Uber Drivers Deemed Employees by California Labor Commission

http://techcrunch.com/2015/06/17/uber-drivers-deemed-employees-by-california-labor-commission/

by uptown • 11 years ago

580 571 11 years ago

techcrunch.com

dylanjermiah11• 11 years ago

"Uber is said to have more than a million drivers using the platform across the globe."

If this ruling sticks, many of those drivers will no longer have a position.

mayneack2• 11 years ago

This, at least, will only affect the California workers, right?

dylanjermiah11• 11 years ago

I presume so, hopefully other cities do not follow.

jkyle2• 11 years ago

If the damages incurred are high enough, it effects uber as a whole. And so effects all their workers.

anigbrowl3• 11 years ago

This ruling, yes. But there is a similar ruling in place in Florida and there may be a federal decision on the horizon IIRC.

dragonwriter9• 11 years ago

Strictly, this ruling affects one worker.

If it is appealed and eventually decided by a court whose decisions are binding precedent -- and the first stage appeal from the Labor Commissioner's ruling would be a state trial court, which is not such a court -- then it would have broader effect.

OTOH, its likely a guide to how the Labor Commission would rule on similar cases brought by other Uber drivers, so, in a sense it signals an effect in California, without having a direct effect on any other worker.

ISTR reading about a Florida decision that found the same thing with regard to Uber drivers, and IIRC there are a number of other labor complaints and lawsuits pending on similar grounds.

davexunit• 11 years ago

Ah yes, the old "if we can't continue screwing you, you won't have a job!" argument.

s73v3r39• 11 years ago

If Uber is just going to take it's ball and go home like a spoiled child, then there was nothing of value lost.

bhouston• 11 years ago

What is the expected cost to Uber of this change?

revelation2• 11 years ago

Bankruptcy.

shivpat23• 11 years ago

If this sticks, Uber cannot absorb that cost and would have to shed many of the drivers - rendering Uber, as we know it now, defunct.

yincrash• 11 years ago

Uber does exist in more than just California.

gav• 11 years ago

UberX is now defunct in Los Angeles at least, I assume they've shut it off for all of CA. No cars available this morning.

tomasien5• 11 years ago

They're appealing so we'll see.

ceejayoz5• 11 years ago

Minimum wage (probably including time you're available but without a fare), overtime, payroll tax, workers comp... and back-pay for all that for the last few years? Enormous, I'd imagine.

toomuchtodo15• 11 years ago

That's only California. If the IRS comes to the same conclusion, they'll owe all of that nationwide.

VLM2• 11 years ago

IF they financially survive the back pay, etc, then numerous policy changes around pages 8 to 10 or so of my scanned copy of the judgement can be applied to mostly patch around the issues.

The requirements that uber enforces on its (now) employees would pretty much have to be wiped to make it more of a contractor relationship than an employee relationship. No more banning 2-door cars or 11 year old cars, no more banning tips, no more auto-filtering out all less than perfect records, drivers would have to negotiate fares not uber, no more background checks. Basically uber does a traditional hiring process without actually hiring, whereas they'd have to move to a traditional contracting relationship. Uber forbids contracting relationships in their ToS, its specifically forbidden to hire a subcontractor. Clauses like that really set off labor boards and the IRS about "fake" contracting.

Specifically, uber would have to let the end user decide not to accept a ride in my new 2-door Yaris or my wife's 2004 Prius rather than denying for me. Also if riders consistently give me 1 star because of my HN posting habits or whatever, they'd have to let the riders decide to not accept me rather than autofiltering out all sub 4.6 or whatever grade-inflated score they use. They couldn't run a background check on me to join the service, MAYBE they could get away with running it and putting the result semi-anonymously online for the rider to make a judgement. They would have to let me set the minimum fare I'd demand, which actually sounds pretty nice for drivers rather than existing "yes/no" take it or leave it, and tips would have to be permitted.

Possibly they could spawn off a "union" or professional organization that only allows members to join that passed a background check and then only allow members to advertise themselves as part of the union. Like my roofing contractor or my unionized electrician.

There's a widely held belief, that is completely wrong, that a contractor is just an employee who is treated like dirt in exchange for more money than an employee gets; essentially a gambling relationship. The actual legal position is considerably more complicated and is not concerned with popular beliefs.

solutionyogi• 11 years ago

Wait a second. I understand that they will have to let drivers negotiate rate but as a contractor why can't they enforce that you must have certain type of car? E.g. I did contracting for financial firms in NYC and certain ones expected me to wear business formals (including a tie) whenever I worked in the office. Why can't Uber have similar requirement that you must have car with certain features?

mikeryan6• 11 years ago

I think Uber can maybe weather this storm but I wonder how this will trickle down to the smaller personal service players like TaskRabbit/Caviar/Luxe etc who employ independent contractors.

toomuchtodo15• 11 years ago

If the IRS determines the same, Uber will be on the hook for back taxes and penalties for all of its US drivers. I don't think Uber can weather that storm.

mikeryan6• 11 years ago

There's a lot of nuance there however and a big if (on a federal determination).

Its also not in the IRS's best interest to put Uber out of business. Even assuming the worst it seems likely that there would be some sort of compromise brokered that would allow Uber to stay operational. They've got a pretty big war-chest to work with.

smileysteve4• 11 years ago

Theoretically, if this is the first driver to report Uber for misclassification, then the contractors have been paying the correct amount in self employment taxes.

Über will be on the hook for penalties for the misclassification, but there is reason to believe that the drivers knew that they were classified as contractors and no imminent tax bill is due.

steven20122• 11 years ago

Of course it will affect them. It will be a huge factor in whether or not they get funding, or an additional round of funding, etc. All of a sudden the business model isn't profitable unless they can go into higher-margin businesses.

s73v3r39• 11 years ago

Hopefully the same thing applies.

nugget2• 11 years ago

I wonder -- if Uber converted drivers in California to employees and dealt with the increased costs (passing them on to riders) but also prevented the now-employed drivers from driving with competing services (Lyft) -- whether the company wouldn't actually become even more valuable than they already are. If you are driving for both services but Uber comprises 80% of your volume and Lyft 20%, it's an easy decision to make. Given that the real asset for all these sharing economy companies is their elastic work forces (drivers and cars for Uber, residents and homes for Airbnb), the CLC may have just created an entrenched monopoly without realizing it.

Beyond that there is a really interesting debate as to whether sharing economy jobs are an end-run around minimum wage laws, rendering such laws meaningless for certain industries going forward. If the majority of workers are turned into 1099 consultants, but are doing effectively the same jobs (drivers, delivery people, etc) that employees did in the past, what does that mean for society?

tomasien5• 11 years ago

There are a lot of downsides to drivers for this potentially, even beyond preventing them from driving for competing services. They also may be forced into working certain hours, which would be horrible for many Uber drivers who aren't doing it full time. I'm worried!

viola113• 11 years ago

The could equally well be forced to work certain hours before as well, by Uber deciding to just give fares to them during certain times.

s73v3r39• 11 years ago

Uber punishes drivers for not working enough hours and taking enough fares in the first place.

toomuchtodo15• 11 years ago

Beyond that there is a really interesting debate as to whether sharing economy jobs are an end-run around minimum wage laws, rendering such laws meaningless for certain industries going forward. If the majority of workers are turned into 1099 consultants, but are doing effectively the same jobs (drivers, delivery people, etc) that employees did in the past, what does that mean for society?

