
California passes bill that classifies gig economy workers as employees - tempsy
https://www.nytimes.com/2019/09/11/technology/california-passes-landmark-bill-to-remake-gig-economy.html
======
whiddershins
All these people making Uber money on the side ... the whole thing was
possible in part due to the low friction in (and also complete disregard for)
the regulatory environment.

I’m in NYC and honestly can’t figure out how to legally hire a studio
assistant for a few hours a week without being at risk for any of a number of
lawsuit vectors.

So I just coil my own cables. And I don’t mentor people who want to learn some
things about the music industry.

Not a crippling loss for me, but I miss the relationship building, I miss
passing on things I’ve learned, I miss the creative back and forth, being
turned on to new stuff ... and frankly my studio is a mess.

I’m not sure why we can’t figure out a way to protect workers without making
everything a legal minefield. One effect of this sort of legislation is it
gets harder and harder to be a small player. The big companies always figure
out how to deal with the rules.

It’s sad.

~~~
chongli
The way to protect workers is to shift the burden of health care and other
costly benefits onto the government, supported by taxes. Then there is no risk
to hiring a new employee beyond the wages you pay them.

The US public does not want this, though, and the war of words over universal
health care has led to incredibly deep entrenchment on the side of those
opposed. All this despite the mountain of evidence from other countries,
showing the greatly reduced total costs and improved life expectancy as well
as a lack of bankruptcy and financial ruin for those caught in an emergency.

~~~
poilcn
When an individual creates an enterprise it's expected to fail in 2 years. It
does not mean death of the individual, but often it makes 'em go broke. Only
one company in a hundred is successful. Other are doomed. Government-run
projects do not live in alternative dimension. It is affected by the same
things any private organization is affected. It is expected that a country
would exist longer than an individual company. But want to bind the whole
country to some huge bureaucratic organizations. Say, the one managing
healthcare and the one managing pension founds. You won't stop at that, of
course, but let's simplify to just that. There would be only two ways for them
to survive in a long run. Bloating their budget, eating all other parts of the
gov budget. After there is no where to "expand" (keeping the same quality of
services), they would had to cut out some of their "clients". For a pension
fund it would be to increase the age when people would be able to retire. For
healthcare it would be to limit free services reject people who would be able
to have certain services for free in certain cases, decrease quality of
services. Then it would be inevitable death. As people are not immortal,
organizations are not as well. If you had several private companies, the death
of one of them would make others stronger. It would get rid of the weakest
companies, keeping the strongest alive and in addition they would have
opportunity to learn on errors of others. But you have one single company for
each sector that manage the whole country. It results in country's collapse.
There is no "mountain of evidence from other countries, showing the greatly
reduced total costs and improved life expectancy as well as a lack of
bankruptcy and financial ruin for those caught in an emergency". The idea of
universal health care hasn't been tested by time yet (and in principal it will
fail due to things I described above), so it's very reasonable that the US
public rejects it.

~~~
jshowa3
_The idea of universal health care hasn 't been tested by time yet (and in
principal it will fail due to things I described above), so it's very
reasonable that the US public rejects it._

Uhhh... nearly every other country other than the US has had some form of
national health service for decades and they spend _less_ on healthcare per
capita for comparable quality.

What you're spouting is nonsense.

~~~
poilcn
> for decades You are retelling what happens in a very short period of time,
> ignoring dynamics. Decades is nothing for a country. You could look at
> second-world countries which were pioneers in universal healthcare and
> universal pension funds. For most of them it didn't last long. Even though
> the "universality" was questionable. These systems won't survive 100 year
> run in countries with tens of millions. Then, private healthcare is not the
> reason why Americans pay for it that much. There are lots of factors that
> drastically worsen the situation. People in the US are the ones who finance
> medical R&D, results of which are used by other countries relatively for
> free as individual American companies are forced to negotiate their
> contracts with governments. Which could be mitigated if American government
> would enforce for these countries to pay for their share in R&D. Then,
> perhaps I am mistaken, but the US is the only place (or one of the few
> places) where doctors have to study twice to become doctors: first at
> regular colleges then in medical schools. It cuts out lots of people who
> could've been doctors, not to mention education costs. Other thing that
> affects the costs is the fact that medical debts of individuals could be
> reimbursed by the government (the same applies to education). It creates
> incentives to actually make people go broke as insurers have nothing to
> loose in this case, but gain much more from the government which play along.

------
monkbroc
Is there any reason to believe the ride sharing companies won't reorganize
their drivers using a similar model to what Amazon uses for their delivery
drivers: contract to external firms that employ drivers so the parent entity
is absolved of responsibility?

[https://www.nytimes.com/2019/09/05/us/amazon-delivery-
driver...](https://www.nytimes.com/2019/09/05/us/amazon-delivery-drivers-
accidents.html)

~~~
dustinmoris
Uber has no USP except the network effect. They are just a taxi company with
an app essentially (givent that their self driving efforts havn't fruited at
all yet). If they outsource the competency of drivers to an external provider
then they are just a taxi company with an app and not even their own driver
network, making them even more vulnerable to someone else coming with a better
app and using the same driver provider. Customers are the fastest to migrate
when price is the main factor and the barrier to switch to a different app is
literally just a few clicks in the app store.

~~~
jayparth
He's just talking about a legal reorganization. "Uber Drivers LLC" contracts
the employees which is wholly owned by Uber. I don't see how this would
actually help them though. Under the new law, Amazon Flex drivers are also
categorized as full time employees and the child company would still bear the
costs of that

~~~
apesti
They’re actually talking about Amazon’s delivery service partner program. It’s
where Amazon helps people setup independently owned delivery businesses.
[https://logistics.amazon.com/](https://logistics.amazon.com/)

~~~
sharkmerry
But in those instances, the company contracted by Amazon will now, no longer,
be able to use contractors, they would be employees.

------
woah
This is an extremely heavy handed law which would be destructive to large
parts of the economy by making many people’s livelihoods illegal.

The drafters of the law knew this, which is why 90% of the text of the law is
carve-outs for various professions. But forcing people to live their lives
through loopholes never works well.

