California passes bill that classifies gig economy workers as employees

https://www.nytimes.com/2019/09/11/technology/california-passes-landmark-bill-to-remake-gig-economy.html

by tempsy • 7 years ago

721 716 7 years ago

Me1000• 7 years ago

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.

toomuchtodo3• 7 years ago

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.

daveFNbuck2• 7 years ago

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

writepub2• 7 years ago

The money comes from lobbyists for previous incumbents in those industries, like legacy taxi, hotel, restaurant... businesses. Those legacy businesses also tend to have stronger Union bases

irjustin• 7 years ago

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.

tempsy3• 7 years ago

I haven’t closely followed this but it definitely seems like something that could have serious second order effects that (surprise, surprise) politicians who optimize for optics never think about.

For example I think the bar will immediately be higher for drivers who want to remain drivers, meaning less tolerance for drivers that have below median ratings. Maybe that’s a good thing for riders but it could make driving more stressful than it already is.

dmix• 7 years ago

This is why it's good to have states be the test beds for policy experiments.

It's not all bad for everyone. If this turns out to be a giant net negative, the rest of the world can learn from California's experience. Worst case it will be a boon for other states who will be able to offer better taxi availability for all the business people they are trying to attract away from California, putting pressure on CA to update it's laws (although let’s be honest this is pretty rare even in the face of changing marketplaces).

This could also accelerate the adoption of AI and the subsequent loss of the driver's jobs in favour of automation as the human capital costs increases and/or driver availability issues could help tilt the cost efficiency scales.

Plus a lot of people are predicting truck drivers are going first and I wouldn’t be surprised if there will be an influx of people looking for urban Taxi jobs soon.

1. Although it's not always the case other states actually look at data and studies first before copying other state's policy.

jamiequint• 7 years ago

While it seems like "big corporations complaining", I admit this does threaten certain companies, especially the ones that are not profitable.

So basically all the "gig economy" companies.

MiroF• 7 years ago

Airbnb?

dahdum2• 7 years ago

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.

tempsy3• 7 years ago

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.

jballer• 7 years ago

It's an auction - they used to make great money because there were fewer drivers. If drivers walked away when pay got too low, the pay would rise to equalize with rider demand.

goatinaboat2• 7 years ago

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

alimbada• 7 years ago

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

goatinaboat2• 7 years ago

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

pcurve• 7 years ago

“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• 7 years ago

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.

stickfigure• 7 years ago

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

jackmodern4• 7 years ago

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• 7 years ago

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.

AndyMcConachie• 7 years ago

If that means people driving for Uber/Lyft can now have a decent standard of living I'm all for it.

drngdds• 7 years ago

don't know why this is getting down voted

It's literally just "regulation bad!" with no argument backing it up

Tiktaalik• 7 years ago

Oh no workers will make a reasonable income!

influx• 7 years ago

Won’t this just mean that Uber hires all their drivers, prevents them from driving on another service, waits for Lyft to die and then raise rates?

dnautics6• 7 years ago

no, uber can just do what the taxi companies do, which is to charge the drivers for the service. That way, the drivers are customers and not employees.

scottmsul• 7 years ago

Everyone here's talking about Uber, I would guess most of the unintended consequences will be less visible. Smaller companies, freelancers, independent contractors, consultants, that whole ecosystem might undergo a chilling effect.

hn_throwaway_993• 7 years ago

One thing that I find disappointing in this legislation is that I wish it did essentially the reverse: instead of forcing the drivers to be employees, I wish it loosened the control Uber/Lyft had to bring it down to the level of what should be expected for independent contractors.

The biggest issue for me is pricing - the fact that drivers have 0 input to rates always made the IC designation fiction. But if the apps worked eventually like a reverse auction, where drivers got to set their own rates and you could then choose based on distance and cost, that would be much more of a true marketplace model with independent sellers.

helen___keller• 7 years ago

But if the apps worked eventually like a reverse auction, where drivers got to set their own rates and you could then choose based on distance and cost, that would be much more of a true marketplace model with independent sellers.

It's interesting to think what kind of efficiencies could be unlocked with a more versatile and robust driver-client interaction. Could clients order a ride at X time to Y location and have drivers bid down to fulfill the ride? Could the bid-down process be performed automatically based on the driver's personal settings on pricing and location?

Ultimately these efficiencies would make the driver's life better. The UI for the rider may be similar and the price may be similar (or higher!) as well.

Uber and Lyft had their chance to show leadership and empower their drivers if they truly believed their drivers were contractors, rather than leaving them in some gray zone of partially contractor and partially employee.

wilg• 7 years ago

Wouldn't that still be allowed by this bill? If Uber reduced their control such that they could be considered contractors again?

guelo2• 7 years ago

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.

dev_dull• 7 years ago

The funny thing is that the incumbents have largely enjoyed the monopoly and “lock-in” you described because their position was legislated. Services like Lyft and Uber were just so much better they couldn’t be stopped. Now this is just an attempt to legislate back the status quo.

pcwalton2• 7 years ago

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.

guelo2• 7 years ago

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.

baron816• 7 years ago

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.

moate9• 7 years ago

>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?

siphor• 7 years ago

Does anyone know how this will effect Google contractors?

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

SpicyLemonZest3• 7 years ago

Most Google contractors are already employees, just employees of some vendor or contracting firm instead of Google itself. I don't think the ABC test prohibits that kind of arrangement.

newshorts2• 7 years ago

So that just means Uber won’t allow people to sign up to drive directly. Uber will contract with companies, who allow people to signup. Those companies will “employ” people at the same terrible rates Google contractors get with no medical or benefit of any kind.

syspec2• 7 years ago

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• 7 years ago

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).

syspec2• 7 years ago

Those contractors typically ARE full time employ, just not of Google.

They’re typically employees of the staffing company which hired them

azurezyq• 7 years ago

I actually never understood that case.

For Uber, drivers are not employed and treated as contractors.

For Google, chefs are employed by another company (food services), which has contracts with Google. And also treated as contractors.

I think these two types of contractors are different. Let's say if contractors are already employed and offered insurance and minimum wage, is it ok for them to work as contractors for other companies like Uber or Google?

username904• 7 years ago

The law explicitly mentions "independent contractors", not contractors in general.

scarejunba3• 7 years ago

Oh interesting. So there'll be a rise in the drivers I had recently who work for a dude who gives them the car to use. Just a little more paperwork.

antropofagico2• 7 years ago

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

erichocean• 7 years ago

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.

SpicyLemonZest3• 7 years ago

Sure, but I can't imagine Uber and Lyft would file fraudulent I-9s whether or not California cares.

antropofagico2• 7 years ago

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.

dmode7• 7 years ago

Why would state enforce a federal employment requirement ?

URSpider943• 7 years ago

That is grossly untrue. Federal authorities can and do take enforcement actions in CA, they just won’t get support from the state or localities.

URSpider943• 7 years ago

Yes, it will mean that all drivers can be verified as having work authorization in the USA.

tylerl3• 7 years ago

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.

onion2k2• 7 years ago

Your post makes it sound like the gig economy is actually unworkable right now, so the right solution, at least in the short term while we don't have an answer to problem of how to make it workable, would be to make those 'jobs' actual jobs with real benefits.

username904• 7 years ago

California loves making bandaid state fixes to federal problems, I think this is the wrong way to go.