Please excuse my demeanor, but it means that if the "sharing" economy is really the "tech companies sidestepping worker/labor protections with no repercussions", then society is screwed.

clarkmoody2• 11 years ago

What does it say about what the Uber drivers think about "worker/labor protections" that they are willing to work without those protections of their own free will?

society is screwed

Please elaborate.

icebraining7• 11 years ago

You do know that taxi drivers are not and have never been employees, right? If anything, Uber will (inadvertently) bring more labour protections where there were none.

Currently the National Taxi Workers’ Alliance does not have any collective bargaining rights as they represent a non-traditional workforce. Taxi cab drivers are not covered under the Fair Labor Standards Act which protects workers’ safety and grants overtime pay.

viola113• 11 years ago

Historically the exploitation of workers has lead to the workers organizing and protesting for better rights in various ways. Usually involving in the formation of unions and creation of legislation ensuring rights for the employees. Or revolution, armed insurrection and stuff like that.

Honestly, the fundamental situation is not new, only the particulars are novel.

MarkMc• 11 years ago

If you are driving for both services but Uber comprises 80% of your volume and Lyft 20%, it's an easy decision to make.

And if you are looking for a ride and Uber has 80% chance of having the closest available car then you are probably willing to pay a premium to use their service.

nostrademons• 11 years ago

The workforce becomes significantly less elastic if Uber drivers are ruled to be employees. Uber would have to pay them at least minimum wages. They'd face wrongful termination suits if they ended their business relationship with a driver. Many drivers might also drop out of the workforce if Uber had to be their sole employer - one of the big draws of becoming an Uber driver is that it's a way to earn extra money without giving up freedom.

Karunamon2• 11 years ago

So let me get this straight:

* People sign up with Uber

* They drive literally whenever they want

* Uber has no standards for their drivers other than "get good ratings" and "pass a background check"

..and they're considered employees? WTF?

jayess• 11 years ago

California.

randomname23• 11 years ago

There's many more reasons for them not to be considered employees, which is why this ruling is so puzzling and why they're appealing.

therobot244• 11 years ago

Whether the judgement is correct or not, they're appealing because it's in their best interest.

ceejayoz5• 11 years ago

Uber has standards for their drivers, listed in the linked complaint. Vehicles have to be specific model years, specific models for Uber Black etc., and well maintained. Can't ask for / accept tips.

Karunamon2• 11 years ago

That doesn't really rise to the level of specifying how a work product must be produced (one of the main differences between employees and contractors), only some prerequisites. (They won't even let you drive if you don't have a >2004 4-door vehicle)

wcummings• 11 years ago

Also, and this is important, driving on Uber Black generally requires a local limousine license, commercial insurance, and a pretty nice car (or finding an employer who already has those things).

http://www.quora.com/Is-it-better-to-be-a-UberX-or-Uber-Blac...

How many Uber Black drivers are employees of black car cab companies? Does that factor into this? My impression was that this was more about UberX than Uber Black

ElComradio6• 11 years ago

There are a lot of people who view jobs as things that are given to someone rather than a free agreement between two parties (cue "power imbalance" objections); extending this out is how you end up with nonsense like businesses owe the rest of us because we allow them to produce products or services and turn a profit.

So the Uber hate comes about because the idea is they are cheating. The drivers' POV is not considered; Uber holds Job Giving Magic and they have to be fair with that power. Proving a service that is in demand is not enough- They have to constantly thank us that we permit them to offer us their service. That's the idea.

s73v3r39• 11 years ago

No. Just no. Those who consider jobs to be things that are given to someone tend to be the types that believe that the company should be able to do whatever they want.

And a free agreement between two parties really cannot be reached with such a power imbalance. How many Uber drivers are able to negotiate on the cut that Uber takes of the fares?

And no, providing a service that is in demand is not enough. Just because their service is in demand is no reason whatsoever to not comply with the law.

s73v3r39• 11 years ago

If you ignore literally everything about their business, sure.

tomasien5• 11 years ago

I'm curious to read this argument. For all the hand wringing over Uber drivers as 1099 workers, they seem to be the very definition of contractors. They provide their own equipment, keep their own hours, NEVER have to work if they don't want to and 0 consequences for working or not working specific hours, etc. What is it about them that makes the employee like? Anyone know?

Edit: it appears that the critical factor they considered was whether or not the driver could have operated their business independently of Uber. They said they could not. They also cited the fact that Uber controls the way payments are collected and other aspects of operations as critical to showing employment. http://www.scribd.com/doc/268946016/Uber-v-Berwick

ChuckMcM• 11 years ago

I haven't read it but perhaps they ran afoul of the 'same manager, same job' over 6 months which tripped up Microsoft?

majc2• 11 years ago

I've had a quick read, the argument seems to be that because the driver is needed to fulfil Uber's rides that they become indistinct from Uber as a business itself; so they're employees.

They make some references to Case law for a Yellow taxi case back in 1991. (at least that was my reading!)

kohanz3• 11 years ago

Essentially: "No drivers, no Uber". Makes sense.

Navarr• 11 years ago

I would imagine that Uber would argue that it's businesses isn't providing rides, but connecting people who need rides to people offering rides.

But I think the Cali court may have had the right of it by going "that's bullshit."

meragrin2• 11 years ago

What's the difference between a McDonald's franchisee and an Uber employee? This ruling would seem to indicate a franchise "owner" is nothing but an employee of McDonald.

foobarqux2• 11 years ago

I'm curious to read this argument. For all the hand wringing over Uber drivers as 1099 workers, they seem to be the very definition of contractors. They provide their own equipment, keep their own hours, NEVER have to work if they don't want to and 0 consequences for working or not working specific hours, etc. What is it about them that makes the employee like? Anyone know?

The ruling is embedded on the page.

The case law they cite: "In addition, even though there is an absence of control over the details, an employer-employee relationship will be found if the [Defendants] retain control over the operation as a whole, the worker's duties are an integral part of the operation, and the nature of the work makes detailed control unnecessary."

tomasien5• 11 years ago

Thanks it wasn't at first, gonna read it now.

vonklaus• 11 years ago

I think the GP was looking for a little color on the 21 page legal document. Without legal expertise, quite difficult to understand I would imagine. Which is what the GP inquired after.

sk5t• 11 years ago

Just wondering, are exotic dancers then also considered employees under California law?

matt4077• 11 years ago

The document is embedded in the article and answers all questions. I can't copy&paste, but the main argument seems to be an existing legal theory that says s/o is an employee if they perform an "integral part of the business" of their employer. There's a taxi corp precedent and pizza delivery is also mentioned.

mtviewdave• 11 years ago

They provide their own equipment...

The ruling points out that this isn't as important as it appears. The example given in the ruling is that of a pizza delivery person. A delivery person is considered an employee of a pizzeria even if they are required to provide their own car and pay for their own gas and insurance.