For example, they have this carve out for high skilled professions:

> (3) An individual who holds an active license from the State of California
> and is practicing one of the following recognized professions: lawyer,
> architect, engineer, private investigator, or accountant.

Sorry, software engineers. An accountant or an architect might be allowed to
take on lucrative contracts, but since the state of California doesn’t have a
special piece of paper for your job, they’re not going to allow you to work in
the way you choose.

Edit: I myself am a software developer who has enjoyed working contracts in
the past and would like the option to do so again.

~~~
curious_fella1
You said it yourself: software _engineer_

So we are allowed.

~~~
rrss
The vast majority of software engineers are unlicensed. I don't think CA even
licenses software engineers.

------
droidno9
For those of you who want to read the bill:
[https://leginfo.legislature.ca.gov/faces/billCompareClient.x...](https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201920200AB5).

The pertinent part of the bill:

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.

Of course, there's a bunch of exceptions for various professions toward the
end.

~~~
mikekchar
As a software contractor... (A) and (B) are terrifying. I think (A) means you
really can't do contract work while working under the direction of a manager,
or PGM. So you essentially have to be doing work for hire rather than filling
in a specialist role for a defined period of time. (B)... Wow... So if the
company is a software development company, they can't hire contractors???

I really hope I'm reading that wrong. I might want to do work for a California
company one day ;-)

~~~
edouard-harris
The bill makes an exception for engineers, among other professions:

> An individual who holds an active license from the State of California and
> is practicing one of the following recognized professions: lawyer,
> architect, engineer, private investigator, or accountant.

~~~
throwaway_law
That would not apply to software developers, even if they call themselves
engineers, software developers are not licensed professional engineers (i.e.
civil engineers).

For example a Software Developer can't start a professional corporation in
California like a lawyer, architect, civil engineer, accountant etc...

~~~
csunbird
unless they have a college degree

~~~
throwaway_law
a College degree != a professional license

~~~
blackflame7000
The American National Society of Professional Engineers provides a model law
and lobbies legislatures to adopt occupational licensing regulations. The
model law requires:

1) a four-year degree from a university program accredited by the Engineering
Accreditation Committee (EAC) of the Accreditation Board for Engineering and
Technology (ABET),

2) an eight-hour examination on the fundamentals of engineering (FE) usually
taken in the senior year of college,

3) four years of acceptable experience,

4) a second examination on principles and practice

5) written recommendations from other professional engineers.

------
stickfigure
If this actually gets enforced, I predict we'll all be talking about the law
of unintended consequences in a year's time.

~~~
jackmodern
don't know why this is getting down voted, all of you folks using lyft/uber..
get ready for the prices to double or triple.

~~~
Barrin92
is this supposed to be an unintended consequence? We all know that the cheap
rides of Uber are (partially) the result of them dodging around employer
obligations.

~~~
paul_f
I disagree with this. What other job on the planet allows me to work when I
want to work, bring my own tools, have no boss, and never even talk to the
company I am working for?

~~~
friendzis
This is usually called "self employment" or "owning a business"

------
Me1000
It seems pretty clear that the Governor is going to sign the bill, so this is
going to be a pretty big deal.

The law wouldn't take effect until the beginning of next year, and in that
time Uber, Lyft, and Doordash will have collectively spent $90 million on a
ballot prop campaign to exempt them from the law.

Not looking forward to all the ads, but I will be curious where the money
comes from on the other side.

~~~
toomuchtodo
I’m unsure what ad spend is going to help with three months until the bill
takes effect. The bill clearly has enough support to be signed into law.

What states use this initiative next as a template is the most interesting
question.

~~~
daveFNbuck
The ad spend can undo this in November 2020. Ballot propositions can't be
undone by the legislature or governor.

~~~
toomuchtodo
That seems exceedingly unlikely to occur, regardless of ad spend, in a state
as progressive politically as California (similar to AirBnB’s tone deaf failed
ad campaign in San Francisco).

This assumes gig companies haven’t exhausted their runway by then. Humorously,
Uber and Lyft thought they might extinguish taxis if they waited them out long
enough, and then the California government did the same to them.

~~~
seanmcdirmid
You’d be surprised. Californians love their ability to Uber, if this gets rid
of that (or severely curtails it), they would have no problem overriding the
legislature at the ballot box.

~~~
toomuchtodo
Maybe! In the interim, burn rates of already unprofitable companies are going
to increase drastically. Does it matter if you overturn the law if you’ve
already ceased operations?

~~~
seanmcdirmid
Uber ride share is actually profitable in California (and most of the USA),
they are burning lots of cash on UberEats however.

If this law is applied fairly, it affects taxi and limo operators as well, so
everyone will be in the same boat at least, fares will surge but they will
still be in business.

~~~
pnongrata
I'm curious, do you have a source for the claim that uber is profitable in
most of the USA? That goes against their disclosed info of huge annual losses.

~~~
seanmcdirmid
It’s in their earnings report: [https://www.businessinsider.com/where-uber-
spends-its-money-...](https://www.businessinsider.com/where-uber-spends-its-
money-lost-5-billion-second-quarter-2019-8).

~~~
mdorazio
Where? I don't see any mention of profitability in CA in your link or in their
actual report [1]. You might be referring to the "Results by Offering and
Segment" where they report growth in the US and $1.8B in revenue, but they go
pretty far to hide where their losses are actually coming from in relation to
rideshare. It's not at all clear to me that they are profitable in any
rideshare market.

[1] [https://investor.uber.com/news-events/news/press-release-
det...](https://investor.uber.com/news-events/news/press-release-
details/2019/Uber-Reports-Second-Quarter-2019-Results/default.aspx)

------
a9a
This seems like terrible legislation. Yes, part time gig workers are exposed
to harms that employees don’t face (i.e. lack of health insurance). But the
ability to work flexibly and between lots of companies has huge upside for
them and for firms. Why not tax companies who use these workers and put the
tax revenue toward a special health insurance / social safety net specifically
for gig workers? Mitigates many of the downsides and preserves flexibility.