Problem: You need a full-time job at a company to get benefits such as healthcare.

Californian solution: Reclassify as many as possible as full-time workers.

Problem: USA immigration laws are horribly inflexible.

Californian solution: Make it illegal to go after illegal immigrants.

I don't think that these passive-aggressive fixes are good for USA's democracy. Either we need to split up the country into more manageable chunks and make moving between states as hard as moving between EU countries or we need to accept the intent of federal laws. Otherwise we will just end up in an ever escalating war of dumb bills to counteract the other sides dumb bills.

hayksaakian• 7 years ago

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.

cheriot2• 7 years ago

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.

SirHound• 7 years ago

You have no idea when that good luck will run out

fiblye• 7 years ago

And good drivers can save lots of cash and worries by simply not getting car insurance.

Health insurance’s main alleged draw is that shit happens when you least expect it, and you can avoid the massive costs when the unexpected happens (accidents, cancer, botulism, whatever). Unfortunately, someone in America found out you can charge monthly fees for health insurance while still making the person pay massive amounts themselves. Just promise they’ll pay a slightly less massive amount.

michaelmrose4• 7 years ago

Good health is a temporary condition. Everyone eventually craps out. If you only buy health insurance when you are old and or sick then you wont be able to afford it when you need it.

ivanhoe• 7 years ago

Your health is of very little significance if you get in a traffic accident, for instance. Or you fall and break something. Or get hurt in training. Or get bitten by lyme disease carrying tick. Etc...

chirau• 7 years ago

What's your point, really? Other than telling us you got to 300 per hour. Please, ELI5

malloryerik• 7 years ago

What's your point, really?

That health care should be decoupled from employment.

djrobstep2• 7 years ago

As well as laws like this that recognize the reality of the employment relationship, making these jobs decent requires:

  - unionization and industry bargaining to get decent wages and conditions
  - quality social welfare systems (including universal healthcare) so that people aren't afraid of poverty if they get fired/quit/change jobs

I've always wondered why there isn't more of an appetite for Medicare for All and universal healthcare on this site. How many people would like to do a startup but don't because they'd have no health insurance?

kmjg88nvf87• 7 years ago

Why doesn't anybody do a startup providing health insurance to the uninsured?

Are there too many regulations? Insurance is just a business, it seems to me.

moduspol4• 7 years ago

How many people would like to do a startup but don't because they'd have no health insurance?

How many people would like to do a startup but don't because they have no food or shelter? We don't really care because the costs of those things are manageable.

The problem isn't that the government isn't paying for it. The problem is that it costs way too much.

writepub2• 7 years ago

The lesson here is for Uber drivers to realize it can't be a career, and quit, just like you did. I don't believe they're being compelled or misled into driving for Uber/Lyft.

Additionally, mass exodus of drivers from Uber/Lyft will compel those companies to increase rates

astockwell• 7 years ago

As an American living in Ontario, Canada for a time, I literally COULD NOT BELIEVE the gig economy there. It is what the US aspires to: a guy owns a snow plow business, employs 30 other gig workers 6mos a year. A woman does city/house hunting tours. Contractors are consistently self-employed. On and on. These folks, earning enough to live, and (to another commentor’s point) without fear of medical bills/issues. That really is it: that’s the difference. And it makes all the difference.

jaaron• 7 years ago

I often wonder about this cost to the US economy due to a lack of universal health care: how much productivity is lost due to people staying in jobs just for health care, how many businesses not started, etc.

pkaye• 7 years ago

That is partially because they are skilled workers. The guys who mow lawns in my bay area neighborhood can command hefty rates too. Of course health insurance remains an issue.

bryanlarsen• 7 years ago

Those snowplow workers will likely be employees, not contractors. The Canadian government really frowns on avoidance of payroll taxes.

But due to Medicare etc, it's not that big of a deal whether a worker is a contractor or employee.

ummonk2• 7 years ago

Post-obamacare, getting healthcare isn't hard, especially if you're making almost half a million a year as you must have been.

kmjg88nvf87• 7 years ago

Seems more of an issue with health insurance than with the Gig Economy, though.

What is the reason insurance providers don't want to insure contractors?

mirimir4• 7 years ago

It is misleading to lump people billing at $100s/hr with drivers, shoppers, dog walkers, etc. But what's the median billing rate for the "gig economy"? Given my experience with consulting, it seems odd to use the "gig" label.

But whatever, it did suck to pay ~$1K per month for health insurance.

RonaldSchleifer3• 7 years ago

My thought too. I also did not get the sense that someone who “ended up billing at $300/hr and was still struggling with month to month work is someone who really realized the full cost of self-employment, because that is what he was really doing, employing himself … not “just like you guys” gigs.

If you’re billing at $300/hr and working when and how you want, it actually seems immensely disingenuous to try to associate with the sympathies for people stuck in the gig economy con job the tech tyrants have been imposing on society as a kind of excuse why you couldn’t manage to fill your consultancy pipeline.

I also guarantee he could have gotten health insurance, he just did not feel comfortable paying the roughly $1,000 to $2,000 per month it would have cost because his business pipeline was not full of work consistently.

People don’t realize just how much health care costs, regardless of whether it’s American employees who don’t realize the employers contribution is about 4-5 time what they pay monthly, or the worshiped and beatified “universal healthcare” that is “free” in Europe where massive taxes are paid to augment the also massive individual monthly cost taken out of people’s paychecks.

tylerl3• 7 years ago

I don't think so; my point was that regardless of your billing rate and even in the extreme, the absence of an employer is always a crippling factor. Telling people they can make their way to the top by working harder is a fantasy. There's no freedom at the top.

Perhaps your state had a $1k/mo option for insurance, mine did not. Even at $5k/mo (if I had it) plans would not cover an emergency. None of the plans available to the self-employed would.

echelon• 7 years ago

I couldn't buy reasonable health insurance for any price. Any price at all.

What?

Can't you buy personal health insurance with decent coverage for on the order of $500/month? And that's for plans with low deductables. $6000/yr for personal health insurance for an individual seems perfectly reasonable.

I'm concerned because I'm planning on eventually pursuing my own startup. If I can't get health insurance, this becomes extremely risky and untenable. If your post is correct, how does self-employment even work?

My understanding is that individuals can buy affordable personal health insurance. Am I wrong?

xbeta2• 7 years ago

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.

pcwalton2• 7 years ago

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.

xbeta2• 7 years ago

I agree with you, but I have to correct myself as well. I mean compare US to other countries where national free health care is available. These are basic human rights which simply ignord by the government in the US.

Workers need benefits which is understandable because they can't even go to doctors when they are sick.

9HZZRfNlpR2• 7 years ago

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.

avz• 7 years ago

Several countries in the EU (e.g. Nordic countries) offer single-payer healthcare services and the EU does have freedom of movement, so such a step wouldn't really be "unprecedented".

moduspol4• 7 years ago

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.

Given their political support of illegal immigration, I don't think it's bizarre at all.

They're among the richest, left-wing states in the country. Relative to other states, there's absolutely no shortage of political support or money. If they can't handle implementing their own utopian health care system, I don't know why any of us should trust that it can be done well at a federal level.

usaar333• 7 years ago

Here's the thresholds: https://www.coveredca.com/PDFs/FPL-chart.pdf

Med-cal is basically poverty level coverage (138% FPL - $29k for a family of 3)

The main issues with can't afford (or more honestly can afford but it is very painful) healthcare are at the higher numbers as subsidies fade out. $83k for a family of 3 has no subsidies, but even high deductible insurance is going to go for $10k/year (meaning expected costs are realistically hitting above $13k). That's over 20% of take-home income.