Also, Uber provides drivers with an iPhone (though they don't have to use it).

pmorici• 11 years ago

They don't provide the phone for free. They charge a weekly fee for use of the phone.

CPLX11• 11 years ago

I read the whole thing. There are a couple relevant sections but this one stands out to me as the best succinct summary of the argument:

"Plaintiff's car and her labor were her only assets. Plaintiff's work did not entail any 'managerial' skills that could affect profit or loss. Aside from her car, Plaintiff had no investment in the business. Defendants provided the iPhone application, which was essential to the work. But for Defendant's intellectual property, Plaintiff would not have been able to perform the work."

That's a pretty solid line of reasoning, to be honest. Note that for those unfamiliar with the subtleties of legal jargon, the words "but for" have a specific meaning that relates to causality. In other words that last sentence roughly translates to "if not for the existence of the iPhone app there would be no distinct or independent business here."

In addition, earlier in the ruling they address the fact that mere ownership of a car has historically not been considered the same thing as owning specific "tools" required to perform a job, and it cites the fact that previous precedent for delivery drivers that they are employees, and merely owning the car and paying for gas does not change that.

foobarqux2• 11 years ago

I don't think "but for" is legal jargon or has any special meaning in law, apart from the normal English meaning.

italophil• 11 years ago

I don't follow the argument that the driver can't affect profit and loss. Every driver can decide when and where to drive, and these two factors have a considerable impact on the income.

phn• 11 years ago

Can't the same driver provide rides using any other app besides Uber? Lyft, or some other guys that show up? He could have all the apps installed and hop between them, right?

aembleton• 11 years ago

If they had to pay for the iPhone app, then they would have made an investment into the business. If a rival came along, then they could work without the need for Uber.

zekevermillion2• 11 years ago

politics

nemo44x8• 11 years ago

http://www.dol.gov/whd/regs/compliance/whdfs13.pdf

I think there's a very good argument for Uber having to treat the drivers as employees. They are dependent on Uber and Uber sets the amount they will earn. They would more likely be contractors if the drivers set their own rates and Uber would choose who they wanted to drive. Doesn't Uber also try to restrict who they can drive for too? Additionally, Uber's business relies entirely on the labor of the drivers. Uber also supervises the employees in-part by the rating system.

In terms of buying their own equipment - this is not an uncommon thing in many trades. Mechanics have to buy their own tools. Many machinists buy their own tools.

Truth is there is a lot of gray area here but I can see interpretation both ways. I do hope the drivers in California take this opportunity to organize as quickly as possible and begin collective bargaining with Uber.

I'd set Uber's value at less than one billion if this happened.

yuncun• 11 years ago

I'd set Uber's value at less than one billion if this happened.

I think that would be a bit of an overreaction.

realusername2• 11 years ago

In my own opinion, the only reason Uber drivers are contractors is because it's cheaper for Uber, there is no other real reason behind this one. Their internal policies regarding drivers are acting like they are employees anyway, they don't even decide of their price. Otherwise where is the limit between employee and contractor ? Just every company you see could switch all their employees as contractors to reduce their costs.

spacecowboy_lon• 11 years ago

Control and Substitution are where the main issues are

rada2• 11 years ago

They [...] keep their own hours, NEVER have to work if they don't want to and 0 consequences for working or not working specific hours.

Not true. I know someone who drives for Uber. Just last month, he was suspended because he did not want to drive during low-demand hours (when he literally loses money). Uber drivers are, in fact, required to (a) work when they don't want to and (b) work specific hours.

dnautics10• 11 years ago

I've heard a lot of termination notices from Uber, but that doesn't sound right. Are you sure he wasn't turning down rides from outside of surge? Uber doesn't like it if you have a low acceptance rate. If anything, Uber wants you to work when there's surge to help drive prices down. Also sometimes Uber just makes shit up when the real reason for termination is something else. (Low rating, safety)

pbreit15• 11 years ago

I've driven for Uber (and Lyft) and have NEVER heard of a policy like this or heard of such a thing happening.

tomasien5• 11 years ago

You may want to get some clarity on this, this is not a policy Uber or Lyft have in place.

ThomPete3• 11 years ago

Considering that Uber eventually is going to replace them all with self driving cars I think it's only fair that the people who help making Uber so valuable gets part of the spoils of being in a company that grows this fast. I am assuming this also means healthcare.

dylanjermiah11• 11 years ago

I think it's only fair that the people who help making Uber so valuable gets part of the spoils of being in a company that grows this fast

They get compensated via driving. Which is why they drive in the first place.

Why forcibly stop people consensually partaking in an activity? It's amazing how far away bureaucrats can tell others what's best for them.

bdcravens2• 11 years ago

Then remove the tips restriction.

hiou4• 11 years ago

Because in an economic downturn an enormous 1099 based workforce would cause serious shock to the economy as they do not qualify for unemployment benefits to smooth the transition as it did in the last downturn. For examples, take a look at what happened in economic downturns prior to the creation of said benefits. It's a lot more complicated than libertarian idealism unfortunately.

stevewilhelm• 11 years ago

Actually, the citizens of California enacted the laws; the bureaucrats are just enforcing them. Uber has the right to appeal if they feel the bureaucrats are enforcing the laws incorrectly. The judicial branch reviews Uber's complaint and will decide one way or the other.

Democracy; it's a pretty nifty system.

lmm• 11 years ago

Because the employer-employee relationship is not an equal one. We've seen the race to the bottom that happens in the absence of labour regulations.

ThomPete3• 11 years ago

If only it was that simple.

ThomPete3• 11 years ago

The fact that Uber determines the price and state of the car etc for them they are by all definitions in my book employed.

__z6• 11 years ago

It's amazing how far away bureaucrats can tell others what's best for them.

It is absolutely amazing how people of today totally ignore history and historical context. It has been years and years of struggles to enact labors laws to give employees some very small amount of power in the extremely unequal employee/employer relationship. You're acting like the time of The Jungle and the Triangle Shirtwaist Factory fire were the good old days until pesky governments got involved and ruined everything.

The US, comparatively, has labor laws that don't give much power to the employee (see: at-will employment).

s73v3r39• 11 years ago

That's not compensation. A job is not compensation.

And just because it's "consensual" doesn't mean that it's not against the law. Otherwise should McDonalds be able to circumvent health codes and minimum wage because it found people willing to work for that? Of course not.

emodendroket7• 11 years ago

Hey, these children are working in factories of their own volition! What's the problem?

dragonwriter9• 11 years ago

Why forcibly stop people consensually partaking in an activity?

There wouldn't be an issue here if there wasn't a dispute between the parties involved in the activity.

aikah5• 11 years ago

Considering that Uber eventually is going to replace them all with self driving cars

Definitely not going to happen in the near future.in 5/10 years maybe, but it looks like Uber is racing to make as much money as possible before the legislator cracks down on it. If the the decision of the commission is confirmed, they'll have to change their business model ASAP. They can do it, they have a shitload of money.

nakovet• 11 years ago

Also with "shitload" of money it's easier to hire lobbyists.

codegeek• 11 years ago

Isn't Uber concept similar to AirBnB ? DOes this mean AirBnB users are also at risk of being classified as employees of Airbnb ? Uber, you drive your own car. Airbnb, you rent your own apartment.

jonwachob91• 11 years ago

And sellers on eBay too...

