the particular nuances around these laws.

So, ie: for work like programming, usually one CAN BE mandated to work in a
specific office, on specific hours. It happens all the time. The consequence
is usually the exercise of the 'at will employee' and being terminated.
Subordination is a valid reason for termination and it does happen.

As for misclassification of workers, the issue isnt there are holes in the
law, the issue is likely that these companies are actually just violating the
law.

Finally, the competition Uber vs Lyft thing hasn't actually worked to reduce
the Uber cut in a percentage-basis. Competition isnt a magical bullet. It
often ratchets up the abuse and pushes marginal contractors to the edge. This
is the very nature of competition, working harder for less.

------
Animats
Here's the IRS's basic test for "employee"[1]:

* Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

* Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

* Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Uber drivers are employees under all three tests. Uber tells them where to go
and when to go. Uber controls the pricing and payments. Uber has an ongoing
relationship with their drivers and it's a key aspect of the business.

Mechanical Turk could argue independent contractor. Anyone can take a
Mechanical Turk task when they want, and Amazon doesn't control how they do
it. Amazon doesn't set the prices; it's more of a bid system. Whether the
relationship is ongoing is a question.

If the US had enforcement of labor law that was anywhere near as strong as
traffic or drug laws, Uber would be out of business by now.

[1] [http://www.irs.gov/Businesses/Small-Businesses-&-Self-
Employ...](http://www.irs.gov/Businesses/Small-Businesses-&-Self-
Employed/Independent-Contractor-Self-Employed-or-Employee)

~~~
cookiecaper
Your interpretation of "behavioral" is flawed. Uber drivers are not told "when
and where" to go. They are offered the opportunity to go somewhere and pick
someone up. It is completely at their convenience and option to do this; they
will suffer no privation if they fail to pick up the offered lead. It's not
like a traditional employer-employee relationship, where the employer buys
_time_ from the employee and directs it as he sees fit. The employer is buying
the execution of a discrete task, not a large chunk of the employee's time.

Your analysis of "Type of Relationship" is also flawed. Uber does not supply
any employee-style benefits, and they do _not_ rely on specific drivers to
carry out "key aspects" of the business beyond the discrete work units they've
wilfully contracted to perform at their convenience. There is no ongoing
expectation that any particular driver will drive at any point in the future.

There is no boss to call Uber drivers and say "Please, you are killing us by
not picking up your shift tonight".

I think the differences between traditional employment relationships and gig
providers are pretty clear. I expect these lawsuits are just from people
trying to get big settlements, since it's pretty obvious opting to bring
someone a Jamba Juice on TaskRabbit once every 2 months is a lot different
than a 9-5.

~~~
Animats
_" It is completely at their convenience and option to do this; they will
suffer no privation if they fail to pick up the offered lead."_

No. Pando Daily writes "Uber drivers are, after, all independent contractors
... On the surface, it seems they should be free to accept or reject any ride
they choose. According to forum comments, however, Uber drivers are required
to maintain a minimum 80 percent ride acceptance rate to remain in the
company’s good graces – the best performers exceed 97 percent, the company
tells its drivers. Ignore too many inbound ride requests when you are the
closest vehicle and the result could be some combination of
reprimand/probation, lost bonus income, or, in extreme cases, deactivation of
the driver’s account."

 _" There is no boss to call Uber drivers and say "Please, you are killing us
by not picking up your shift tonight"._

Yes, there is, although it may not be human. It texts, bugging drivers to get
out there and drive during "surge" periods.[2]

[1] [http://pando.com/2014/09/04/uber-continues-to-screw-its-
part...](http://pando.com/2014/09/04/uber-continues-to-screw-its-partners-now-
by-forcing-uber-black-drivers-accept-uberx-fares/)

[2] [http://uberpeople.net/threads/text-messages-from-uber-are-
ou...](http://uberpeople.net/threads/text-messages-from-uber-are-out-of-
control.5424/)

------
leereeves
Along with the legal gymnastics regarding independent contractors, this struck
me as notable:

"If Solominsky had built his own handyman business, he would not be so
impacted by the decisions of another company. But all he has of his supposedly
independent business—his pages and pages of glowing reviews, his nearly
unanimous five-star ratings—is tied up on the TaskRabbit platform."