PorterDuff8• 7 years ago

Honestly, I can't see why California is unable to roll out a single-payer plan. It's certainly larger than many of the countries that have one. In a single-party state, it should be a relatively straightforward thing to do.

My guess is that no one is serious about healthcare and that it's simply a get-out-the-vote scheme like abortion and gun rights.

"a difficult proposition to say the least in a country that guarantees freedom of movement"

Levels of benefits already differ considerably, no? If freedom of movement is a deal killer, than it seems to me that strict, highly enforced immigration laws would also be a precondition.

dmode7• 7 years ago

It will cost California $400bn to run a Universal Healthcare system, which is double the entire general fund budget. You have to essentially declare private insurance void, and corral that employee and employer contribution to the healthcare system. It is a huge risk. And best be done at the Federal level

forrestthewoods• 7 years ago

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.

SpicyLemonZest3• 7 years ago

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.

droidno93• 7 years ago

For those of you who want to read the bill: https://leginfo.legislature.ca.gov/faces/billCompareClient.x....

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.

pieix• 7 years ago

Thank you for posting the exact wording of the bill.

Which of these three clauses are not satisfied by drivers for a ridesharing company?

droidno93• 7 years ago

The burden of proof would be on Uber and Lyft to show: (B) The person performs work that is outside the usual course of the hiring entity’s business.

This would be a hard sell because Uber and Lyft are in the business of providing transportation to people. They may argue that they're only providing the platform that enables drivers to provide rides, but considering the amount of evidence that says otherwise, I'd like to see their lawyer making that argument with a straight face.

C1sc0cat4• 7 years ago

The control one is the main one here.

mikekchar• 7 years ago

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 ;-)

mrfusion• 7 years ago

Wow. You might be right about B. That could be interesting. (I don’t think A is any different than existing federal laws)

Ensorceled2• 7 years ago

If you really are a consultant and not just a skilled worker with enough pull to negotiate your own terms, B should not apply, you'll be doing something unique that is not normally part of their business. Also, A would not apply because the manager should not have the expertise to actually directly manage you and instead should be setting objectives out in a statement of work.

Donald• 7 years ago

You can still form an LLC and hire yourself as a w-2 employee.

wastedhours• 7 years ago

My reading is that it's similar to the UK's IR35 regulation? Do any UK contractors here have any additional experience of working in/out of IR35 to give some context?

Cthulhu_• 7 years ago

If what you do as a software consultant is outside of the usual activities of the company you work for I suspect you should be fine.

Uber however is a taxi company and the brunt of their primary activities are done (atm) by contractors. Driving people around is their core business - even if they will probably give the defense that they're only a middle man with an app that links independent drivers up with people looking for a ride.

swalsh2• 7 years ago

In 2019, it's probably not too out of scope for nearly any business to argue software is a core part of their daily activities. The digital transformation is basically done, if in the last 10 years you didn't turn your company into a quasi-tech company your competitors did and you died.

I'd make the guess that one could go into finer detail on what specific type of software development falls in-line with the daily activities, but software development in general might be too broad. An ecommerce company probably could argue php development is part of its daily development, but if it hired a contractor to modify their build system, that might be outside the scope of their core business.

mbarronj• 7 years ago

I would imagine most software "contractors" that work for a major company are not 1099 - that carries a bunch of risks. Most "Contractors" are W2 employees of a labor for hire company. That still seems perfectly legal. "Hiring entity" would be Big Staffing Company, your customer would be Big Internet Company.

edouard-harris• 7 years ago

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_law5• 7 years ago

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

In theory this should be really good for software contractors, because in this should rip out the middlemen (i.e. the firms who get the contract to do the work and turn around and subcontract the work to you for pennys on the dollar). Now in theory these middlemen are gone and you as the software developer should be able to obtain the contract directly directly from the company.

codingdave• 7 years ago

You might be reading it wrong... everything in law is in a grey area until further defined in court, but legal documents should typically be read with full boolean logic applied to all the words:

"control and direction" - sure, they give you direction. But do they control what tools you use, when and how you do it?

"connection with the performance of the work" - Are they controlling the final deliverable, or the performance, again, as in when and how the work is done?

I suspect that software consultants have a reasonable argument that they control their own work, while their clients have control over the acceptance of the final deliverable, so the above points are not fulfilled.

Edit: And for B, it just seems like having a 2nd client would fulfill that criteria. Your 2nd client is outside usual course of the 1st clients business.

gwbas1c2• 7 years ago

Most of the software contractors I know easily meet (A) and (B). In these cases, they bid on the job based on its requirements, have multiple customers, define how they will implement the software, and sometimes even have employees.

When I personally worked as a contractor, the other contractors I worked with mostly bounced from short gig to short gig. That would probably meet (B). (A) was a bit more subjective.

If you're a long-time contractor for a single customer, and that single customer has a high level of direction over your day-to-day work, you are at risk of being defined a W2 employee by a legal entity like the IRS. (Or the state of CA.) In such a case, it's important that you clearly understand the legal difference between a contractor and an employee; and have some frank discussions with your "customer." It's important to point out that your "customer" bears the risk of you being redefined as an employee, so it's in their best interest to make sure that your contractor relationship follows the law as best as possible.

kmlx• 7 years ago

it's not clear to me. if i work as a contractor for software development companies in California, will I be classified as an employee?

'cause these look like every long-term contractor needs to become an employee in one way or another.

Ensorceled2• 7 years ago

You probably are an employee unless you are providing specialized consulting expertise and have several clients.

In this case, it's just financially to your benefit to be a consultant. This sword will cut both ways.

DeonPenny3• 7 years ago

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

ilaksh2• 7 years ago

I am also enthusiastic about robots and doubtful about "the market surviving this".

But what happens to people when the robots have all of the jobs?

People think it's not going to affect them because their job is special. It's just a matter of a few years difference, everyone's job will be affected. Even computer programming.

Why am I so sure about this? Because there is a very large research effort going on aimed at AGI and they _are_ making progress. And the potential rewards are enormous. And the hardware capability is available now.

michaelmrose4• 7 years ago

An understanding of rocketry didn't grant us the immediate route to land on the moon without also overcoming substantial obstacles. Given that we don't really understand cognition I would suspect that we don't have enough info to even estimate when we might achieve AGI.

A few years is probably hopelessly optimistic.

DeonPenny3• 7 years ago

Whats with the obsession with jobs. Like healthcare you can easily figure out ways that more than basic necessity are taken care of. Is it really important that we give drivers arbitrary work?

buboard6• 7 years ago

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

DeonPenny3• 7 years ago

Yeh this has happened in a lot of other countries. It's why this won't affect google. Cause they hire companies that hire contractors.

0xffff213• 7 years ago

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

joey_bob• 7 years ago

Yes, "robots". https://www.techidence.com/kiwibots-are-not-fully-autonomous... With the advent of starlink, who knows what else can be outsourced.

kart23• 7 years ago

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• 7 years ago

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.

jcims• 7 years ago

Also does this mean that there will be limits on how many drivers are allowed in a locale?

