
Bill Could Destroy Uber's Unsustainable Business Model - howard941
https://www.vice.com/en_us/article/zmpaq4/this-bill-could-destroy-ubers-unsustainable-business-model
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vikramkr
But they aren't employees. I still dont understand why people who get to work
on demand whenever they want without a boss to report to or set hours are
employees. The company doesn't get the benefits of having employees (schedule
them in for rush hours, reliable controllable labor base), so why should
drivers get the perks of becoming an employee without having to give up their
flexibility and everything?

~~~
bobthepanda
This just codifies an existing California Supreme Court ruling and applies it
to general employment status.

Explainer of the Supreme Court ruling:
[https://www.forbes.com/sites/tonymarks/2018/05/29/the-
califo...](https://www.forbes.com/sites/tonymarks/2018/05/29/the-california-
supreme-court-deals-a-blow-to-independent-contractors/#27991e8b70a1)

> Under the newly adopted ‘ABC test,’ a worker is an independent contractor to
> whom a wage order does not apply only if the hiring entity establishes all
> of the following:

(A) that the worker is free from the control and direction of the hirer in
connection with the performance of the work, both under the contract for the
performance of such work and in fact;

(B) that the worker performs work that is outside the usual course of the
hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established
trade, occupation, or business of the same nature as the work performed for
the hiring entity.

A is debatable at best, given that make and model of car is heavily
restricted, particularly for the 'UberBlack' service.
[https://www.uber.com/drive/new-york/get-started/eligible-
veh...](https://www.uber.com/drive/new-york/get-started/eligible-vehicles/)

If your contractor gets to dictate how you present yourself and how you do
your job rather than just being happy with the end product, that looks a lot
less like contracting as understood by laypeople.

~~~
woah
What if you’re a clown and you show up in jeans and a button down with normal
sized shoes and no makeup?

~~~
bobthepanda
As far as I could imagine, most clown contracts don't actually specify the
exact articles of clothing down to the UPC; anything that looks reasonable is
permitted. Whereas Uber has a list of specifically permitted vehicles.

~~~
jquery
That's a distinction without a difference. There's only so many car models,
what alternative would you suggest to a whitelist of acceptable cars for
UberBlack?

~~~
jakelazaroff
Allowing the worker to choose their car. Quoting GGP:

 _> (A) that the worker is free from the control and direction of the hirer in
connection with the performance of the work, both under the contract for the
performance of such work and in fact;_

~~~
bobthepanda
Curious, what is GGP in this context?

~~~
jakelazaroff
I meant "great-grandparent", referring to your comment quoting the Supreme
Court ruling, but I realize now that I miscounted and it's actually one level
further than that :(

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willio58
Eh.. just charge people more money to use Uber. Yeah they would lose a lot of
regular riders but will those people really go back to using cabs? Uber could
double their prices and I would still use them over taxis 9/10 times.

~~~
empath75
Half the time in New York you get a cab with their meter off when you call
Uber.

~~~
CydeWeys
What?! I live in NYC, have taken dozens of Ubers/Lyfts to a variety of places,
and have literally never once seen this.

~~~
empath75
Happened to us in Brooklyn just last weekend.

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CydeWeys
How many times have you taken Uber and how many times has it been a yellow
cab?

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webwielder2
How about people get guaranteed certain rights and services by the government
so we don’t have to worry about whether someone’s an employee or contractor?

~~~
rsweeney21
Because Americans don't like paying taxes. It's why we revolted against the
British in the first place.

~~~
cma
That was about taxation without representation, which doesn't help explain why
DC residents don't get to vote.

~~~
votepaunchy
Given modern travel, why not disperse the federal government and simply
dissolve the federal district (as was already returned to Virginia)?

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Atavism
Hey I’m the author of this piece, let me know if you all have any specific
questions about AB5, the ABC test, and this gig economy business model!

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paulsutter
Im baffled to imagine drivers really want to lose all those tax deductions -
and get paid less - to be employees rather than contractors. Being an employee
is just about the worst possible tax situation.

A better change in the law would be the opposite. Give the benefits of being a
contractor to all folks currently forced to be categorized as employees. And
fix healthcare so it’s not tied to your job.