Something to keep in mind as/before we replace an economy built on independent
small businesses with an economy of "independent" Uber drivers, Amazon
sellers, etc.

~~~
TeMPOraL
I have this quote from Mass Effect written down in my quotes file:

"Your civilization is based on the technology of the mass relays, our
technology. By using it, your society develops along the paths we desire. We
impose order on the chaos of organic evolution. You exist because we allow it,
and you will end because we demand it."

Replace "civilization"/"society"/"organic" with "business", "mass relays" with
"platforms", and there you go.

Something that keeps coming back to my mind in cases like this since the
Twitter API fiasco of 2012/2013.

------
kefka
Ah, you mean "Using capitalism as a cudgel to undo the social advances from
the 1930's". I shed no tear if Uber and the likes of companies that use 1099
to destroy employee rights.

For those that believe that Uber and the like are good for the US and the
economy, I have a question for you:

1\. What happens if we have 10% unemployment? We already have; this answer is
simple.

2\. We turn the screws of automation and computerization: what happens to our
country/society if we have 50% unemployment?

3\. What happens, when we find out that everybody's job can be hyper-
specialized and broken down so robots can do them... which leads to >95%
unemployment?

4\. Capitalism leads to reduction of costs and risks by all means necessary.
This would imply that human labor would be too expensive once more
technological advances are made. So, how does capitalism work if there are few
workers?

~~~
rlucas
One of the very, very few proven formulas for rapidly generating concentrated
wealth is: centralize (privatize) the profits, distribute (socialize) the
risks and costs.

Once you start looking for this meta-pattern, you'll see it a lot. A chemical
company concentrates the profits from synthesizing a useful compound, but
diffuses the risks and costs of pollution and disease into the commons. A
social network distributes the effort and cost of building up a massive,
informative graph, and then centralizes the profits from exploiting that
information. A contract-work marketplace pushes the risks onto individual
drivers, and centralizes the profits from matchmaking.

My personal view is that this will always happen to some extent, and is
intrinsically linked with the system of inequality that drives the turbine of
ambition in our society. Therefore, it will never be done away with, and
arguably shouldn't be.

But, especially when there is no consent to the socialized externalities (e.g.
pollution) or very lopsided or coerced consent (e.g. "Grapes of Wrath"-level
treatment of workers), decency requires, and eventually the pitchforks-and-
torches will demand, some balancing of things by the Leviathan.

~~~
johnrob
In the context of this article, a big portion of the risks and costs are
supported by national health care (Obamacare). If these gig workers had to
acquire health care via the old means (i.e. benefits from a corporation, or
hoping an insurance co will accept you), they would not have the luxury to
work as contractors.

~~~
r00fus
ACA/Obamacare is _not_ national health care - it's national health insurance,
and despite it being better than before (i.e., no pre-existing condition
rescissions), the plans offered by carriers even with subsidies are still too
pricey for many.

------
mathattack
This is a very touchy area. Firms can pay $20 an hour for cleaning services
precisely because they're not paying for sick days, health insurance and the
like. If they have to pay all that, then the wages go down. This is one of
many reasons why a large company will pay a company like Accenture two or
three times the salary compensation of it's own employees. (There are other
reasons too, like having someone to blame when things go wrong.)

In my mind, as long as everyone has open eyes up front, it's all good. If Uber
treats people poorly, they can go to Lyft. The key is insuring more
competition for the workers. That more than anything else will drive how they
get treated. If there are 100 cleaning jobs, and only 90 workers, and multiple
vendors, then Handy can't mistreat the workers.

On a side note, I've used Handy in the past, and have had mixed experiences.
Some are great, some show up so late that I've had to cancel appointments. Not
sure if this would have changed if they were employees.

~~~
smacktoward
_> Firms can pay $20 an hour for cleaning services precisely because they're
not paying for sick days, health insurance and the like. If they have to pay
all that, then the wages go down._

Or they could, you know, charge more.

The problem with "let the market solve it" is that customers are generally
extremely price-sensitive, and if all the other cleaning companies are getting
away with misclassifying their workers, the one that does the right thing and
treats them as employees voluntarily will be at a serious market disadvantage.
If Good Guy Cleaners charges $25 while Bad Guy Cleaners charges $20, Bad Guy
Cleaners will get rich and Good Guy Cleaners will go out of business. The only
way out of the trap is to remove the option for any players in the marketplace
to do the wrong thing.