~~~
asdf21
Welcome to California, politics here is full of great intentions and awful
execution.

------
kart23
So what's actually going to happen? I'm still confused.

Ridesharing drivers will now be paid wages, not based on the time that they
have a passenger? Will the ridesharing service have to pay for the cars and
their maintenance?

From the article, it seem the only effect is that drivers are going to be
scheduled in advance, and flexibility is going to be decreased.

~~~
jmull
> only effect is that drivers are going to be scheduled in advance

That’s a claim the ride-sharing companies are making but the law doesn’t
require that. They _could_ do that, but they could also let drivers take a
shift at a moment’s notice. In that scenario, though, there may not be a shift
available when a driver wants one. The ride sharing company will have to pay
at least minimum wage so they probably won’t offer a shift when demand is low.
Perhaps that won’t be a huge difference in effect in terms of a driver getting
work since the limiting factor is demand, regardless.

There are significant effects besides scheduling, though. Drivers will have to
get basic benefits like minimum wage, unemployment benefits, etc. there are a
lot of labor laws that make a distinction, so there will be a lot of changes
from that perspective.

In terms of vehicles, I would think drivers would be able to continue using
their own vehicles, but would need to be paid for that somehow. The typical
way to do that is a per mile amount which covers everything, fuel, wear,
depreciation, etc.

------
djrogers
It seems to me that an evolution of the current Uber/Lyft model would allow
for the gig-economy to continue. Today Uber/Lyft being the exclusive
determinants of both cost of rides and pay for drivers, which leads to
'prividing rides' being their core business.

If NewCo were to build an app/platform that allowed drivers to bid on rides in
real time (perhaps with driver determined presets for price floors, distance,
etc), while skimming a percentage off for NewCo, then drivers would clearly be
NewCo's customers and not employees.

Under this model, NewCo could also sell insurance to their customers (the
drivers), lease them vehicles, etc. all without 'directing' them, or running
any risk of them being classed as employees.

Perhaps this will be an unintended consequence to this legislation, but the
ultimate outcome of this would likely be _worse_ for many drivers, as open &
competitive bidding for rides would likely drive down prices. Look at eBay and
Amazon - lowest seller sells most.

~~~
ben_jones
This would be terrible for a large number of Uber riders. Want to go across
the Bay Bridge? $100. Airport? $100. Want to get picked up after a night of
drinking? $100. Want to get picked up in a poor neighborhood? Not happening.

All the problems associated with taxis: poor service, scams, racism, extortive
pricing, will return.

~~~
mdorazio
I don't see how this follows. A marketplace Uber would basically have drivers
setting price per mile or price per distance rates within their acceptable
geography and probably a rider score variable. Riders would enter a
destination and either be presented with driver options (including ratings) or
be paired with the lowest bidding driver. Payments, ratings, dispatch, etc.
would all still be handled by Uber, as would disputes.

You'd end up pretty close to today's Uber experience, just with more expensive
rides (not subsidized, so likely pretty close to current taxi rates in most
places) and probably an extra step in the hailing process for riders.

------
robomartin
This is an Atlas Shrugged moment, if I’ve ever seen one. I know Uber and Lyft
would not do it because they are public companies and other reasons. Yet, it
is my opinion, that they should. They should fire everyone in CA.

Why?

Because this is preposterous.

These companies started with the premise that people could sign-up to monetize
free time by driving others using their vehicles. That was the deal, the
contract, if you will.

Nobody forced drivers or passengers to participate in any way.

The system was the very embodiment of freedom: You do as you want, when you
want, if you want to. And you can also stop and not do it if it does not
deliver value. This applied both to driver and passenger.

This move represents the use of force on the part of government to unjustly
interfere with the free market. It’s the continuation of a slippery slope in
CA that will eventually cause this State’s politics to become
indistinguishable from that of a third world country.

This is also wrong because, as far as I know, it is the first time government
uses force (because that’s what laws are) to materially change the business
model of public companies.

Uber and Lyft should fire everyone in CA immediately. That’s the only power
they have. If they don’t move to force a repeal these politicians are going to
mess with them until the end of time. If you have ever had the “pleasure” of
dealing with the State Board of Equalization you know precisely what I mean.
It’s hard to believe, but, yes, they are worse than the DMV.

This might also mean that, by extension, it will be dicey to hire anyone in CA
for gigs. Be it a graphic designer or coder, if the potential exists for
trouble people will simply hire out of state out of the country.

As Ross Perot famously said, paraphrasing...that huge sucking sound you hear
are jobs leaving CA, if not the country.

For Uber and Lyft it might mean accelerating their transition to robot cars in
order to get rid of people as soon as possible.

~~~
dmode
Thank god you are not running any companies. Uber and Lyft's 25% of their
revenues come from California. They will not exist without California.

~~~
robomartin
Quite to the contrary my friend. I have been running businesses my entire
life.

You must have missed the part where I said they won’t do it.

In business there’s often a huge gap between what you should do for a higher
cause and the reality of staying in business. A simple example of this are car
companies. I guarantee you all of them want to go electric. I also guarantee
you they know they would go out of business if they rushed into it right now.

In the Uber/Lyft case the greater good is to take a stance that favors free
markets. However, as you correctly point out, this would come with potentially
severe consequences.

My guess is they might take it to the courts. Long term, they’ll move to self-
driving cars. In the end the outcome for drivers will be worse. Which is what
often happens when government sticks it’s paws into a market.

Same will happen to the rental market in CA.

------
Mizza
Can anybody here with proper experience break down the "ABC" test for me? It
seems to me like the "C" part (that the work is "part of a company’s regular
business") applies to literally any company who would hire a freelancer to
work on their product or service.

~~~
dmode
Just read through the text of the bill, looks like the work you describe is
explicitly exempted from the bill
[https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...](https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5)

~~~
UK-Al05
When you have to exempt the majority of professions then it's just bill
targeting specific companies which in my opinion is wrong.