Shivetya• 11 years ago

well it depends, some taxis in California are union, TPAC pretty much hates Uber, so what better way to kill the competition. So do hotel staff unions feel threatened by AirBnB? doubtful, the numbers are just to small. The threat to AirBnB is politicians who want tax money

cvburgess• 11 years ago

Uber customers are paying the driver for a service, AirBnB customers are renting an asset - they break down differently from my understanding of the law but IANAL

ceejayoz5• 11 years ago

I'd say no. If AirBnB hosts provided housekeeping during the stay it'd probably be comparable. AirBnB's business model is closer to a rental car than a driver service.

acveilleux2• 11 years ago

I wouldn't think so. In AirBnb, the hosts retain control over availability, pricing and make decisions. In addition, while you use AirBnb to book, you book from a person (moral or physical) directly.

In essence, AirBnb is just a broker.

With Uber, you don't rent Wissam's driving services for 20 minutes or hire Samantha to pick you up at SFO. You hire Uber and they dispatch a faceless anonymous cog.

jasonlotito• 11 years ago

No. AirBnB, from my understanding, doesn't require AirBnB users to provide X features. If AirBnB required users to offer high-speed internet, a personal TV, and a separate way in and out, then you start going down the path Uber went, which is part of what caught Uber up here.

For Uber to fall into AirBnB status, you'd be able to rate drivers, and drivers could request to pick you up, and you'd choose a driver amongst those available. That's not what happens. Uber would have less control.

There is much more involved here, but the decision is fairly easy reading.

abandonliberty• 11 years ago

Nope, the article shows otherwise. For example: https://news.ycombinator.com/item?id=9732231

4-6 are madly different for airbnb than Uber:

4) Uber alone sets prices, and tipping is discouraged, so there is no mechanism for driver (as "contractor") to set prices. 5) Plaintiff driver only provided her time and car. "Plaintiff's work did not entail any 'managerial' skills that could affect profit or loss." 6) Drivers cannot subcontract (presumably negating Uber's position as a "lead generation" tool for contractors).

AirBnB is facing an entirely different challenge - residential vs commercial zoning, hotel taxes, impact on the normal rent market, etc. I'm seeing laws coming up either seeking to regulate & tax them as hotels, or outright ban them as in santa monica: http://www.npr.org/sections/thetwo-way/2015/05/13/406587575/... Clearly a residential rental market isn't sustainable when you can easily earn at least double with short term rentals.

mcintyre1994• 11 years ago

I think no on the basis that Airbnb hosts set their own price.

That said I'd be interested to know the break down between host involvement/room etc and "entire place" because Airbnb seem to have sold a lot on the host element and there's arguably a major commitment to the guest by a live in host. Also things like superhosts [0] which clearly aren't employees but come a bit closer to blurring the lines.

I think the ebay seller analogy mentioned might be best though - Airbnb hosts set the price freely, approve/reject at will, can make individualised offers, earn trust and Airbnb - like ebay - call out without employing (and supposedly without endorsing) highly trusted hosts.

[0] https://www.airbnb.co.uk/superhost

revelation2• 11 years ago

Renting is not a job.

hiou4• 11 years ago

There is a fair amount of case law in regards for drivers as opposed to other professions. Taxi's, pizza delivery, trucking etc. I'm not sure how or if this flattens out to other sharing economy type businesses.

s73v3r39• 11 years ago

They're similar in that they're both poster children of the "sharing economy" schlock. That's about it.

mayneack2• 11 years ago

This makes all the R&D into driverless cars worth it. Driverless cars can't be employees.

jkyle2• 11 years ago

I'm not sure the uber contractors would think that's a benefit.

gegtik• 11 years ago

*employees

josefresco4• 11 years ago

Exactly. This is the equivalent of Netflix mailing DVD's and transitioning to streaming. If Uber can pull it off they'll survive the regulatory assault.

cehrnrooth• 11 years ago

Not necessarily. As other people have pointed out, Uber's business model, margins, and valuation are based on shifting their costs onto their drivers (especially the capital costs of vehicles).

Switching to driverless raises the question of who owns the vehicles they'll be using, and if they're the ones owning the vehicles in their fleet that represents a major shift in capital expenses and ongoing maintenance costs.

pgeorgi• 11 years ago

"regulatory assault" is a funny term to apply to the Uber situation where Uber ignores existing regulatory frameworks only to then whine when regulators do what regulators exist for.

s73v3r39• 11 years ago

How are they going to survive actually having to bear all the liability and maintenance costs that they're currently shoving off onto their employees?

phpdeveloperfan• 11 years ago

I'm surprised this happened, though I feel like it'll be appealed heavily.

todd3834• 11 years ago

I was asking about this a little while back and no one chimed in: https://news.ycombinator.com/item?id=9551467

beering• 11 years ago

Skimming through the doc, court findings are:

1) Drivers providing their own cars is not a strong factor - pizza delivery employees also drive their own cars.

2) Uber "control the tools that drivers use" by regulating the newness of the car.

3) Uber exercises extensive control over vetting and hiring drivers and requires extensive personal information from drivers.

4) Uber alone sets prices, and tipping is discouraged, so there is no mechanism for driver (as "contractor") to set prices.

5) Plaintiff driver only provided her time and car. "Plaintiff's work did not entail any 'managerial' skills that could affect profit or loss."

6) Drivers cannot subcontract (presumably negating Uber's position as a "lead generation" tool for contractors).

Sorry that these are out of order. Look on Page 9 of court documents for full text.

heimatau• 11 years ago

Thanks for the breakdown. Sounds like a solid explanation. I wonder what other states/nations will do. This could affect the business model of Uber dramatically by increasing their costs and liabilities.

djm_• 11 years ago

Out of all those,

Uber alone sets prices

is the killer one. I guess the only solution to that would be to make it more of a market where drivers could choose their rate to compete.

nemo44x8• 11 years ago

Exactly. Independent contractors set their own pricing. If Uber would allow the drivers to set their rates and then "hire" who they felt was best for them (and then markup the price to the customer for their own profit) only then would the drivers be in control of payment.

This is how every other independent contractor works.

wiredfool• 11 years ago

Taxis also have set prices, though I think that Uber would want avoid that line of reasoning.

arebop• 11 years ago

We know how to run fast auctions, so this doesn't seem hard to solve. #5 Managerial Skills seems harder to work around.

theklub• 11 years ago

That would be really cool, a ride marketplace that lets you choose the driver based on rate (and or other factors). Does that exist already? If not, it should.

pbreit15• 11 years ago

So would merely allowing tipping (which it absolutely should do either way) be sufficient?

How about Sidecar's approach of actually letting drivers price their services (to some degree)?

voidlogic• 11 years ago

I wonder about allowing drivers to bid on taking customers/routes?

prawn• 11 years ago

While that might appeal to some people (competition, etc), I think it would seriously weaken Uber from the perspective of marketing. Consistency of experience or pricing has been a huge driver for many businesses (Walmart, McDonalds, etc).

alasdair_• 11 years ago

How does this differ from the idea that if I want to get a fence built and I call up three fencing contractors and tell them "I am paying $1000 for a fence", I'm effectively setting prices.