Mizza• 7 years ago

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.

dmode7• 7 years ago

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...

UK-Al05• 7 years ago

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

0xffff213• 7 years ago

Can you point out exactly where you think this is exempted? Particularly, my reading is that a software company cannot contract out software development tasks under this bill.

droidno93• 7 years ago

There are exceptions for certain "professional services" providers if certain factors are satisfied. Curiously enough, software developer isn't one of the exceptions.

(c) (1) Subdivision (a) and the holding in Dynamex do not apply to a contract for “professional services” as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:

(A) The individual maintains a business location, which may include the individual’s residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.

(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.

(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individual’s own hours.

(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.

(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.

"Professional services" include:

(i) Marketing

(ii) Administrator of human resources

(iii) Travel agent services

(iv) Graphic design

(v) Grant writer

(vi) Fine artist

(vii) [IRS enrolled agent]

(viii) Payment processing agent

(ix) [Certain still photographer or photojournalist ... ]

(x) [Certain freelance writer, editor, or newspaper cartoonist ... ]

(xi) [Certain licensed esthetician, licensed electrologist, licensed manicurist, licensed barber, or licensed cosmetologist ... ]

[And even more exceptions for real estate agents, repo people, etc.,.]

C1sc0cat4• 7 years ago

Why am I not surprised its keeping us greasy engineers in their place.

Just as in the UK actual Self employed contractors on a 3 month contract get hit by IR35 but Barristers working on the same case for a decade do not.

zaarn5• 7 years ago

If it works remotely similar to how fake self-employment works in germany then as a freelancer it's sufficient to show that you work for more than 1 company. If you exclusively work for 1 company, AND ONLY THAT COMPANY, as a freelancer in germany, you and the company you work for are at risk.

thrav• 7 years ago

I mean, most drivers work for both Uber and Lyft...

dnautics6• 7 years ago

applies to literally any company who would hire a freelancer to work on their product or service.

IANAL but I imagine that's exactly the point. There are always incidentals, like let's say you're a restaurant and you need to hire a plumber to fix your toilet or if you're a real estate agent and you need to hire a programmer to do your website.

hn_throwaway_993• 7 years ago

No, those examples you give would be taken care of as part of the "B" part of the test. Plumbing and website design is certainly not the main business of restaurants and real estate agents.

The problem becomes if you need to hire a freelance programmer to do some work for your software development company. There the "C" part of the test becomes a lot more of a gray area IMO.

manigandham5• 7 years ago

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• 7 years ago

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

manigandham5• 7 years ago

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.

scarejunba3• 7 years ago

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.

Keverw• 7 years ago

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.

fergie• 7 years ago

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

michaelmrose4• 7 years ago

I think you need to open an incognito tab then perform a web search for the articles title.

mirimir4• 7 years ago

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

akvadrako• 7 years ago

You can use container tabs on Firefox or something similar in Chrome.

wokemillennial2• 7 years ago

Or you could, you know, pay for the news that you want to consume.

"How do I get past the Uber paywall these days?"

See how absurd that sounds?

Pay for the products and services that you consume.

kmjg88nvf87• 7 years ago

"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.

uasm3• 7 years ago

"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• 7 years ago

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

jameslk• 7 years ago

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• 7 years ago

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.

kmjg88nvf87• 7 years ago

If these people don't need the money, then I guess it is no problem.

shpongled• 7 years ago

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.

justinc86872• 7 years ago

For most legal purposes, a SMLLC isn't considered different than an independent contractor. For example, unless you file a Form 2553 to be taxed as an S Corporation or a Form 8832 to be taxed as a C Corporation, you just file a Schedule C on your 1040, the same as if you didn't have an LLC.

sampo• 7 years ago

Will this affect freelance journalists?

wokemillennial2• 7 years ago

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.

monkbroc• 7 years ago

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...

lr3• 7 years ago

Then that makes them too much (or exactly like) a taxi outfit, which would not go down too well.

DanielBMarkham• 7 years ago

This is an important point, as many times these laws claim to do one thing and end up doing another.

Does this fix a problem? Or does it keep the old problem, just in a new configuration, and add barriers to entry for new participants?

Nasrudith• 7 years ago

I think the answer may be "yes" effectively if it leads to establishing companies of contractors but not without side effects in themselves - like most regulations really.

If gig economies lead to working with companies instead of individuals that would lead to two distinct branches. * A self established one would give more regulatory surface for things like training and background check requirements. Not as easy to sign up before any added regulations. Constituents would get more of a pure cut. The barriers to entry would make their labor slightly more valuable. * A traditional company which hires employees. They would have a middleman to make signing up easier but likely less flexibility - which doesn't matter as much to fulltimers anyway.

It likely result in a less flexible market with more barriers to entry but it would solve some problems and act as a framework to add more solutions and problems for better or worse. It could be abused to create cartels again or responsibly handle externalities without unduly privileging - it depends on how the tool is used.

Second order effects are likely a labor pool that cannot rise and fall as quickly which would stabilize prices for the labor supply and turn instability into a company liability as they may be left with a choice of paying for idle labor for availability and meeting demand for sure or risking being unable to fulfill demand.

That said I wouldn't be surprised if widespread roll out of these sorts of laws caused a gig economy bubble to burst - especially given how many are doing a VC dumping strategy of losing money on transactions.

I don't really have strong feelings as to what would be the best nor consider myself above an amateur commentator.

Aeolun2• 7 years ago

Does it matter who the employees are employed by? All rules for an employer apply just as well for the employing company as they would for Amazon if they employed them directly.

quaquaqua14• 7 years ago

It does matter. Here's why:

Uber agrees to pay X rate currently to drivers. A law is passed that makes X rate even more unprofitable.

Uber then engages the services of an external company which provides labor at a lower rate, fires all of the current Uber drivers, and encourages them to work for the new external company.

The external company, if sued, does not have the resources that Uber has, and simply goes bankrupt. The drivers are encouraged to work for yet another new company.

This process continues for a while as ride quality and driver satisfaction all suffers. Uber gets to lengthen the runway a bit longer, and either a miracle happens and the company continues operations or some other competitor swallows the market.

kkarakk2• 7 years ago

yup it does, just like contractor employees at amazon/google/tech company of choice don't get any of the nice benefits or perks of working at the client company, these guys won't get anything.

Those employees can't sue the client company, they can only sue contractor company - that suddenly goes poof and doesn't pay out anything when a dispute happens. Good luck forming a union coz then the company will go poof too

It basically just moves the onus onto the employee willing to sign up for a shit job with no perks and absolves the govt/client company.

dangerface2• 7 years ago

Seems fair to me no one wants to deal with the bureaucracy of employing people or being employed why not out source that to a third party?

The main problem Americans seem to face with gig economy is the lack of health care but thats americas problem you can't blame employers or employees for it.

kkarakk2• 7 years ago

Healthcare, Insurance, Repairs to machinery, Discrimination - There a TON of problems with the gig economy that are being "subsidized" by investors right now.

mfer2• 7 years ago

Where I live the gig works make about or a little less than the minimum wage after expenses for vehicles. This doesn't include saving for retirement, healthcare, workmans comp, disability insurance, or a bunch of other things.

Basically, even if healthcare were taken care of the amount they make would not be a living wage.

throwaway_law5• 7 years ago

Cost/Benefit.