~~~
dmode
The principle behind exemptions are those that already make far more than
minimum wages, but I agree with your overall point

------
kmjg88nvf8
"Ride-hailing drivers hailed the bill’s passage." \- I wonder how happy they
will be when their job simply goes away because of that bill.

It's terribly misguided and anti-freedom.

I think it is a problem if companies like Uber are not honest with their
employees, like neglecting to mention that their cars may break down and
require maintenance, which should be factored into the income. But that is
about honest information sharing, not forced employment.

Nevertheless, people should be free to do contract work and negotiate
contracts on their own terms.

~~~
uasm
> "I wonder how happy they will be when their job simply goes away because of
> that bill."

Taxis are... not "going away". They may get more expensive. Taxi companies are
simply going to make a comeback.

Uber was making it easier/cheaper for _passangers_ \- it did very little for
the drivers themselves.

~~~
romanovcode
Uber is not Taxi. OP point is still correct. Taxi companies are coming back
but Uber drivers get fired.

~~~
uasm
> "Uber is not Taxi. OP point is still correct. Taxi companies are coming back
> but Uber drivers get fired"

They can't be "fired", since they were never properly hired in the first
place! They were never regarded as employees. That's exactly what this
legislation is setting out to change!

~~~
kmjg88nvf8
It doesn't matter how you call it - they will be unable to earn extra money by
driving, that is the issue. If they relied on that money to make ends meet,
they may not be happy anymore.

~~~
uasm
> "It doesn't matter how you call it - they will be unable to earn extra money
> by driving, that is the issue. If they relied on that money to make ends
> meet, they may not be happy anymore."

Your post makes zero sense, so I'll keep it short for you. Uber was the
middleman, and without it - both individual drivers as-well as taxi companies
have significantly more leverage over the consumers, and can now start
charging higher prices.

~~~
kmjg88nvf8
My post makes zero sense? Are you sure you have thought things through?

So how does a driver get clients without Uber? If they can get clients without
Uber, why did they use Uber?

How do clients know they can trust a driver? Taxi, OK - a taxi driver has to
shell out serious money to get a license. Sometimes they must show proof of
training. That makes them somewhat trustworthy, especially since their license
can be revoked after a transgression.

For Uber, I suppose they tried to replace that with a rating system.

Without Uber, how do you propose making it work? I suspect simply becoming
taxi drivers is not a viable option for many Uber drivers - because of the
time and money commitment.

------
DeonPenny
Well, RIP to the Gig economy hopefully robots get here soon. Cause I can't see
the market surviving this.

~~~
buboard
Driver robots? See you in 20 years

Its more likely you ll see drivers forming shell contractor companies so they
can still work for both uber and lyft etc

~~~
0xffff2
20 years is optimistic. Real fully autonomous self-driving cars will arrive 10
years after fusion power becomes commercially viable.

~~~
buboard
haha. well i m hopeful that if we change the roads we can at least have
autonomous train-cars or at least kiva robots with seats

------
forrestthewoods
Gig economy workers are neither contractors nor employees. They're something
in-between. They are neither a square peg nor a round peg. They're a triangle.
Forcing a triangular peg through either a round hole or a square hole is
wrong.

We need a new, third type of classification.

~~~
SpicyLemonZest
I have to agree. The rideshare companies have given a lot of self-serving
commentary, but they made one very good point: if the legislature believes on
principle that everyone deserves the benefits and protections of being an
employee, how come they wrote so many carveouts? It really seems like an
implicit admission that the ABC test isn't quite right.

------
johnrob
The Uber layoffs announced yesterday now seem to be strategically timed. If we
assume the standard 3 month severance offered by big companies, the layoffs
would free up cash at the end of 2019 - right when they’d need it for the
increase in CA drivers benefits.

~~~
gorbachev
They were already announced some time ago and are related to the catastrophic
quarterly earnings for the last quarter.

------
macinjosh
California industry revolutionizes businesses, California government ruins
them.

------
diehunde
I would like to read more comments from actual drivers from this apps instead
of people saying things they think about them and their lives.

------
pcurve
“Today, our state’s political leadership missed an important opportunity to
support the overwhelming majority of rideshare drivers who want a thoughtful
solution that balances flexibility with an earnings standard and benefits,”

What is their idea of thoughtful solution?

~~~
Mathnerd314
Full statement: _Today, our state’s political leadership missed an important
opportunity to support the overwhelming majority of rideshare drivers who want
a thoughtful solution that balances flexibility with an earnings standard and
benefits. The fact that there were more than 50 industries carved out of AB5
is very telling. We are fully prepared to take this issue to the voters of
California to preserve the freedom and access drivers and riders want and
need._

So basically they want to carve out an exception for their industry as well,
wait 10 years until competing taxi services are dead, and then pass some token
legislation based on the outcome of AB5 in other industries. Standard
corporate-speak.

------
txsoftwaredev
I read this as Uber/Lyft will no longer operate out of CA. And many other
companies that would be required to take on this burden will leave CA as well.
I'm don't see how this will benefit the citizens of CA.

~~~
jedberg
CA is one of their few profit centers. It's also 10% of the population of the
USA. No business would choose to exclude CA, and CA knows this. That is why
they can get away with these heavy handed regulations.

------
mcntall
We are looking at more wire tapes being built in California. It makes one
wonder whether Cali would implode if Silicon Valley had a rapid decline

~~~
mdorazio
Fun fact: Silicon valley isn't even near the top of the list in GDP-
contributing industries for California [1].

[1]
[https://en.wikipedia.org/wiki/Economy_of_California#Sectors](https://en.wikipedia.org/wiki/Economy_of_California#Sectors)

------
75dvtwin
We are getting to a fundamental dissonance between different models of work
engagement, and the cost (monetary and environment) of essential services that
citizens need to rely on.

Workers say 'I need to be able to choose when I work, and for how
infrequently'.

Government says: 'we will mandate your employee to pay for your benefits'.

Workers say: 'I need to be able to afford essential services, like health
care'. Government says: we will either make your employee pay for it, or we
will tax the whole country to fund it.

Workers say: I would like to get college education that promises, well paying
jobs, and makes myself competitive with, (including, but not limited to)
foreign-educated workforce.