~~~
savanaly
> Or they could, you know, charge more.

Not necessarily. The price for these services probably settles at an
equilibrium relatively quickly due to competition, and a company charging
above the equilibrium for the same service won't be able to stay in business
for long. They could seek to have higher quality workers and then indeed they
could charge more. But at that point it's not even the same product and so
what are we even talking about?

------
habosa
I totally agree with the comments saying that Uber and others are trying to
get employee-level control over people with contractor-level benefits. The
guys who drive Uber for 20,30, even 50 hours a week are definitely employees
and should be treated as such.

However I'd like to throw in my own personal anecdote. I am a full time
software engineer but I am signed up as a Postmates bike deliveryperson on the
side. I do ~3 hours of work on Saturdays and Sundays because it's basically
paid exercise and I like to explore. I am clearly NOT an employee of
Postmates. If new laws are passed, would people like me just be told to go
away? I think one of the coolest things about the gig economy is that there
are a lot of people like me just taking on flexible employment because it's
such an easy way to use idle cycles (no pun intended).

~~~
jtbigwoo
I delivered papers once a week as a kid. I got paid 3 cents per copy by the
company. I worked approximately 2 hours per week. I was officially an
employee. It didn't break the company to classify me as an employee. It
wouldn't break Postmates to have you classified as an employee either.

~~~
ovulator
I'm not sure how long ago you delivered papers, but I delivered papers in the
90's as a kid and was an independent contractor.

I worked for a paper in the 2000's, not as a deliverer, but their deliverer's
were all independent contractors.

These were two different papers at two different parts of the country, I'm
sure not all papers handle it this way but I wouldn't be surprised if this was
the case for most.

------
threatofrain
The problem is that companies like Uber don't want to call you an employee,
but they want to treat you like one. They want as much power over you as they
can have without taking any responsibility for their relationship as an
employer.

------
mckinnsb
I honestly think this article does a massive disservice to the discussion by
ignoring that independent contractors are required to pay their own taxes and
some of the savings that a company receives by electing to hire independent
contractors over employees come directly from not having to match the
employee's FICA contribution. I love Uber and Homejoy as a service, but
honestly if they are the people setting the rates any "middle ground"
established by the government should require them to pay that FICA
contribution, and any relevant self-employment taxes ( like we have here in
NYC ). It's only fair.

------
buro9
In a double-sided marketplace I'm tempted to think of the actual seller as
being the one that determines the price.

In the case of Handy, Uber, etc... it is in fact Handy, Uber, etc.

In the case of Amazon, the price is determined by the contractor themselves.

Is there some major flaw in this thinking? Employees are not generally
empowered to determine the price at which their work is sold, and yet contract
suppliers are. I think this works fairly well to determine whether or not the
person actually performing the work is really an employee or a contract
supplier.

~~~
simcop2387
No major flaw in that thinking. In fact as pointed out elsewhere in this
thread it's one of the major checklist items that the IRS uses to make this
determination for w-2 vs 1099 (employee vs contractor). Different states
however may have other criteria that pushes someone one way or the other.

[http://www.careerusa.org/resources/career-
files/100-resource...](http://www.careerusa.org/resources/career-
files/100-resources/career-files/12g3-w2-or-1099/281-1099-vs-w-2-an-irs-
checklist-.html)

------
EGreg
There needs to be a decentralized marketplace that gets out of the way and
doesn't have everyone at the mercy of its platform.

But that's hard to build. Once it's built, the two sides can compete on
reputation, cost, or whatever else, crafting their own strategy and the
overall wealth of the system will go up. The gatekeepers often hold the system
back - even the ones who built the system.

I believe that platforms should be decentralized and free, enabling wealth
creation at smaller scales more in touch with the individual.