Uber doesn't want drivers classified as employees so they don't have to pay minimum wage, provide employee benefits, pay payroll taxes, or otherwise comply with the law vis-a-vis employees.

Yet, it is one thing for Uber to hire drivers as contractors individually where Uber has full control over the terms, in other words no driver is in a position to negotiate their contract with Uber...it is an entirely different thing for the drivers to be organized and those organized drivers now be in a position to negotiate (almost like a union).

I think the last thing Uber would do is assist the drivers in organizing...its not just the ability for them to negotiate with Uber collectively either, at that point said driver contracting firm(s) would then be in a position to launch their own ride-share app to compete, unlike say these Amazon driver firms would can't just launch an Amazon competitor.

middleload• 7 years ago

In my country, working as an Uber driver gets you a good salary. I think it's around 1000€ (minimum wage being less than 500€). Is it different in USA? Do they get less than minimum wage for 8 hours?

phjesusthatguy3• 7 years ago

That's what they do now.

dustinmoris3• 7 years ago

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• 7 years ago

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

buboard6• 7 years ago

don't most drivers already work for their competitor as well? they have no "driver network". It was actually one of the good parts of gig work.

prostoalex2• 7 years ago

Somebody like WorkforceLogic, ManPower or other temp agency would just handle employment, background verification, compliance and 1099s, they're unlikely to start building apps around their own networks.

gamblor95612• 7 years ago

Labor law jurisprudence allows for piercing the veil when a company outsources its primary revenue generating function.

dehrmann• 7 years ago

I've seen Uber or Lyft in-app receipts suggest the driver is actually an LLC.

buboard6• 7 years ago

Drivers themselves will probably do that, so they can work for multiple riding companies

mattmcknight• 7 years ago

So perhaps each Uber Driver could be given the tools to form their own LLC, where they are an employee of that LLC, and that LLC contracts with Uber and potentially other gig services. It could be completely automated for them.

mvid• 7 years ago

Even if it is automated, that is an $800 out of pocket expense every year for LLC fees, and more complex accounting requirements. It's not worth the effort unless you are making significant money or are serious about your business

lr3• 7 years ago

“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• 7 years ago

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• 7 years ago

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

hypersoar• 7 years ago

These are all obtainable without citizenship. There are clearly a lot of immigrants driving for Uber.

magashna• 7 years ago

If they pledged that money to pay their employees properly, wouldn't it be a wash?

hfdehfddhs• 7 years ago

$90 million is peanuts compared to the potential cost of this bill.

That's why lobbying and buying propaganda works.

perseusprime112• 7 years ago

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

bluntfang2• 7 years ago

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

perseusprime112• 7 years ago

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.

t34543• 7 years ago

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

whiddershins• 7 years ago

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.

dustinmoris3• 7 years ago

What do you expect from your studio assistant that you think might put you at risk of a number of lawsuits?

Honestly, if you want to hire someone to do some work a few hours a week then you are basically hiring a part time employee. There's nothing dangerous around doing this and it's certainly not a minefield if you treat them with the respect that any employee deserves.

neltnerb2• 7 years ago

Well, other than the minor hassle that they need to know how to issue a W2 and get enrolled for workers comp insurance and pay their estimated taxes for them. None are super hard, but they are barriers for people who aren't used to hiring people, which is the case for I think a lot of self-employed people.

I only finally bothered to learn how to do it all last year when I needed some extra help with projects for my consulting company. Prior to that I just paid a contract CFO to deal with it because it's what you don't know you don't know that gets you sued. So either it's expensive to hire a CFO just for that, or expensive in your time to learn it all when your main goal is to actually get work done that produces revenue.

nickjj9• 7 years ago

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.

To my understanding (not a lawyer / accountant) if you hire someone part time like that you're not obligated to pay for their insurance or anything like that.

You just write off what you paid them as a business expense and send them a 1099 at the end of the year (this is the official document stating how much money you gave them during the year -- your accountant will generate the form for you).

Then it's up to them to file their taxes for that income, but this is out of scope for you. As long as you've sent them their 1099 you've done your job.

jeffasinger• 7 years ago

Also not an accountant or lawyer, but I think that if you're paying someone by the hour, and directing them as to how they should do they job, they need to be classified as an employee, not a contractor.

This means a W2 instead of a 1099, plus you need to pay them on a fixed schedule, pay social security and medicare taxes (and likely other taxes depending on jurisdiction) on their wages, deduct income taxes, do an I-9 verification at the beginning of employment, change your own liability insurance, etc.

There is software as a service companies that help out with setting this up correctly, but I do see many ways you could do this incorrectly, and land yourself in trouble.

Digory2• 7 years ago

This is a common misconception, but terribly incorrect. Talk to a lawyer.

dsfyu404ed2• 7 years ago

You could 1099 them but considering the likelihood of someone who's taking an entry level music job claiming the income on their taxes seems like a recipe for an audit for both parties.

Realistically you should probably do what everyone else does in this situations and pay under the table. Think of the lost taxes as billing the government for making stupid laws that can't reasonably be followed even when you want to follow them.

gamblor95612• 7 years ago

Or instead, if you're really not willing to learn something you'll do with every future hire, you could just use a small business payroll service provider that specializes in this sort of stuff to do it for you so that you don't risk prison time.

Payroll might be complicated to learn the first time. But it's like riding a bike, once you learn it's trivial to do.

blisterpeanuts• 7 years ago

The fact is, there's a lot of people paying under the table, for these very reasons. One estimate from 2012 of the underground economy in the U.S., i.e. transactions of goods and services other than illegal drug trade, was around $2 trillion[1]. That was during a severe recession; it's not clear whether the subsequent recovery has exacerbated the situation or encouraged more people to work "above ground".

One thing is certain: as long as there is friction & obstacles to hiring part time help, there will be people trying to work/hire under the table.

1. https://www.investopedia.com/articles/markets/032916/how-big...

PopeDotNinja• 7 years ago

One option is a temp agency.

Quanttek• 7 years ago

That "flexibility" means precarity as the majority of gig employees do this full-time:

In California, the legislation will affect at least one million workers who have been on the receiving end of a decades-long trend of outsourcing and franchising work, making employer-worker relationships more arm’s-length. Many people have been pushed into contractor status with no access to basic protections like a minimum wage and unemployment insurance. Ride-hailing drivers, food-delivery couriers, janitors, nail salon workers, construction workers and franchise owners could now all be reclassified as employees.

Also, classifying them as employees doesn't mean that flexibility is gone:

Uber and Lyft have repeatedly warned that they will have to start scheduling drivers in advance if they are employees, reducing drivers’ ability to work when and where they want.
Experts said that there is nothing in the bill that requires employees to work set shifts, and that Uber and Lyft are legally entitled to continue allowing drivers to make their own scheduling decisions.
In practice, Uber and Lyft might choose to limit the number of drivers who can work during slow hours or in less busy markets, where drivers may not generate enough in fares to justify their payroll costs as employees. That could lead to a reduced need for drivers over all.
But Veena Dubal, a professor at the University of California Hastings College of the Law, said it would still generally be advantageous for Uber and Lyft to rely on incentives like bonus pay to ensure they had enough drivers on the road to adjust to customer demand much more nimbly than if they scheduled drivers in advance.

miracle2k3• 7 years ago

Of course they don't have to schedule them. But if Uber has to take them on as employees, then Uber might reasonably want to take advantage of their right as an employer to force them to work certain shifts.