It's not as it uber is the only employer - most drivers I've seen use lyft as well and choose between them at will.

marincounty2• 11 years ago

The ever changing vechicle requirement has always has always baffled me? 2008 four door! Then 2000 when driver enrollment drops? The Uber fancy cars must be black on black? People were going into debt in order to make Uber money.

(I am so glad the government stepped in on this one.)

pbreit15• 11 years ago

Sidecar does this and it worsens the user experience for the most part. If this really is the key, I wonder how much lee-way Uber would need to offer to get over the hurdle. There are obviously ways it can offer pricing control but effectively get everyone at or near the desired price. Which I suspect would not fly.

panarky• 11 years ago

Here's California's guidance to taxi companies on how to classify workers.

http://www.edd.ca.gov/pdf_pub_ctr/de231tc.pdf [PDF]

Cites precedent in Santa Cruz Transportation v. Unemployment Insurance Appeals Board. Here's what's relevant to Uber:

1) Drivers could be terminated if they did not maintain good relations with the public.

2) The company required the drivers to account for the fares they received.

3) The work did not require the expertise of a skilled professional.

4) The drivers depended on the company’s dispatcher for their livelihood.

5) The drivers did not set their own rates, but were paid according to the number and distance of fares they carried.

6) There was no evidence of entrepreneurial risk.

7) The customers called the company and the company arranged for the performance of the services.

8) The drivers did not advertise their services.

9) The driver’s work was part of the regular business of the taxicab company.

baq• 11 years ago

such arguments would also work in some EU countries where Uber is doing business or is about to.

nulagrithom• 11 years ago

Hmm, doesn't seem too far off from the trucking industry (when contractors are employed). I definitely know of at least one company that fits each of the bullet points above.

fillskills2• 11 years ago

Thanks, now it makes sense to me. Lot of these points ring true, specifically 3 and 4

shawneric• 11 years ago

As an Uber Driver I find that there are a few big problems for us that simply come down to the fact that Uber as a corporation is a selfish and greedy and doesn't really care about the drivers:

1. We're not allowed to receive tips. 2. They take 20% of our commission anyways. 3. Who gets tipped here? Uber does, not me. 4. I use my own car, quite frequently, and unlike a pizza delivery guy, the valuable that I'm transporting is another person's life. 5. If I get into an accident, my insurance screws me. 6. I don't get paid enough.

ahallock9• 11 years ago

Uber as a corporation is a selfish and greedy

And you aren't self-interested or greedy when you find the opportunity?

And why do you work for a company that is so terrible? Find a new occupation or work for a competing service.

JonFish85• 11 years ago

"If I get into an accident, my insurance screws me."

Well, unless you purchased specific insurance to cover the cost of driving your car for business use of transporting people.

makeitsuckless• 11 years ago

7. If you get into an accident, you're screwing your passenger(s).

Yes, the valuable you're transporting is another person's life, and you're doing it in such a way that circumvent all regulatory safeguards to protect that.

Don't make Uber out to be selfish and greedy when you're doing the same.

superuser2• 11 years ago

Why is tipping the baseline expectation? I personally use Uber explicitly to avoid tipping.

ytdht• 11 years ago

if you loose money Ubering, don't do it, unless you do it for another reason

zaroth5• 11 years ago

I can see some pretty clear holes in that reasoning. If you spend even a few minutes investigating whether you should actually drive with the Uber app, you realize there's an incredibly complex set of calculations to understand profitability, what kind of car to lease, how much to invest in passenger extras to boost your rating, associated "hidden" costs to factor in, etc.

Drivers absolutely choose their tools and invest heavily in those tools which directly impact their profitability and their ratings. Drivers absolutely employ managerial skill in deciding what hours and how many hours to work and what areas to drive in to get the best passengers and best ratings.

For example, the last Uber ride I took, the driver explained how they specifically avoid driving during certain time frames and certain locations because the fares are more likely to damage their tools, or leave poor ratings, or start yelling at them randomly.

Uber exercises extensive control over vetting and hiring drivers...

For a pretty lose definition of 'extensive'. Nothing compared to a typical job interview and vetting process that a real hire goes through. How many dollars per contractor does Uber spend validating drivers? Probably averages to something like $25 - $50. There's a validation process, certainly, but it's hardly a "vetting" process.

But for Defendant's intellectual property, Plaintiff would not have been able to perform the work

This is also absolutely not true. There are a number of different apps which would allow the plaintiff to perform substantially the same work using the same tools and the same business plan. But for using the Uber app, they would not be able to pickup Uber fares, obviously, but that's a tautology. They certainly would be able to perform the same work though. Or they could write their own app and perform the same work (obviously fighting the network effect, they may not succeed, but it's certainly possible).

The fact is that plaintiff can drop Uber on Monday and be driving for Lyft on Tuesday, or even drive for both concurrently and arbitrage between the two apps.

Personally I think this ruling goes too far, but it is a close call and it will be very interesting to watch this develop. The chicken farmer analogy is a good one. If Uber drivers are employees, it actually breaks a fairly large number of well established business models. I think this has more to do with push-back against Uber specifically than technical compliance with the law.

therobot244• 11 years ago

The fact is that plaintiff can drop Uber on Monday and be driving for Lyft on Tuesday, or even drive for both concurrently and arbitrage between the two apps.

I keep seeing this, why do you believe that because people are using more than one app it makes it impossible for them to be employees? Why can't someone work more than one job and be considered an employee of both?

codecamper3• 11 years ago

I don't think it is so easy for a driver to switch. Uber could easily penalize drivers that are not readily available.

KingMachiavelli• 11 years ago

Could this ruling be used to argue that the farmers in poultry raising contracts with Tyson, Poultry House, etc to raise chickens owned by Tyson are also employees?

1) Chicken farmers own and provide equipment that (2) the parent company requires and has set standards.

3) The contractee chooses farmers based on some criteria(not certain, but I would assume it's fairly extensive).

4) Contractee sets prices; the farmers do compete with each other for the best pay based on quality, but the farmers do not set prices. Chicken quality could be seen as equivalent to Uber's pay based on hours/distance driven.

5)Chicken farmers do possess skills that influence Tyson's profit or loss, so this point differs.

6)I'm very much doubt that the farmers can subcontract.

7) The chicken farmers are vital to the contractee's business; the profit of Tyson and other companies that use poultry contracts depends primarily on the supply and quality of the chickens raised by the contracted farmers.

Overall, Uber drivers and contracted chicken farmers seem fairly similar though the chicken farmers may conform slightly more to the traditional contractor role.

testingonprod• 11 years ago

That's a very very interesting argument to be made.

mattmanser• 11 years ago

The farmers can subcontract, they can hire extra hands and don't have to do the work themselves.

jahewson• 11 years ago

6) is critical, you can't just brush it off: someone who can hire other people to perform their labour is generally not an employee. What you're claiming applies to pretty much any fixed price contract, and it should be obvious that most such contracts don't result in an employee relationship. ALL of the necessary criteria must be met for that to happen - not just some.

e.g. I could be paid by a farmer to to work on such a chicken farm (presumably many people are), but I can't be paid by an Uber employee to cover their shift. That is a critical difference.

marincounty2• 11 years ago

As to 1, I cannot find anything on Independent contractors moving livestock? I went to Purdue, and all truck drivers look like employees? Maybe I missed something?

http://perdue.balancetrak.com/lists/103/jobdescription.aspx?...