Government says: We will make tax the whole country to fund it

Workers say: I would like to sustain family with children, on one salary.

Government says: Nope, but will tax the whole country and fund free child
care, for working parents (that's Australia).

\--

What's not present in these question/answers -- are solutions that make

a) Work engagement simpler, and less litigious b) The health care cheaper c)
The cost of education cheaper

This is

Instead, US is marching along to keep its burden of legalized racketeering
through groundless lawsuits.

Instead, the US is keeping its out of control health care costs (or apply
price controls, in the hope that quality will not suffer).

Instead, the US is keeping its out of control college education cost....

\--

It just seems that we have tilted way from figuring out how to make things
cheaper through fair competition and through advances in technology.

------
jameslk
Can't Uber and Lyft get around this by requiring their contractors to register
their own companies? E.g. a SMLLC might be sufficient.

~~~
dagw
Even if that would work from a legal perspective, I suspect that it would be
enough of a practical hurdle to greatly decrease the number of people willing
to drive for Uber/Lyft.

~~~
shpongled
Especially in a state like California, where you have to pay an $800 franchise
tax each year to keep an LLC registered, regardless of if it has any income.

------
Imashshoryuken
I have spent 6 months building a gig econ app that now is around 5 million
valuation. I can assure you it is not easy. If the government doesn't want
1099 workers because technology has made them viable at scale then we need to
throw gig econ apps some help with W2 workers. Even changing I9 documentation
would be a massive improvement.

~~~
cj
> Even changing I9 documentation would be a massive improvement.

Is there something difficult about completing Form I-9? In my experience, it's
one of the easiest steps of the hiring process to complete. Even if the
employee is remote, you could have them send you a picture of their driver's
license + passport which isn't too hard to do. What would you want changed
about it?

Direct link to Form I-9:
[https://www.uscis.gov/system/files_force/files/form/i-9-pape...](https://www.uscis.gov/system/files_force/files/form/i-9-paper-
version.pdf)

------
ylhert
From the bill:

    
    
      (c) The misclassification of workers as independent contractors has been a significant factor in the erosion of the middle class and the rise in income inequality.
    

It really irks me that they can posit this in legislation without supporting
data. It seems like a dubious claim, at best.

~~~
pembrook
The misclassification of _health insurance_ as a service employers should
provide instead of government has been a significant factor in the erosion of
the middle class.

I can throw out random assertions as well.

------
guelo
These "gig" companies are all unprofitable. Their current business models are
consumer-friendly as they try to capture market share, so people mostly love
them. But they are not sustainable, the prices will eventually have to go up
or become a worse deal in some other way. They are just hoping to use all that
cash to stumble into some kind of monopoly or lock-in that eventually removes
customer choice. They are not good for society overall, we might get a lot of
cheap convenient transportation in the short term but eventually we'll all be
worse off as they kill off competition. It's basically price dumping, and the
sooner they are stopped the better.

~~~
pcwalton
Killing Uber and Lyft outright means bringing back the taxi industry, which
isn't better for anyone except the cab companies. The biggest benefit of ride
sharing for me isn't that it's cheap: it's that I don't have to awkwardly
assert my legal right to use a credit card every single time I ride. I'm fine
with paying more to ensure drivers are earning a living wage.

~~~
guelo
I'm not saying that they are not convenient, I'm saying they're unsustainable.
Eventually they either will be more expensive or less convenient. The question
is how much they can reconfigure society to their advantage in the meantime.
For example, their price dumping is causing some governments to cut mass
transit funding which will have long term consequences.

------
jswizzy
I wonder how this effects companies like Google which contract out most of
their workforce.

~~~
hn_throwaway_99
I believe most of those contracted workers are still W2 employees, just at
other companies.

------
bcheung
One unintended outcome of this is probably going to be age discrimination. If
companies are now required to provide health care they is an incentive to hire
younger workers with cheaper healthcare expenses than older people who cost
more.

~~~
diminoten
California considers age to be a protected class.

~~~
Implicated
Right - but how often/easily is that enforced?

~~~
diminoten
Often and easily?

------
irjustin
In broad strokes, I support this because it's helping the driver who used to
get great money but then has been getting the squeeze lately.

While it seems like "big corporations complaining", I admit this does threaten
certain companies, especially the ones that are not profitable. Charging more
per ride or gig doesn't pan out well as ridership and usage drop in step. So
far all our Uber rides have been subsidized by Softbank and other investors.
Similar story for lots of other gig based apps.

I'm not sure what the real answer is here, but overly simplifying the problem,
better pay/benefits for the individual person is better.

Let's hope it pans out to be exactly that.

~~~
dahdum
It will be an interesting case study for sure. I think we can expect fewer
drivers, mandatory time slots, and capped 40 hour weeks. Prices should go up
to cover all of it, and both Uber/Lyft are cheeky enough to separate that line
item as a “CA Tax Recovery Fee” or some such.

Probably will be better off for those making it their living, worse for those
looking for extra income.

It’s going to be harder on all the other businesses getting hit suddenly with
this, newspapers threw a fit and got a 1 year reprieve but the rest didn’t
have a bully pulpit.

~~~
tempsy
30 hours is the threshold for “full time” worker if you’re determining
eligibility for health insurance. No way Uber will offer health insurance to
drivers, so guessing hours would be capped at 30 max per week.

I would think the exact opposite...in this scenario drivers who do this part
time anyway are fine but anyone driving more than 30 hours a week will be
hosed.

~~~
seanmcdirmid
Drivers will simply split their time between Uber and lyft like they do
already.

~~~
pishpash
You can bet your bottom dollar that as employees drivers will be afforded no
freedom to double dip. The only reason they are able to at the moment is
because companies held back on initiatives that they feared would classify
drivers into employees. Now they will have no such fear and gig work will be
strictly controlled. Prices will go up simply due to the loss of efficiency
from multiplexing gain that gig work provided the economy. California never
fails to take every opportunity to reduce market efficiency.

~~~
jackmodern
Prices up, sorry consumers. total earnings down, sorry full time drivers.
hourly earnings up, yay part time drivers.