EpicEng4• 7 years ago

Experts said that there is nothing in the bill that requires employees to work set shifts, and that Uber and Lyft are legally entitled to continue allowing drivers to make their own scheduling decisions.

Well yeah, it doesn't force them to. Who are these "experts"? If Uber takes on 100,000 new employees and all of the costs that go along with them, why wouldn't they also manage them like... employees? You can't have it both ways.

manfredo2• 7 years ago

Absent that flexibility many people wouldn't be working at all. Both because their life situations don't allow them to take another job as employees, and because the companies' labor needs do not justify the cost of adding additional employees.

Uber and Lyft have repeatedly warned that they will have to start scheduling drivers in advance if they are employees, reducing drivers’ ability to work when and where they want.
Experts said that there is nothing in the bill that requires employees to work set shifts, and that Uber and Lyft are legally entitled to continue allowing drivers to make their own scheduling decisions.
In practice, Uber and Lyft might choose to limit the number of drivers who can work during slow hours or in less busy markets, where drivers may not generate enough in fares to justify their payroll costs as employees. That could lead to a reduced need for drivers over all.
But Veena Dubal, a professor at the University of California Hastings College of the Law, said it would still generally be advantageous for Uber and Lyft to rely on incentives like bonus pay to ensure they had enough drivers on the road to adjust to customer demand much more nimbly than if they scheduled drivers in advance.

I think the experts cited in this article are not getting at the crux of the problem. Offering employee benefits means that each driver has an overhead cost to the rideshare company. Drivers need to generate a minimum amount of revenue for rideshare company, otherwise the driver is a net loss for the company. So Uber and Lyft are going to have to start scheduling drivers to generate a certain threshold of revenue, and if drivers don't meet that they'll be let go.

matchbok• 7 years ago

Few hours a week? How would anyone, other than students, make that work?

erdleerdle• 7 years ago

New York State just overhauled farm labor in a similar manner that will prevent most small farms from hiring by season... and in agriculture seasons can be 2 weeks to 2 months... but now you have to cover FT, benefits, plus unemployment insurance.

So in theory you can hire someone... they can work for 2 months and then collect unemployment after you run out of work for them because the earth's position changed and it's now winter.

New York State already pays about 4% above the national average for farm labor. All costs will just be passed on to consumers. Industry groups estimate that consumers will need to eat $300m in additional food costs per year.

The State Senator (from Queens) that authored the bill visited approximately 14 farms in NYS prior to writing the bill... and signed it in Manhattan... where farm labor money is now set to flow in the form of union fees being managed by hedge funds and banks.

UnFleshedOne• 7 years ago

Farming kinda relies on exploiting under-payed workers. Historically those were sharecroppers (who created the myth of family farms), but lately they are undocumented immigrants.

Why do "consumers" have a right to underpay for somebody's labor?

magic_beans• 7 years ago

Hire a paid "intern".

buboard6• 7 years ago

"employee protection" lawmaking is popular and makes lawmakers seem caring and thus reelectable. Did uber drivers in the past leave uber to flock to taxi companies who do hire them? AFAIK no, and they know that legislation like this will probably cause them to lose their chances at a job/gig. Different people different motives

Loudergood• 7 years ago

Taxi companies don't hire you, you're just another contractor for them as well.

jdc• 7 years ago

It doesn't have to be black or white. Why don't regulators make a third category of worker between employee and contractor? Such a policy could reflect what people are already doing and give them some protection against abuse.

chongli• 7 years ago

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.

bernawil2• 7 years ago

I can think of several countries with universal healthcare where hiring is still complicated to say the least. Not arguing it would still help, though!

HillaryBriss• 7 years ago

Then there is no risk to hiring a new employee beyond the wages you pay them.

but you must not forget the additional administrative/accounting overhead, the risk from the wide variety of lawsuits one is vulnerable to as an employer, the risks of employee injury on the job, and costs associated with the possibility of laying off employees in the future. surely there are more costs than just wages.

intortus• 7 years ago

The US public does not want this

A majority does, in fact, want this.

https://www.pewresearch.org/fact-tank/2018/10/03/most-contin...

djsumdog• 7 years ago

In America, you have to work until you die. The major thing the gig economy takes from people is health care. It's insanely expensive, and the Affordable Care Act is a terrible shamble of broken policy. I spent time outside of the US and came back to find health care worse than when I left it:

https://fightthefuture.org/article/returning-to-america-and-...

I have a friend who has been fighting brain cancer for over a year. The small company he was working for let him go (although they wouldn't admit it; it was likely over his condition) and his wife has to constant fight her own company's insurance company/policy to get treatments covered (and she is a lawyer; who literally works for a law firm doing mostly corporate liability cases).

In any EU country, you get a terminal illness, you can take time off and live your life. Will you get the same level of treatment as you would in the US? Who cares. You get treatment, and you can spent time with the people you love and appreciate things until you get better or your friends say goodbye. In America, if you do not have a spouse, you just have to keep working until you can't any more .. and then you die.

poilcn3• 7 years ago

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.

maximente2• 7 years ago

The US public does not want this, though

evidence? from 2017 shows more support than not.

https://www.pbs.org/newshour/health/62-percent-u-s-want-fede...

dragonwriter2• 7 years ago

The US public does not want this

That's far from clear. Polling fairly consistently shows that the US public favors at least some degree of it (particularly shifting the healthcare burden from employers to government, other benefits have less political salience), though any particular plan for the detailed mechanism may have trouble gaining majority support.

Reedx• 7 years ago

All this despite the mountain of evidence from other countries, showing the greatly reduced total costs and improved life expectancy

Does this account for confounding factors? Such as the US having the highest obesity rates, which has a massive impact on costs and life expectancy.

I'm for universal healthcare, but "X has these results in Y, therefore it'll be the same in Z" is a poor argument and weakens the overall case.

irrational2• 7 years ago

The US public does not want this

I don't think this is true. I think what the US public doesn't want is the higher taxes to pay for it. We are already swimming in debt and wages haven't kept up with inflation. My daughter is making exactly the same wages now that I made when I was her age 25 years ago, in comparable jobs.

bogomipz• 7 years ago

"The US public does not want this, though"

Could you share some data that supports this? Polls I have seen show that a majority of Americans support expanded health care coverage.[1][2][3] There is some division howwever on whether that is best done via Medicare For All or a regular single payer system.

[1] https://www.pewresearch.org/fact-tank/2018/10/03/most-contin...

[2] https://www.kff.org/slideshow/public-opinion-on-single-payer...

[3] https://www.pewresearch.org/fact-tank/2017/01/13/more-americ...

CodeWriter23• 7 years ago

Then there is no risk to hiring a new employee beyond the wages you pay them.

This is a gross oversimplification. Two risks that immediately come to mind, increases to the Employer’s Disability Insurance and Unemployment Insurance either through fraud(speaking from experience), or, in the scenario mentioned by gp, when you lay the worker off at the end of the need.