(Edit--I did find some vage(pretty much state regulations) at Tyson, but if anything they don't regulate their independent farmers enough?)

patrickg_zill• 11 years ago

I don't know if it is a distinction that matters, however, I was under the impression that Tyson et al., SELL the chicks at a set price to the farmer; then, offer to buy back all the chickens that are X days old after that, that meet their standards, whatever they are.

This is Tyson's overview of their contracts: http://www.growwithtyson.com/overview-of-contract-poultry-fa...

XorNot• 11 years ago

I hope so. The practices of those companies suck and are terrible for farmers.

covercash• 11 years ago

Here's the segment John Oliver did on chicken farming: https://www.youtube.com/watch?v=X9wHzt6gBgI

stcredzero• 11 years ago

So the major factors that let many taxi companies maintain that drivers are contractors are subcontracting and tipping?

smohnot• 11 years ago

Sidecar has a different approach to #2,#4, and #5... wonder if that will work in their favor on this ruling #2: They just aren't as strict as Uber (can't remember specifics now but my friends 2003 Volvo qualified for Sidecar but not for Uber #4: Sidecar has a marketplace component where drivers bid for jobs #5: It is managerial to choose how to price a job

pbreit15• 11 years ago

Uber's take: http://newsroom.uber.com/2015/06/clcstatement/

I think the "ruling" is pretty silly. The Uber model is reasonable. Maybe some tweaks are needed but from a high level it's a legitimate approach.

leelin• 11 years ago

Fascinating! RentHop operates in an industry where almost everyone is an independent contractor on 1099: real estate agents.

1.) Agents are mandated to use their company logo and brokerage info in all ads, both by NYC law and by the company. Some companies have strict dress code requirements when meeting clients.

2.) The brokerage firm definitely controls the tools used, from internal databases to marketing syndication tools to in-house CRM systems.

3.) The brokerage firm has vicarious liability over the actions of their agents (also mandated by NYC law). For that reason the brokerage firm has a huge incentive to vet their employees.

4.) Agents generally have very little discretion if any on the commission charged. The brokerage firm sets commission policies and any deviations must be approved by the managing broker or associate broker.

5.) I highly disagree with the court ruling here [edit: administrative ruling?]; my understanding is Uber drivers are free to turn off the Uber app and operate without the source of leads generated, and that certainly impacts PNL (if that's not the case, agents still can't simply ignore leads forever without getting fired). Uber doesn't mandate when or where the work is done. Same with agents, the brokerages generally can't impact when or where the work is done, with the exception of some mandatory company wide meetings. Firms tend to provide desk space and equipment.

6.) An agent hired by a brokerage firm may not "subcontract" by having a friend show up in his place and conduct the work, even if the friend is a licensed real estate agent -- the brokerage, assuming vicarious liability for the actions of all their agents, would not allow it. This is different from an overworked agent asking a colleague to take over clients, both are still agents of the brokerage.

dragonwriter9• 11 years ago

A mandate imposed on contract relations by law (even if echoed by company policy) is often different in considering the employee/contractor distinction than what not imposed by law.

Additionally, New York law is not California law, and 1099 vs W-2 distinction is a federal tax law distinction, which is distinct from California, New York, or even federal labor law employee/contractor distinctions (though some of the factors that are relevant may be similar between those different sources of law.)

I highly disagree with the court ruling here

There is no court ruling, its an administrative ruling that is being appealed to a court.

SilasX• 11 years ago

Strange, it seems like that would be a clear case in favor of them being employees.

pbreit15• 11 years ago

It's not a "court". It's a non-binding opinion from one state's pro-employee commission in one person's situation. It's very close to meaningless.

Dwolb2• 11 years ago

This is a good ruling for workers, but maintains society's status quo. That is, Uber has realized significant margin gains by pushing all risk of carrying passengers and car maintenance onto its drivers. Therefore, this risk is transferred to either drivers (who are on average mot equipped to handle this risk) or insurance companies (who pass the costs on to their entire insurance pool) and not borne directly by Uber nor its customer base. By classifying drivers as employees, risk becomes better aligned.

Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits. This ruling will postpone a public discussion on the role of employer-based insurance and benefits.

dylanjermiah11• 11 years ago

This is a good ruling for workers,

Is it? If this were to remain, the large majority of the drivers will not have a position to fill. It will not be viable.

That is, Uber has realized significant margin gains by pushing all risk of carrying passengers and car maintenance onto its drivers

No one has 'pushed' anything. Drivers are consensually agreeing to drive because the pay they receive values their time.

Therefore, this risk is transferred to either drivers (who are on average mot equipped to handle this risk)

How are they not equipped?

Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits. This ruling will postpone a public discussion on the role of employer-based insurance and benefits.

What society needs is less people forcing them to do what others think is best.

WaxProlix3• 11 years ago

Found the American libertarian. You hit all the talking points in a few sentences; now that's efficiency the government can only dream of!

eli4• 11 years ago

Not everyone agrees with you, but I think there's a good debate to be had about if and how to update laws to accommodate new business models.

Operating in a legal gray area isn't a good solution for drivers, riders, or Uber.

mootothemax2• 11 years ago

Drivers are consensually agreeing to drive because the pay they receive values their time.

I just want to make sure that I understand you fully:

You believe that Uber and its drivers negotiate as equals?

realusername2• 11 years ago

Is it? If this were to remain, the large majority of the drivers will not have a position to fill. It will not be viable.

I guess you found the main point. If Uber would operate like a normal company, with employees, proper insurance and risk coverage for everyone, it might not be profitable.

scarmig2• 11 years ago

No one has 'pushed' anything.

Oh, come on. Would you accept the phrasing, "Uber has shifted risk away from themselves and toward its drivers"? Which 99% of English speakers would read as equivalent to "Uber pushed risk to its drivers."

That's just factual, not some hidden communist rhetoric.

sp3326• 11 years ago

If this were to remain, the large majority of the drivers will not have a position to fill. It will not be viable.

That's correct, it's probably not viable.

How are they not equipped?

Most personal car insurance policies don't cover operating your car commercially. In addition, each driver would be required to conform to ADA rules (which apparently not all of them were doing https://arstechnica.com/tech-policy/2015/04/blind-users-with...) and the penalties for noncompliance are higher than most people can afford. And those aren't the only rules they would be responsible for - the risks are just really high!

aikah5• 11 years ago

It will not be viable.

Sure it would, why wouldn't it? It's not like Uber is the first taxi company that has employees in the history of USA. Why do you think it would make Uber not viable?

krisdol4• 11 years ago

Is it? If this were to remain, the large majority of the drivers will not have a position to fill. It will not be viable.

It's simple supply and demand. The demand for easy-to-book, gps-enabled car rides is there. If uber cannot accommodate, someone else will.

No one has 'pushed' anything. Drivers are consensually agreeing to drive because the pay they receive values their time.