~~~
nvk
There is a project working on true decentralized markets,
[http://openbazaar.org](http://openbazaar.org), it's already in beta.

~~~
pekk
Is there a project which doesn't require everyone to use bitcoin?

------
emodendroket
Good. I hope they do. You shouldn't be able to just ignore the law because
you're so "innovative."

------
everyone
Seems like another manifestation of this phenomenon

[http://www.vice.com/en_uk/read/permanently-
temporary-0000176...](http://www.vice.com/en_uk/read/permanently-
temporary-0000176-v20n12)

Also this article has some very basic errors in it, missing words etc. Looks
like it wasnt proofread at all.

------
ZoneGhost
Eventually, these models have to change. Someone is going to start writing
open data layers that replace key value points in these businesses. The
companies that operate on these "gig" models do a few things that sum to a
greater whole:

    
    
      1) Marketed web front-end for consumers
      2) Confidence aggregation / metrics for both parties
      3) Payment gateway / escrow service
      4) Insurance and (sometimes) materials
    

I think we'll see blockchain tech replace the (2) and (3)'s here. With a
decentralized ledger and some form of third party "notary", you can verify
ratings for an incredibly small fee. Payment gateways and automated three-
party escrow services are easy with multisig transactions, and can be
converted to any other currency through coinbase, circle, or whatever.

The (1) point could be replaced by an indirect revenue model, or by open
aggregation apps.

(4) would then be put back in the hands of the actual service provider, where
contractual liability belongs. A new business model could be born, where
"Uber" simply has a nice phone app that references public blockchains to get
you a driver, and sells insurance packages to drivers themselves. They
wouldn't be locked down to just being an "Uber" driver, however.

~~~
humanrebar
I think the biggest factor is: (5) Quality control

There _have_ to be real consequences for gaming search/ratings/matchmaking
sites. If the government is interested in policing this sort of fraud, then
1-4 above will be easier to commoditize, but in the meantime, companies need
to enforce discipline and professionalism among the people filling gigs.

------
gwern
One question to ask here is why TaskRabbit and Uber and Handy are going so
close to the employee/contractor problem in the first place: why, if the risk
is so dire and the issue so well-known (which it is, there's been articles
occasionally for years now, and most critical articles or pieces will venture
the observation that their contractors are really employees) they are putting
in place all those requirements and rules for their 'contractors'? Why aren't
they pure intermediaries and marketplaces for the contractors & customers?

This issue reminds me a lot of Coase's
[https://en.wikipedia.org/wiki/The_Nature_of_the_Firm](https://en.wikipedia.org/wiki/The_Nature_of_the_Firm)
problem/paradox - if markets are so efficient and optimal, why do large
corporations exist and operate internally by non-market mechanisms? The usual
answer is friction or transaction costs, but the whole point of things like
Uber or TaskRabbit is that the Internet and smartphones hugely reduce these
costs...

~~~
waps
1) cost : contractors without work are free. No insurance (not even with
ObamaCare). No providing infrastructure. No nothing ...

2) risk : contractor fucks up, contractor is legally responsible. Employee
fucks up, firm is reponsible.

3) Ease of firing and the resulting pressure that can be applied to employees.
Contractors don't even have to be fired to be fired.

4) Customer/payment risk. Suppose a customer doesn't pay. In the case of an
employee, the employer has to pay the employee and the infrastructure. In the
case of a contractor, the contractor is screwed (in some cases they actually
have to pay transaction costs even if the customer doesn't pay)

~~~
gwern
None of that explains the paradox: why contractors aren't superior in general
and why they're trying to turn contractors into quasi-employees, subject to
centralized non-market control.

------
balls187
Why doesn't the "market" sort this problem out.

Essentially these companies "own" connecting supply and demand, but I fail to
see how that prevents competition from forming and providing a better
alternative for both?