~~~
manigandham
Why hire part-time drivers at all? The marginal costs don't make sense if they
can't get all the hours they can.

~~~
darkwizard42
Mmm I think you get the best of all worlds (as the hiring company) with part
timers.

\- <30 hours/week so no benefits \- you can only work in these hours \- take
it or leave it cause we now can remove your ability to work for any other
times

No marginal costs outside the min wage (no benefits) and honestly you don’t
want more hours unless they are explicitly in the time and place you want
them.

------
privateSFacct
I'm generally a fan of this bill I think - but I don't like bills with so many
carve-outs and special exceptions - usually a sign of bad drafting or special
interest influence. And can make things hard to admin. Now you have to parse
whether someone is or is not part of a carevout (ie, did they exercise
sufficient creativity to be in group A or not).

That's just litigation heaven. Make some rules - any rules really - that can
be reasonably followed by non-attorney's. This bills has pages of if's, and's
and but's.

------
radicaldreamer
Can someone explain why both the Uber and Lyft stocks are up on this news?

~~~
fullshark
I thought this was priced in, seems like everyone expected it at least. Uber I
thought was up due to layoffs.

------
frostyj
I can't believe those drivers are that short sighted. They would be just gone
if L4 autonomous driving becomes a thing, and they are definitely pushing
those companies to there much faster now.

------
tylerl
They're calling _that_ "Remaking the Gig Economy"? Making Uber and Lyft
drivers into employees? What a sham.

For 10 years I ran my own consultancy. Every new engagement was a new "job"
where I could negotiate the rules of engagement however I deemed fit. Usually
lasting no more than 5 days each. Every new month for 10 years I'd think:
"this is it, it's over; I have no work scheduled for next month, I'm going to
have to give up and get a real job." But somehow the work always rolled in,
and I did really well. By the end I was billing over $300/hr, and I worked
when and where I saw fit. As far as "gig workers" go, I was about as
successful as you can possibly be.

And yet my wife had to work a Real Job at a Real Company because I couldn't
buy reasonable health insurance for any price. Any price at all. So I spun
down my company and got a real job. The Gig Economy is an utter poopshow; not
even at the very top is it sustainable.

Making Uber's bottom-of-the-barrel jobs slightly less abysmal doesn't do crap
for the Gig Economy. Driving for Uber isn't a Gig. You're not negotiating your
rate on each pickup. It's a carefully managed relationship with the same
company each time, who pays for your service on a recurring and predictable
fee-for-work basis. It's a job.

Fixing the Gig Economy means making it possible for people to make a living
without the shelter of an employer. And making Uber and Lift into real
employers doesn't fix it. It's not even related.

~~~
hayksaakian
Your case seems to be a consequence of how healthcare works in America
(insurance).

For those of us lucky enough to be in good health, the "Gig economy" as-
described would be just fine.

~~~
cheriot
> For those of us lucky enough to be in good health

It's a common refrain that only people with health problems need health care,
but that's just not true. Risk has a price. That's why health care and life
insurance for healthy people is not free. Good health just makes it easier to
pretend that risk isn't there.

Tying health care to employment is a historical accident long overdue for
change.

~~~
WalterBright
> Tying health care to employment is a historical accident long overdue for
> change.

Ironically, it came about because of wage freezes imposed by the government
during WW2. Employers had to find something to offer to attract workers, and
employer-paid insurance did the trick.

The trap, though, was that employer paid insurance was paid with pre-tax
dollars, while if you bought it yourself you'd pay in post-tax dollars, making
it far more expensive.

~~~
erik_seaberg
Also adverse selection. Healthy people are tempted to only pay for
catastrophic or no coverage, so a lot of individual policy buyers are sicker
than the average employee in a group policy (because large companies cover
everyone).

------
tathougies
As if Uber or Lyft even care. They almost certainly foresaw this (who
couldn't), which is why they have taken the typical response to government
over-regulation -- automation. The end goal is a self driving car, and the
resulting concentration of wealth. Once again, we can blame so-called
'progressive' policies for furthering the enriching of the rich and the
continued subjugation of the poor and middle classes who are denied yet
another income stream.

------
edmoffo
They are trying to put the fast growing market of freelancers under control. I
don't see it as a bad move. The market is becoming bigger every year.
Eventually everybody will be freelancers. You like this videos of Yegor, he is
constantly speaking about this:
[https://www.youtube.com/watch?v=0gnDmr_H2Ks](https://www.youtube.com/watch?v=0gnDmr_H2Ks)

------
ben_jones
1) Society has failed and there are no superior job opportunities, forcing
people to work for objectively unlivable wages driving for Uber etc

2) There are vastly superior work and educational opportunities but many
choose not to take them and instead prefer the advantages of driving for Uber
(mainly flexible hours)

I believe both these statements on a case by case basis are true and both need
to be respected by any legislation that is passed.

~~~
0xffff2
>There are vastly superior work and educational opportunities but many choose
not to take them and instead prefer the advantages of driving for Uber (mainly
flexible hours)

Many are not able to choose those "vastly superior work and educational
opportunities".

------
dfilppi
Another beauty from the California politburo.

------
hbarka
I want to be empathetic to both sides of the argument. Don’t 1099 workers have
preferential tax treatments? Why would you give that up and become W2? On the
other hand, health insurance is a safety net. I feel like we need a new system
where one can be an entrepreneur and still be able to afford healthcare.

~~~
Gibbon1
> Don’t 1099 workers have preferential tax treatments?

It's complicated but the short answer is no. A 1099 contractor can write off a
bunch of expenses. But importantly an employer can also write off a bunch of
expenses. (like your health insurance) On top of that an employer pays half
the FICA withholding where a self employed person pays the whole thing. And
also you don't get unemployment as a contractor. And you don't get paid
vacation either.

> I feel like we need a new system where one can be an entrepreneur and still
> be able to afford healthcare.