People undervalue their labor in order to get the gigs they need to make money. Laborers consensually agreed to unsafe, 18 hour factory work back in the day, and indentured servants consensually agreed to years-long contracts of, effectively, their life.

If the only reason uber competes is due to price difference gained by eschewing labor laws and benefits, then of course drivers are agreeing to drive with them -- there is no other option for their labor when the competitors that provide benefits have to shrink operations due to demand shifting to illegally-sourced labor. That said, I don't think Uber is used due to their price so much as their technology.

How are they not equipped?

I doubt many will afford commercial vehicle insurance, health insurance, 401Ks, in addition to substantially increased maintenance costs covered out of their own pocket. It will certainly make driving for uber undesirable. Of course, Uber covering these costs is far cheaper overall, and the price change would likely be negligible.

What society needs is less people forcing them to do what others think is best.

This is just a stupid talking point.

s73v3r39• 11 years ago

No. Just no. This idea that every single thing like this has no coercion needs to stop. You cannot possibly make the argument that both the driver and Uber are on the same level of power in that relationship.

dnautics10• 11 years ago

I'm a Lyft driver and this is a TERRIBLE decision for me, personally. Luckily, I will be quitting and launching my own company (a biotech) soon. The irony is that if this ruling sticks and Uber and Lyft lose significant business, business will migrate to taxis, which have an even more exploitative (but definitely legal) relationship with their drivers!!

johndevor• 11 years ago

It's as-if... this were politically motivated or something... hrm... tin foil hat?

Daishiman3• 11 years ago

Or, you know, an actual platform that does connect freelance drivers to passengers and allows them to set the conditions for the fare in a legal manner?

geoffbrown2• 11 years ago

" Therefore, this risk is transferred to either drivers (who are on average mot equipped to handle this risk) or insurance companies (who pass the costs on to their entire insurance pool) and not borne directly by Uber nor its customer base. "

This is really revolting to me. And outlines what my intuition feels is wrong with most SV 'disruption'. Its just so immature. While I don't agree with your later sentiments, the risk shifting is dead on.

kevinpet• 11 years ago

It's also delusional and betrays a complete lack of economic understanding of insurance. Uber is paying for insurance. The drivers should be paying for commercial insurance. It should be all priced in. If the drivers aren't getting commercial insurance, then Uber should be verifying it. If the insurance companies aren't pricing it right, then go talk to the insurance commissioner (i.e. the government agency in charge of screwing up this market).

s73v3r39• 11 years ago

"Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits. This ruling will postpone a public discussion on the role of employer-based insurance and benefits."

This ruling will have quite little effect on that conversation. The political situation in this country has already decided that conversation shouldn't happen yet.

dcosson• 11 years ago

"Now, what society is really missing out on is an opportunity or reason to transition from employer-based benefits to government or society-based benefits."

This was my reaction as well. If Uber drivers feel that they don't have access to typical benefits like good healthcare, life insurance, disability insurance/workers comp, etc. then it would seem that one solution is to make these things easily available to people who are not full-time employees. And that would help millions of non-Uber citizens as well.

Another solution is what the court is ruling here, to force Uber to take on the complexity and cost. I can't see how this could actually be better for anyone involved in the long run. Uber will just raise their cut of the fares to cover the costs of benefits so drivers won't actually take home more money. I suppose it'll get a lot harder to fire drivers so maybe some will benefit from that?

In any case, I honestly feel like it would be more reasonable if this driver could sue the state of California for not making benefits easily available to 1099 workers. Hopefully Obamacare will open up the Overton Window[0] and this is the way things are heading in the future

[0] https://en.wikipedia.org/wiki/Overton_window

dragonwriter9• 11 years ago

Another solution is what the court is ruling here, to force Uber to take on the complexity and cost. I can't see how this could actually be better for anyone involved in the long run.

The ruling here isn't a long-term solution, its an immediate (and retrospective) ruling on rights under current law.

Changing the law to provide a different model is a forward-looking, longer-term approach, and not the job of the court or labor commission. That it might be better if taxes -- almost certainly new taxes, including on capital income -- shifted the model of support from employers supporting their employees for certain basic needs to the tax base as a whole supporting the citizenry at large for those needs, that doesn't create a license for employers not meeting their obligation under existing law until that new model is in place.

Dwolb2• 11 years ago

One hypothesis could be Uber can't raise their fares if there's significant competition and outside options. That is, if Uber were to take a higher margin cut, others would undercut be able Uber. Overtime, each competitor would be subject to the same sanctions and maintain depressed margins in the highly competitive market.

emodendroket7• 11 years ago

This ruling will postpone a public discussion on the role of employer-based insurance and benefits.

Of the many factors preventing that I think this ruling is a pretty minor one.

jkot• 11 years ago

Does it not complicate things for drivers as well? As employees they may have to tax entire income from Uber, including car expenses, maintenance etc..

breischl• 11 years ago

I believe you can still deduct work-related expenses. That's what Line 21 "Unreimbursed Employee Expenses" on the 1040A is for, if I'm reading the instructions correctly.

http://www.irs.gov/pub/irs-pdf/i1040sca.pdf

zekevermillion2• 11 years ago

surely Uber is prepared for this eventuality and has a strategy ready to go

acveilleux2• 11 years ago

The first of which is probably to appeal and stall as long and as far as the law allows.

aikah5• 11 years ago

Oops ... here goes Uber's competitive advantage ...

prodigal_erik• 11 years ago

Have taxi companies managed to get a driver to actually show up when you call? I thought Uber's advantage was not being completely dysfunctional, even when they only had expensive town cars.

emodendroket7• 11 years ago

Yes, and so have livery services.

bdcravens2• 11 years ago

Won't this mean that every single "employee" covered by this will have to file amended tax returns?

facetube2• 11 years ago

...and potentially get thousands of dollars in employer-paid FICA and payroll tax back, assuming it sticks (which is a big if).

nemo44x8• 11 years ago

Just throwing a hypothetical out there. What if this sticks and the drivers decide to organize with a union and collectively bargain a living wage, benefits, etc?

What would be the value of Uber (and related businesses)? Would it stay in business even? How many VC's would lose fortunes over Uber going nearly to 0? Would this be the popping of what some suspect is a private equity bubble as the effects of this ripple throughout?

Regardless, it would be a very different business with a very different valuation.

mcafeeryan92• 11 years ago

My thought on this is that the current Uber valuation is related very strongly to the idea of their future worth, which is currently quite optimistic due to their self-driving car research. Uber without having to pay drivers at all is still the end-goal for them, so it may just mean that they need more capital investment in the short-term and investors may be happy to do so.

nemo44x8• 11 years ago

I don't believe self driving cars will be practical in the next 10 years. Not at the level Uber would benefit.

I don't understand why self driving cars are good for Uber. Uber is successful right now due to he network effect of their drivers. Once self driving cars are a reality you will see numerous offers for this service with all of them racing to the bottom.

Bigger fish like Apple and Google would be able to siege them and starve them out as pricing races to the bottom. Uber is valuable because of their drivers, not despite their drivers. In the age of self driving cars - Uber won't be able to compete.

s73v3r39• 11 years ago

If Uber can't survive when having to comply with the law, it shows that their company wasn't viable to begin with.

jellicle• 11 years ago

This was obvious from the beginning. There's really not the slightest doubt that all government authorities are going to classify Uber employees as employees, except perhaps a few that might be bribed/pressured into not doing so.