My comment also is a gross oversimplification.

slantedview• 7 years ago

The US public does not want this, though

Actually a majority of Americans support the idea of single payer healthcare [1], and the number goes up depending on how the question is asked. The problem is the political obstacles, which are enormous given the power of the health insurance, pharma, and hospital industries.

https://www.kff.org/slideshow/public-opinion-on-single-payer...

subhobroto6• 7 years ago

The way to protect workers is to shift the burden of health care and other costly benefits onto the government, supported by taxes

Yes, it's clear that our prosperity hinges on how quickly we decouple health care from our employers.

Employers don't want to be in the business of providing healthcare to their employees and its painfully obvious.

I just don't understand why smart people think it's a good idea for anyone other than me decide what my healthcare needs are!

I would like to have a separate discussion whether the government is the best party to handle this. If you look for my writing here and on Quora, you will see that I have for over a decade being campaigning the government was the best party, but after having really worked on it (thanks to people getting in touch with me from my writing), I no longer believe the government is the best partner.

Instead, I think the government managed marketplace where people choose private insurance is actually a brilliant solution and ACA already provides that, so we already have that in place.

The value the government brings here is extreme negotiating ability with the private insurance providers that individual citizens lack.

The US public does not want this

I strongly disagree.

I have spoken with far too many (thousands) of people to know that majority of the U.S. hate their employer provided insurance and are worse off for it. I can give you specific instances where an employee was worse off due to the employer provided insurance and had to declare bankruptcy due to medical bills than if they were unemployed to begin with and were on welfare instead!

I seriously believe:

1. the tax incentives to provide employer provided insurance should be abolished. They made sense at a time that's past us now.

2. employers instead should be required to pay a premium for choosing to provide primary insurance to employees instead of letting employees continue with the coverage they have or get one from the marketplace

3. Employers are free to provide secondary and supplementary care insurance if they chose to, not due to regulation.

This leaves behind only those employers who genuinely care about their employees instead of pretending to do something because someone forces them to.

I support the individual mandate in the ACA because it ensures negative self selection in the marketplace.

This will allow people to gain control of their own healthcare, get a benefit package that's more transparent and gain better control of their own lives.

As software engineers, we are in the top tier of employment. We earn in the top tier of the population and handle levels of complexity in the top tier of the population.

Our personal experiences don't reflect that of the general population.

Even then, the engineer making $180k/yr at Microsoft might have a very different healthcare experience compared to the engineer making $180k/yr at Google depending on the choices that the benefits administrators at Microsoft and Google have made!

That's just insane and a level of complexity that's just unnecessary.

m-p-3• 7 years ago

It makes me sick that so many Americans are willing to keep their taxes lower and pay their own healthcare insurance (which are absurdly high, and you still have premiums to pay, etc) instead of having the peace of mind that if they become seriously sick, that it won't ruin them and their close relatives.

Sure, you might be healthy now but do you really want to take a gamble like this and keep more money in your wallet now, and potentially lose everything due to bad luck later? I guess it's the American way?

tathougies2• 7 years ago

Alternatively, incentivize companies to offer more pay rather than healthcare. For example, by disallowing group bargaining for healthcare by an employer.

mrlala• 7 years ago

The US public does not want this

Yes, they do.

ptaipale• 7 years ago

The strange thing here is that United States uses more public money to health care than European welfare states. So Americans already now pay more taxes for health than Europeans. Some aspects of the U.S. health care system are incredibly ineffective use of money.

https://data.oecd.org/healthres/health-spending.htm

There are reasons for this; some of them good (the best care in the U.S. is very high quality and leading-edge technology, and consumer protection through litigation tries to minimize errors); some are bad (e.g. because of litigation, legal costs are very high, and the system seems to carry a lot of overheads, and many people still lack coverage).

It seems the so-called Obamacare wasn't a very good approach, because so many people felt it was ripping them off. Clearly it is easier to build an efficient public health care system from nothing (like e.g. my country Finland did in 20th century) than transform an existing system (which the U.S. has and where there are lots of incumbent operators that have "assets" that they protect.

nitwit005• 7 years ago

The way to protect workers is to shift the burden of health care and other costly benefits onto the government, supported by taxes.

Or just disconnect this stuff from the employer. It seems strange that employers are involved in something like health insurance. It creates friction changing jobs, and much of the population isn't employed.

deathanatos• 7 years ago

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.

All that is needed is to undo employers providing health-care. The government could provide it, but it could also work akin to auto or home insurance where you the individual choose the company yourself. (I do think we need other reforms, principally price transparency, in order to manage the current cost problems w/ health care. There is no sane way for any person to evaluate anything about any insurance setup if they cannot gauge what it will cost them!)

Tax-based universal healthcare would accomplish this, but I do not think it is necessarily the only option. It does need to stop being attached to the employer. Losing my job should not cost me my healthcare, too.

AnthonyMouse• 7 years ago

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.

That's still the same problem. If the taxes that fund the health care are paid by employees then a living wage would have to be higher to account for having to pay the taxes. If they're paid by the employer, there goes the money they were going to use to hire the employee, or they have to raise prices and we're back to causing a higher cost of living.

Taxes aren't magic. The money still has to come from somewhere. The actual problem is that housing and health care cost too much. It's necessary to solve that regardless of who is paying for them, at which point there is no longer a pressing need to try to shift the burden somewhere else, because the burden is no longer so onerous.

jforman• 7 years ago

Here's a quick guide to employer regulation in NYC. With one part-time employee you would be exempt from many statutes:

https://www.lexisnexis.com/legalnewsroom/labor-employment/b/...

Also, part of the purpose of incorporation is to provide a personal liability shield as a catch-all.

Any policy has benefits and drawbacks. Yes, somebody is losing out on beneficial employment with you. But somebody else is being saved from being paid $5/hr under dangerous conditions without workers comp.

TYPE_FASTER• 7 years ago

I would highly recommend you reach out to local educational institutions to see if they have intern/co-op programs. You might be able to get some help with the administrative parts of the process.

dangxiaopin• 7 years ago

Even though it does not look this way now, I think this is a seminal legislation that in time will move small startup scene out of California for good, due to what you have described. I have the same experience, bootstrapping a software company that initially could not afford an employee payroll and administrative/legal burden. Where do we go next to start non-VC companies? Oregon? Texas?

opportune• 7 years ago

What if you just incorporate in Delaware and contract remotely out of less restrictive states in the US? I think this will only apply to employees working within CA

kerkeslager3• 7 years ago

Your sob story has a number of holes:

1. An employee working, in your words, "a few hours a week" has literally nothing to do with an Uber driver working full time.

2. As a society, do we need more cable-coiling jobs? I don't think we do. With respect to your experience, there are a lot of people in the music industry (and most industries) willing to mentor people without also expecting them to do menial labor for minimum wage. You're not being benevolent or providing some integral service to the community.

3. There are a large variety of services which make it easy to hire an employee, which cost a small fraction of what the employee is going to cost. If you actually wanted to do what you say you want to do, I'm sure you could figure out how to do it.

Vraxx• 7 years ago

I feel as though that ire ought to be directed at the companies who knowingly walk in the gray areas to make profits where simpler laws might suffice for common sense. It's the same arms race that plays out in many other instances, if abuses didn't happen then we wouldn't need to codify into the law that those things are indeed abuses.