A saw someone claim about 10 years ago that there are more small businesses
and self employed people in Europe than the US and government funded health
insurance is likely the reason.

~~~
hbarka
A self-employed person can also put more money away towards retirement and
reduce taxable income this way. A W2 person cannot do as much.

I would love to see data regarding the small business rate in Europe. As an
American, I’m really missing out on what other developed societies are doing.

------
siphor
Does anyone know how this will effect Google contractors?

Seems like they'd have to make them employees under this ABC test.

~~~
syspec
I think most of those contractors are full time employees, just not of google.

Generally they work for the staffing company as full time employees, which
then places them at google

~~~
adamredwoods
It's the same at Microsoft and Amazon. In order to work as a contractor, we
need to be represented by a managed service, or a preferred vendor. Some
vendors offer benefits, others will give you more money for less of their
"service". There is some benefit to having it run like this (E&O insurance,
quarterly taxes, group health care).

If you are a contractor, make sure you shop around for managed services. There
are transparent vendors out there and some willing to show you their cut
(although not many).

------
buboard
I wonder if they could please make a law so that Google's publishers are
considered employees as well?

------
goatinaboat
Let’s hope that the UK follows this lead very soon, and collects all the taxes
Uber owes us, backdated.

~~~
alimbada
Amazon, Apple Google et al owe orders of magnitude more in taxes than Uber do.
Get your priorities straight.

~~~
goatinaboat
Agreed but we’ve got to start somewhere. Think of Uber as an appetiser.

------
lr
“Some of the companies are not done fighting the bill. Uber, Lyft and DoorDash
have pledged to spend $90 million to support a ballot initiative that would
essentially exempt them from the legislation.”

And how may people who drive for these companies are not citizens and cannot
vote?

~~~
kryogen1c
I would guess very few, since driving requires a smartphone, a license, a
vehicle, and a bank account.

Its possible to work around these, of course, but the numbers must be small.

~~~
asteli
? You can easily get all those things as a non-citizen resident. Do you mean
undocumented immigrants or something?

~~~
apta
The poster seems to be talking about illegal immigrants.

------
azinman2
One thing that worries me with this is the effects on the otherwise jobless,
especially those on government assistance that are effectively otherwise
unemployable. Lyft/Uber is a godsend for this demographic.

------
projproj
Could Uber make their new employees sign non-compete agreements after the law
is passed? A lot of drivers drive for both companies now. Will this restrict
drivers to drive for just one company?

~~~
ilikehurdles
Not in CA

~~~
kec
Non competes preventing you from workin in industry after you leave an
employer are illegal, a clause preventing you from moonlighting for a
competitor during your employment is not.

------
Keverw
I wonder if this is doing more harm than good...

Some people want to do these types of gigs for extra income, but now if your
an employee then probably companies will want you to be on a schedule and a
minimum number of hours.

I forget where but seen a story where someone was told by one of their clients
that they were letting them go because of this new law. Happened to be their
biggest client too, but they were doing remote work and lived in California...

So now I guess some companies might want to let go of people from California
and contract with residents of Texas or any other state instead.

Kinda reminds me of when states started changing their sales tax nexus laws, I
was doing affiliate marketing but didn't have any success as still starting
out.

But my state changed their law to try to collect from remote sellers and
changed it to count affiliate sales too. So I got a notice kicking me out of
the program on a short notice... If I had built up landing pages and traffic,
I'd be left holding the bag... or adjust them to aim at another company but
would have been a huge setback.

You could go from making a comfy living online to making zero. I know gurus
tell people to build up multiple streams of income, but in this case, all
companies could do the same. Look at affiliate sales from the state, look at
compliance costs... If making enough sales to justify then comply or just ban
residents of the said state from the program and move on. So by trying to tax
companies, they could have ended up hurting their residents instead. So by
trying to get sales tax, they ended up with neither, losing out on both sales
tax along with the income tax on the commissions since companies just decided
to pull out completely from letting those residents be affiliates, so they
were longer eligible to earned any commissions.

"We regret to inform you that Nexus state tax regulations in Ohio were just
passed July 1st of this year. Unfortunately, we are unable to work with any
Ohio based affiliates, due to the Nexus Tax Laws currently under enforcement
in the state."

This was back in 2015. I think more than a few states changed their laws on
this, I believe they are referred to as a cookie nexus. and some programs have
a minimum threshold to cash out too. So I guess they can kick you out and keep
your money... Lucky I didn't have any in my account as was recently dabbling
in this area.

So kinda sad that you could lose out on income just because of the state you
are domiciled in. Wouldn't surprise me if other companies outside of
California is going to end contracts with people just because they live in
California. Kinda feels like discrimination in a way.

However maybe setting up a corporation instead of being a sole proprietorship
that could be a workaround. Don't deal with California individuals, deal with
California companies instead even if it's just only a company size of 1. So
ride sharing apps could require drivers to set up an LLC and pay that instead
of paying them directly maybe. But then California has high taxes and
franchise fees already, so maybe it's just not worth it. There's already a
mass exodus from California, so wouldn't surprise me if this makes even more
people question if they should leave the state also. Move somewhere cheaper
and get to keep your clients too if you are a freelancer.

------
HALtheWise
I have seen very many cars with both Uber and Lyft stickers on their
windshield, is that still going to be allowed under the new regime?

------
Alexander473
Does anyone have any thoughts on wheather this bill is going to effect
freelancers working through Upwork or similar sites?

------
sampo
Will this affect freelance journalists?

~~~
wokemillennial
God, I hope so. If I see the term "full-time freelance position" in a job
description one more time I am going to lose my shit.

------
xbeta
Workers have no choice but to get W2 status to get health care insurance,
retirement compensation, etc.

And they fix it by simply moving them as FT employees, because to the State of
California that's the easiest thing they can do. Single-payer free healthcare
for all - which is the right thing to do is too much for the State.

This is just how bad the State of California is being run.

~~~
pcwalton
California already has among the most generous state-level medical benefits in
the country. Here, it's hard to be in a situation in which one simultaneously
can't afford insurance and doesn't qualify for Medicare or Medi-Cal
(California Medicaid).