Right now, as a demand user of Uber, I like that the company is very
protective of my experience, something that is painstakingly difficult with
traditional taxi services. But if Lyft offered me the same experience or
better, my switching cost is nil.

~~~
hnnewguy
> _Why doesn 't the "market" sort this problem out._

It will. But "the market" doesn't care about who the winners and losers are.
Some of these services are essentially transferring wealth from low-skilled
workers with few alternatives to "App middlemen" and VCs.

------
lgleason
If you think the US labor laws are really strict try going to Europe, South
Africa etc.. You will soon find that they are actually pretty lenient.

------
ilaksh
I believe that the "Gig Economy" in a more general sense is now the largest
section of the economy. It may have been that way before the apps came out.

The reality is that most small and many large businesses cannot afford to pay
their employees fair or competitive wages and benefits. That has been the case
for years, especially any time the economy has a downturn.

The internet has made it so that this issue comes out in the open as it
presents obviously with large centralized companies that put smaller companies
out of business.

I personally have been part of the "Gig Economy" for most of my life. I am an
extremely experienced programmer. I rarely have had a real "full-time" job
with benefits. Although almost all of my jobs have been full-time, they just
haven't included the benefits of a "real full-time" job.

I have done contract and temporary work because I needed to. The option has
always seemed to be to struggle for what could be months to land the ultimate
"real" full-time job, or to take what was available as contract work. Since,
when I need a job, I usually need it then and not X months down the road, I
have had to take the contract work.

The reality is that there just isn't enough money circulating out there for
the majority of people to have good pay and benefits. So, from what I can see,
the traditional economy is useless and there is no point trying to make it
work.

We need to take advantage of technology to solve some structural issues. Money
is great, but there isn't enough information in it.

Everyone deserves to be able to live. Most, like myself, are just struggling
to survive. This is the result of the Social Darwinist structure created which
does not place any intrinsic value on human life.

This is my github. [http://github.com/runvnc](http://github.com/runvnc). Maybe
I don't deserve to be able to afford health insurance or a car or to be able
to pay my taxes. Perhaps I am just a shitty programmer who should have died on
the street years ago.

------
ianbicking
"Instead, it [Handy] relies on an army of independent contractors to complete
jobs, taking a 15% to 20% commission of every hour worked"

This is where it doesn't feel like an employer. Employers take more like 50%.
So yeah, you don't get protections, and you get higher take-home pay. It
sounds like a pain in the ass when you have to buy your own supplies, handle
customers, etc., but all that is not uncommon even for employees. The result
of leaving the workers responsible for all these details (and risks) is
increased potential: the ability to optimize your work, and very directly
benefit from that.

~~~
emodendroket
Well, the illusion of that, since in reality it's almost impossible to make
the kind of huge returns they advertise.

------
nasmorn
In Austria we have a third kind of employment type that is hourly allows the
employer to set hours. It can be used eg. for a weekly teaching position. The
employer needs to withhold social security taxes but not actual federal taxes.
The employee can technically send a substitute qualified to do the job. But I
think right there it usually breaks down in reality and moves into an attempt
to get rid of the ton of onerous legislation you fall under with real
employees.

------
pavlov
Another perspective on Handy, the company discussed in the article as the
target of a class-action lawsuit:

[http://thebillfold.com/2014/10/my-day-interviewing-for-
the-s...](http://thebillfold.com/2014/10/my-day-interviewing-for-the-service-
economy-startup-from-hell/)

Sounds like working for Handy is hell, whether they try to classify you as a
contractor or not.

------
dougabug
"Gig Economy"? First it was "Sharing Economy," an equally bogus attempt to
control perception by inventing language to make piece work and unsteady labor
seem hip and innovative and even socially conscious. I think the
"Disenfranchised Labor" or "Unprotected Workforce" economy would be more
appropriate.

------
dnissley
Previous article on Handy(book):

[https://news.ycombinator.com/item?id=8489273](https://news.ycombinator.com/item?id=8489273)

------
enahs-sf
I would be highly surprised if uber's general counsel wasn't gearing up for a
high profile settlement given their cash hordes right now.

------
copsarebastards
A side question: these pages that load with a gigantic graphic that covers the
entire screen which I have to scroll past to get to the content have got to
die. Is there a plugin which removes these from websites? I haven't found one,
but I may be just searching for the wrong keywords.

~~~
ilaksh
Their mobile has a bug where the right side of the text is hidden. I clicked
the full site link to reload and then could read the article.

------
wtbob
> [Robert Reich:] "You and I and everybody else, if the present trends
> continue, will be selling what we do to the highest bidder."

He'd prefer that we sell our services to a _lower_ bidder?

------
youonlyliveonce
[http://thebillfold.com/2014/10/my-day-interviewing-for-
the-s...](http://thebillfold.com/2014/10/my-day-interviewing-for-the-service-
economy-startup-from-hell/)

------
Elzair
Yay!