~~~
caymanjim
Being an employee means you can unionize, you must be paid minimum wage, you
have protection against arbitrary termination, and myriad other benefits. Many
drivers prefer the current arrangement, but many also want to make the
tradeoff.

~~~
closeparen
>you have protection against arbitrary termination

[https://en.wikipedia.org/wiki/At-
will_employment](https://en.wikipedia.org/wiki/At-will_employment)

~~~
caymanjim
That's all fine and good on paper, but what do you think really happens when
an employer fires an at-will employee, without cause, who doesn't like what
happened?

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danaris
Maybe the employee gets their lawyer involved, and then the company gets their
_entire cadre of highly-paid lawyers specializing in exactly this thing_
involved and regardless of whether the law's on the employee's side, he gets a
legal fight that will just drain his resources for years and years (or until
he's broke).

~~~
caymanjim
I'm not saying the employee would win, but nor would your scenario occur, in
most cases. They'd just pay them off. It's easier to avoid that entirely and
offer severance. To get back to my original point, being a real employee
rather than a contractor means there's a cost to arbitrary termination, which
provides the employee with some additional job security. This is one of the
many reasons why one might prefer to be an employee, rather than a contractor,
even if there are tax implications.

~~~
paulsutter
So basically it is better to have a terrible tax situation, because you’re
hoping to hang on to a job where you aren’t wanted?

I’m sorry to hear it, that’s a really sad situation.

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iandanforth
"Uber has never made a profit and has actually lost over $14 billion in the
last four years alone. In the prospectus, Uber insists that these five major
metropolitan markets are essential to its path to profitability. In reality,
what Uber actually relies on is the $20 billion in funding raised over the
past decade and the $8 billion in new investments after going public in May.
This investor welfare covers the cost of low prices that render each rideshare
trip unprofitable, of driver incentives to combat the high turnover rate of
drivers, and of promotions used to drive up demand."

Article nails it, Uber is an investor funded welfare program. Certainly Uber's
tech employees are benefiting from this welfare _a lot_ more than drivers, but
does asking a massively unprofitable company to be even more unprofitable aid
drivers' long-term interests?

~~~
bobthepanda
A fair amount of businesses were probably put out of business when we banned
child labor.

Doing _anything_ to restrict _any_ business will reduce profitability and make
their balance sheets redder, but as a society we can define the minimum
standards that a company is expected to meet; otherwise they'll just feel free
to dump the externalities of treating their workers poorly onto society and
the general taxpayer will have to pay for it.

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koolba
> Uber, Lyft, DoorDash, and Postmates derive a huge share of their sales from
> California: 41 percent of all Postmates' US sales are in California, 27
> percent with DoorDash, 24 percent of Lyft's rides, 17 percent of Uber's
> rides, and 13 percent of UberEats' sales.

Not the main topic of the article but I'm surprised at how concentrated Uber
and Lyft's revenue is the state of California. I can imagine smaller / newer
companies getting started in one location and being lop sided in their sales,
but those two are huge and have been around for years. That's some serious
concentration of regulatory risk!

~~~
berbec
SV & population

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jacques_chester
A pedant might argue, and cogently one might add, that Uber's unsustainable
business model is what will destroy Uber's unsustainable business model.

~~~
TeMPOraL
The story of Uber is one of how surprisingly long they can keep an
unsustainable (and illegal) business model running. They were supposed to be
dead for a long time now. They're still kicking.

~~~
jquery
What is Uber doing that you consider illegal?

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TeMPOraL
Operating taxis in cities around the world. Google it, it's not only not news,
it's pretty much the core defining thing of Uber.

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icebraining
What will it do to the taxi business model? In the US, traditionally, cab
drivers are classified as contractors too, and they've also been suing
companies in the last few years regarding this issue.

~~~
Atavism
The taxi business model emerged relatively recently and was the inspiration
for Uber’s. In all likelihood, there will be a reversion to the historical
norm which actually operates more efficiently than taxi cabs (which believe it
or not operate as or more efficiently than ride shares in many scenarios). But
we will have to see. Anything is possible because of how many billions are at
stake.

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anovikov
It all seems to work for a while only because self-driving cars are delayed...