With every round of this game we play, it gets harder for smaller businesses to step around the collateral damage, but it's not as though the right answer is to give up on worker protections. The worst part of it all in my opinion is that after a gray area is ruled on after years of extracting profits, there's literally no consequences for a business forcing that gray area to get codified into law. Of course these vague in-between areas will be exploited and eventually refined into more and more meticulous law, there's a bounty on every one of these areas. The system we have will trend towards this unless we give up on worker protections (obviously not good) or reorganize this system so the winning move isn't to force more legislation

KirinDave• 7 years ago

Why don't you just hire people part time? That still exists and it exists for a reason.

bagelbagel• 7 years ago

I'm a student at a music school in NYC, I wonder if I could help? send me an email at robert.diack [at] gmail if you're interested.

iamgopal• 7 years ago

Life goes in a cycle. A new tech, invention ( e.g. Bitcoin ) comes and blooms until it starting to affect government revenue, from that point onwards people in power find a way to regulate it for greater good. The tech becomes boring, intelligence search for more novel solutions. History repeats itself.

VladimirIvanov• 7 years ago

So what happens to Thumbtack's business model now?

mcntall• 7 years ago

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

mdorazio6• 7 years ago

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

jswizzy• 7 years ago

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

hn_throwaway_993• 7 years ago

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

a9a2• 7 years ago

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• 7 years ago

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

CriticalCathed• 7 years ago

But the ability to work flexibly and between lots of companies

They still have this ability

sandstrom• 7 years ago

Sounds like your describing the social safety system in Europe

a9a2• 7 years ago

Sure—that seems like it can in certain instances be a great system. In general I think a fair/free labor market means individuals should have as many options as possible, including a government backstop, to leverage when negotiating with firms who want to buy their time.

johnrob• 7 years ago

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• 7 years ago

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

Imashshoryuken• 7 years ago

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.

cj3• 7 years ago

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...

macinjosh• 7 years ago

California industry revolutionizes businesses, California government ruins them.

dfilppi• 7 years ago

Another beauty from the California politburo.

MentallyRetired• 7 years ago

How will this affect platforms such as amazon or redbubble?

djrogers3• 7 years ago

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_jones2• 7 years ago

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.

mdorazio6• 7 years ago

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.

djrogers3• 7 years ago

That's not how competition works...

fulldecent2• 7 years ago

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

bgilroy26• 7 years ago

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.

radicaldreamer• 7 years ago

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

aldoushuxley001• 7 years ago

Makes it harder for any new competitors. This just entrenches the old guard.

fullshark• 7 years ago

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

buboard6• 7 years ago

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

projproj• 7 years ago

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?

ilikehurdles2• 7 years ago

Not in CA

kec• 7 years ago

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.

cortesoft2• 7 years ago

An employer can limit you having another job while currently employeed, even in california.

robomartin2• 7 years ago

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.

dmode7• 7 years ago

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.

robomartin2• 7 years ago

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.

aabajian• 7 years ago

How does this affect AirBnb hosts?

saisundar• 7 years ago

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.

frostyj• 7 years ago

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.

woah5• 7 years ago

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.

Spivak2• 7 years ago

They're not carving out high-skill professions. You'll notice that doctors aren't on that list. They're carving out professions that are already under special regulatory regimes that affect how they're able to sell their work. In part because people/businesses are required by law to contract with people who hold these licenses. Like you cannot build a building without a licensed architect and civil engineer.

There would be an uproar if you couldn't renovate your office without hiring an architect an an employee.

Edit: Looks like the final version is way different than this quote. The final list of exemptions are:

- physicians and surgeons

- insurance brokers

- securities brokers

- direct sales under specific (previously existing) conditions.

So looks like they didn't really care about professional services after all but carved out industries where you look like an employee but operate a tiny little business inside another one.

woah5• 7 years ago

Doctors are exempted in a section immediately above the one I quoted.

woah5• 7 years ago

It is actually pretty difficult to find the final text of the bill, and the list of exemptions seems to change a lot between versions, so let's look at a quote from one of the authors:

Lorena González, the San Diego Assembly member who authored AB 5, says she’s working to make sure that is not the case. The point, she says, is to protect workers from exploitation and to classify them as real employees with the power to unionize, not to stifle their independence. “We don’t want to deny somebody the opportunity to, say, submit a story to The New York Times,” she says. “So we are looking at freelancers and working with some of the associations and unions to come up with a definition for what a ‘real’ freelancer is.”

https://www.lamag.com/citythinkblog/ab-5-freelancers-bill/

She acknowledges the fact that this will cause a lot of problems for a lot of people who have nothing to do with the gig economy, and that they are working on a lot of carve-outs because of this. But I guess the software dev's union didn't make it in time to do the proper lobbying, so we're out of luck.

Some laws lay out elegant general principles that can be applied in many scenarios, and some laws fail at this and require people to contort themselves into the limited categories thought of by the politicians and their lobbyists at the time they wrote the law.

kerkeslager3• 7 years ago

Meh, as a freelance software engineer who sometimes works for California employers, I'll be happy to classify myself as an employee and decline health insurance in exchange for higher pay.

While the law could have been written more simply, I think your concern for my well-being is misplaced.

woah5• 7 years ago

Sure, maybe you can replicate an arrangement you had before, but due to the multiple new layers of bureaucracy you’re going to get paid less. Like I said, they knew this was an issue which is why 90% of the law is carve-outs. Unfortunately software engineers (and many other professions, I’m sure) have slipped through the cracks and now will be subject to the harms that they were trying to avoid for doctors, accountants, fishermen, etc etc etc

rsweeney21• 7 years ago

It's not that simple. For a company, a contractor is much different than an employee, and it is much more regulated and costly to terminate an employee.

For example, if you terminate an employee you have to have proper documentation to justify the termination. Even then, you are still vulnerable to a wrongful termination lawsuit...unless you offer them severance in exchange for signing away the right to sue.

You are also on the hook for unemployment.

curious_fella1• 7 years ago

You said it yourself: software engineer

So we are allowed.

rrss• 7 years ago

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

cortesoft2• 7 years ago

The law doesn't categorize based on job titles that have no legal meaning.

You really think Uber can get around this by just changing everyone's title to "Driving Engineers"?

KingMachiavelli• 7 years ago

How does the law prevent you from working under your own LLC?

alkonaut• 7 years ago

I wonder why they didn’t just put a minimum rate for contracting work? That would put all qualified workers above it.

Just say “you can hire someone to gig for an hour all you want but you need to pay $50/h”.

ylhert• 7 years ago

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• 7 years ago

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.

privateSFacct• 7 years ago

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.

HALtheWise• 7 years ago

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?

memmcgee• 7 years ago

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.

s_y_n_t_a_x• 7 years ago

That doesn't mean they know the law or can think through the consequences. Kind of a like a genie wish situation.

colechristensen• 7 years ago

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.

diehunde• 7 years ago

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.

azinman2• 7 years ago

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.

tathougies2• 7 years ago

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.

txsoftwaredev• 7 years ago

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• 7 years ago

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.

bcheung• 7 years ago

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.

diminoten2• 7 years ago

California considers age to be a protected class.

Implicated• 7 years ago

Right - but how often/easily is that enforced?

hbarka2• 7 years ago

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• 7 years ago

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.

hbarka2• 7 years ago

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.

ben_jones2• 7 years ago

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.

0xffff213• 7 years ago

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".

Alexander473• 7 years ago

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

75dvtwin• 7 years ago

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.

edmoffo• 7 years ago

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

California passes bill that classifies gig economy workers as employees

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