1. This is an appeal from a decision by a hearing officer of the California Labor Commissioner. Most of the time such officers spend their days hearing things such as minimum wage claims. Hearings do not follow the strict rules of evidence and are literally recorded on the modern equivalent of what used to be a tape casette instead of by a court reporter. Such hearings might run a few hours or, in a more complex case, possibly a full day as the normative max. The quality of the hearing officers themselves is highly variable: some are very good, others are much, much less than good in terms of legal and analytical strengths. In a worst case, you get nothing more than a pro-employee hack. The very purpose of the forum is to help protect the rights of employees and the bias is heavily tilted in that direction. That does not mean it is not an honest forum. It is. But anything that comes from the Labor Commissioner's office has to be taken with a large grain of salt when considering its potential value as precedent. Hearing officers tend to see themselves as those who have a duty to be diligent in protecting rights of employees. Whether what they decide will ever hold up in court is another question altogether.
2. Normally the rules are tilted against employers procedurally as well. When an employer appeals a Labor Commissioner ruling and loses, the employer gets stuck paying the attorneys' fees of the prevailing claimant on the appeal. This discourages many employers from going to superior court with an appeal because the risk of paying attorneys' fees often is too much when all that is at stake is some minimum wage claim. With a company like Uber, though, the attorney fee risk is trivial and all that counts is the precedential value of any final decision. It will therefore be motivated to push it to the limit.
3. And that is where the forum matters a lot. The binding effect of the current Labor Commissioner ruling in the court is nil. The same is true of any evidentiary findings. The case is simply heard de novo - that is, as if the prior proceedings did not even occur. Of course, a court may consider what the hearing officer concluded in a factual sense and how the officer reasoned in a legal sense. But the court can equally disregard all this. This means that the value of the current ruling will only be as good as its innate strength or weakness. If the reasoning and factual findings are compelling, this may well influence a court. Otherwise, it will have no effect whatever or at most a negligible one.
4. What all this means is that this ruling has basically symbolic importance only, representing what state regulators might want as an idealized outcome. Its potential to shape or influence what might ultimately happen in court is, in my view, basically negligible.
5. This doesn't mean that Uber doesn't have a huge battle on its hands, both here and elsewhere. It just means that this ruling sheds little or no light on how it will fare in that battle. You can't predict the outcome of a criminal trial by asking the prosecutor what he thinks. In the same way, you can't predict the outcome here by asking what the Labor Commissioner thinks. In effect, you are getting one side of the case only.
6. The contractor/employee distinction is highly nebulous but turns in the end on whether the purported contractor is actually bearing true entrepreneurial risk in being, supposedly, "in business." There are a number of factors here that do seem to support the idea of true entrepreneurial risk but that just means there are two sides to the argument, not that Uber has the better case.
7. In the end, this will be decided in superior court and then, likely, on appeal to the California courts of appeal beyond that. It will take years to determine. In the meantime, the Uber juggernaut will continue to roll on. So the real question will be: should we as a society welcome disruptive changes that upset our old models or should we use the old regulations to stymie them? Courts are not immune from such considerations and, as I see it, they will apply the legal standards in a way that takes the public policy strongly into account. It will be fascinating to see which way it goes.
That seems like a loaded way of phrasing the question.
Here's another loaded way to ask the question: should we as a society welcome disruptive changes that allow companies to turn defacto employees into at-risk "entrepeneurs", or should we rely on over a century of established practices for protecting employees from being unfairly exploited?
Well that's a hilariously unbiased way of framing it.
I very much enjoyed reading this (longish) piece by Nick Hanauer and David Rolf, "Shared security, shared growth":
Uber's key innovation and disruptive influence is in the customer experience, and I look forward to them finding a way for them to focus on that without exploting technicalities in worker characterization.
Uber started a revolution; but there is no requirement that they survive it.
What do you make of the Berwick Enterprises wrinkle?
Civil disobedience should be the last thing you try, after all the usual channels fail, not something you just leap into because you don't feel like trying the proper channels first.
If the AT&T monopoly had been preserved to the present day, and/or the Carterfone decision had gone the other way, I think we would be seeing a lot of civil disobedience in the form of people connecting unauthorized devices to the network.
I'm sure we'd see civil disobedience of the form you mention if telecoms deregulation hadn't happened. But my point is that it did happen without the need for civil disobedience. Civil disobedience is reasonable and good when you've exhausted all the normal avenues for change and it's not working. But Uber hasn't even tried to get taxi regulations reformed or removed. They've started out by simply ignoring them without ever trying to work within the system.
Of course we've definitely crossed over into matters of opinion now.
All I'm saying here is that if there are problematic regulations you should try to actually get them reformed or removed before you take the step of just outright violating them, because it can and does work sometimes to make that attempt. I'm surprised this is such a controversial opinion.