Singling out California for not taking the unprecedented step of rolling out
single-payer alone--which is a difficult proposition to say the least in a
country that guarantees freedom of movement--is bizarre.

~~~
9HZZRfNlpR
Well, I would assume they offer healthcare to people who are working or are
disabled and not able to work. It's not like you get healthcare in Europe for
not putting anything back in the system. Freedom of movement is not a problem
in this case.

~~~
scarejunba
You are full of it. Germany, for instance, (and other European nations are
similar) puts so many barriers in the way of a disabled immigrant that they'll
never end up a resident.

You're telling me if I were disabled and could not work I could just move to
Europe and live on the healthcare system? That's not at all true.

~~~
9HZZRfNlpR
I don't claim it what so ever, that was the point of my comment. Only people
who put the money in the system get the benefit of healthcare.

------
fulldecent2
So... reincorporate subsidiary in Micronesia and ignore the laws from there?

~~~
bgilroy26
A car service app that the public uses has a large surface for regulatory
enforcement. When NYC wants to catch illegal car service activity they have
police or the taxi commission post people at the airport.

Incorporation somewhere without rules only works if the space your enterprise
operates in is outside the reach of the gov't as well.

------
MentallyRetired
How will this affect platforms such as amazon or redbubble?

------
VladimirIvanov
So what happens to Thumbtack's business model now?

------
aabajian
How does this affect AirBnb hosts?

~~~
saisundar
Would Airbnb even be under scrutiny with regards to this bill? Airbnb is a
marketplace, where the hosts can set their own rates, with minimal
intervention from the platform. This is not the case with Uber/Lyft though.

------
antropofagico
Does this mean drivers will need working visas? If so, it will drastically
reduce the number of drivers.

~~~
erichocean
Unlikely, California is a "Sanctuary State" and essentially has no enforcement
of state (or federal) laws governing "illegal" employment.

If anything, they consider it to be a good thing.

~~~
antropofagico
Even though California is much more lax on immigration, undocumented
immigrants that work here still work "illegally". And I-9 Audits are conducted
by ICE, not California.

Like SpicyLemonZest said, it sounds extremely unlikely that Uber and Lyft,
being public, would risk filing fraudulent I-9s.

------
perseusprime11
What if I don't want to be an employee?

~~~
bluntfang
Can you talk more about why someone wouldn't want it?

~~~
perseusprime11
I want to be an independent contractor without getting tied to a company. At
least, this was the best part for me in the gig economy where I can drive Uber
and rent on Airbnb and make money doing multiple gigs. I don't want to be an
employee of either Uber or AirBnb.

~~~
bluntfang
What specifically is the problem with being an employee? I want to understand
your position more. I don't understand the drawbacks of "being tied to an
employer".

>this was the best part for me in the gig economy where I can drive Uber and
rent on Airbnb and make money doing multiple gigs.

What about being a contractor makes this possible? Many people work multiple
jobs by being a direct employer of the company? Also how does rental
properties come into this?

------
fergie
How do we get past the NYT paywall these days? Incognito mode no longer seems
to do the trick?

~~~
mirimir
I can read OK in Firefox if I hit reader view fast enough.

------
scarejunba
Why so many carve-outs? The law should apply to all industries. Exploitation
in some cannot be allowed simply because it's been going on longer.

------
memmcgee
People seem to think this is going to hurt workers, but it was gig economy
workers who pushed for this law. Workers know their own conditions better than
you do.

~~~
colechristensen
People often vote against their own interests and the fact that there were gig
economy workers pushing for this does not mean they as a group want it.

Gig economy workers are not a whole. Some of them really do just want a bit of
extra income on the side. That is very incompatible with this new law.

------
t34543
I don’t think this is about gig worker wages at all. It’s about tax revenue.
California has always been a scumbag state.

------
manigandham
This is more about the state collecting more taxes than actually helping
workers, especially with ride-sharing drivers used as bait.

People can already be full-time drivers if they wanted. Those jobs have
existed for a century. In reality, the _vast_ majority of Uber/lyft drivers
already have a FT job and drive for secondary income with the time and
location of their choosing. Retirees, students, fixed income, disabled, and
many others who are just supporting their families.

Shifting them to employee status will cut many supporting incomes while adding
a few more driving jobs with strict conditions, basic benefits and bare
minimum hours. Many more will suffer than gain (if any). Another case of
California having some of the worst politics in the nation.

For those downvoting, I would like to know what exactly you disagree with
here.

~~~
YokoZar
Could you explain how taxes are involved? What about reclassification causes
the state to see more taxes raised?

~~~
manigandham
Employees cost more for the company in terms of taxes paid, along with all the
required benefits, minimum wages and making sure there's enough inelastic
supply to meet the demand.

~~~
URSpider94
There is no state payroll tax, so California has literally nothing to gain in
terms of taxation whether drivers are employees or contractors.

Even at the Federal level, the taxes net out the same. For employees, your
employer pays half of your social security contribution, but as a contractor,
you have to pay the employers half on your taxes.

The only thing I can come up with is unemployment insurance, which contractors
don’t pay, but they also can’t collect unemployment.

If I’m missing something, please clarify.

~~~
manigandham
What? California has 4 different payroll taxes:
[https://www.edd.ca.gov/Payroll_Taxes/What_Are_State_Payroll_...](https://www.edd.ca.gov/Payroll_Taxes/What_Are_State_Payroll_Taxes.htm)

Minimum wage requirements alone will raise incomes and thus taxes. Add in
bigger salaries, benefits, vehicles, equipment, etc that the company will now
have to pay for.

------
baron816
What this means: much more expensive Uber/Lyft rides which in turn means fewer
riders, and thus, fewer drivers out on the road and longer wait times.

The labor market is a complicated thing, much more complicated than just
supply and demand. But these types of controls are often not the right tool
for the problem.

~~~
moate
>>But these types of controls are often not the right tool for the problem.

1- Do you believe Uber/Lyft/etc exploit any part their labor for corporate
gain? 2-What do you believe is the correct control to prevent labor
exploitation by Uber/Lyft/ect, assuming your answer to 1 is true?