Uber controls every aspect of the business, from the fares charged (and how much profit Uber will take from each) to the route taken to the conditions of the vehicle to preventing subcontracting. It isn't even close or arguable. As the ruling points out, these people aren't independent drivers with their own businesses that just happen to have engaged in a contract with Uber, nor could Uber's business exist without them.

The short version:

http://www.irs.gov/uac/Employee-vs.-Independent-Contractor-%...

lnanek2• 11 years ago

Doesn't seem obvious at all to me since I know several drivers who do rides for several systems at the same time. How could they be an employee or three companies at once? They aren't, they are clearly contractors.

You can see multiple people stating the same here about driving for multiple services: http://qr.ae/7y7fv7

I think this is just another ruling by a clueless government that has no clue what is actually happening on the computers involved.

6d6b732• 11 years ago

Many people work for multiple companies, that's nothing new. Computers are just tools not some magical pixie dust.

cdcarter• 11 years ago

Many people work for multiple jobs at once. I've been a receptionist who codes for someone else at the same time, and I've been a crowd manager while doing email for my other job. Both were time sheet W2 employee relationships.

This isn't about computers whatsoever. This is about the requirements and business relationship between Uber and Uber drivers. The relationship does not allow Uber drivers to subcontract, negotiate prices, and had control over profit and loss. Uber drivers are employees.

therobot244• 11 years ago

How could they be an employee or three companies at once?

So by your logic i can't be employed as waiter at a restaurant and also be employed as cashier at a grocery store at the same time. Obviously i can't be scheduled for the same shift at both places, but with Uber, Sidecar, Lyft, etc your shift starts once you accept the rider and ends when you drop them off. You clearly aren't going to pick up an Uber rider while you have a Lyft rider in the car.

So what's the difference between the waiter/cashier scenario and the Uber/Lyft scenario besides shift length?

mmarklar• 11 years ago

You've never had two jobs at the same time? Thats life for a lot of people

s73v3r39• 11 years ago

"How could they be an employee or three companies at once?"

Many people have multiple jobs. Uber doing a poor job of making sure that one of their drivers is only working for them at the time doesn't matter.

Tycho• 11 years ago

Excellent point. This was the case for the last Uber cab I took.

I don't see the problem here. Customers like Uber. Drivers are choosing to use it. For some reason the government needs to wade in...

pbreit15• 11 years ago

I think mostly the opposite. I don't think the ruling holds tightly or sees broad copying.

No, Uber does not "control every aspect of the business". Specifically, it doesn't control when you work, where you work, how you work (obviously not the route taken), the conditions of the vehicle (beyond that it is legal), etc.

s73v3r39• 11 years ago

They control the important aspects of the business. They control the pricing, they control how the drivers work, they control the condition of the vehicle (can't have an old vehicle, must be newer), and they exert control over when drivers work by punishing those that turn down too many fares.

emodendroket7• 11 years ago

So if an office position has flex time you're an independent contractor?

You're wrong about the vehicle condition part and "how you work" is questionable (you have limits on how many fares you can refuse, for instance).

steven20122• 11 years ago

The ruling is not unexpected at all. After the ruling against Microsoft back in the 90s on contracting, it's pretty clear that a business needs to be very careful how they hire contractors, so that they don't become implicit employees. Google has to jump through hoops so that their contractors aren't considered employees (only work for 1 yr max, etc).

I'm curious how much this will affect Uber and what it will do to their business model. If I had to speculate, it would be that it becomes unprofitable almost instantly, but they do have a gigantic warchest, so maybe they can fight the ruling or figure out another way to classify their drivers.

Maybe they can advertise fares and jobs ("This person wants to be driven from SFO to Mountain View") and drivers bid on it like an auction. I wonder if that might change the equation? But then it means that drivers will have a lot more friction in the process.

sjg007• 11 years ago

They will do tips. They will do a time sensitive auction. They will set a minimum bid (by the customer).

hiou4• 11 years ago

Curious to see what the public markets will do in response. Nasdaq is taking a bit of a slide as we speak.

brentm• 11 years ago

This feels like an inevitability at their scale. Outside of the tech world it was always going to be hard to sell their labor pool as contract when put under the microscope.

c-slice• 11 years ago

Who is Rasier LLC? This seems to be some sort of shell corp for Uber's insurance.

encoderer2• 11 years ago

Drivers are just temporary anyway. Uber is going to be the company to beat when autonomous cars make Autos as a Service a huge business. I see that, and not some low-margin package delivery service, as the driver of their future growth.

nemo44x8• 11 years ago

Uber won't be able to compete in the age of automated drivers. Uber is successful because of their drivers, not despite them. The network effect of having the most drivers lets Uber maintain its dominance in the market. Autos as a Service will be a race to the bottom and there will be a smaller gateway to entry than there is now.

Uber is a bad investment.

icebraining7• 11 years ago

It's not a race to the bottom if you also control a non-commodity, like the software driving the car.

And it just so happens that Google has a large stake invested in Uber.

encoderer2• 11 years ago

You act like it's a big binary shift one day. But it's not.

Uber has massive consumer mindshare, and its still growing fast. When they start phasing-in self driving cars you will have a day where your UberPool ride to work was driven by a human, but your UberPool home happened to be an autonomous car.

Uber is building a brand as the go-to transportation service and that won't be displaced just because another company deploys a fleet of autonomous cars with their own app. Even if that company is Google. Sure, it's a competitive threat, and I have no idea if Uber will be a brand people know in 25 years. But in 5-10? I think they are positioning themselves for dominance as the provider of autonomous transportation.

louithethrid• 11 years ago

Ueber always was a desert flower. The field it disrupted was scheduled to vannish with automated cars anyway.

16bytes2• 11 years ago

Which is why it's one of the biggest investors of those automated cars. Investors see this and will continue to fund them.

Furthermore, their earning potential doesn't instantly vanish. They just compete with existing transportation companies on more even terms.

They have a vastly superior product; there's no reason why they won't continue to be widely successful.

toomuchtodo15• 11 years ago

Which is why it's one of the biggest investors of those automated cars.

No, Google is. Google has poured more money into self-driving car technology than even auto manufacturers and Bosch.

Furthermore, their earning potential doesn't instantly vanish. They just compete with existing transportation companies on more even terms.

Uber is nothing special. There is no stickiness. They are the Tinder of the mobility space. People will use whomever is the cheapest and meets their standard.

They have a vastly superior product; there's no reason why they won't continue to be widely successful.

Unless they're forced out of existence through legislation and taxation. It doesn't matter if you're a tech startup if you don't own the roads. Atoms != bits.

DannyBee5• 11 years ago

This should be 100% not shocking to anyone (including Uber, i expect). Given their recent executive hires, i'm sure they saw this coming, and already have an appeal strategy.

From a legal standpoint, riding the edge rarely works. Look at what happened to Aereo.

icebraining7• 11 years ago

Taxi companies have been riding it for decades.

DannyBee5• 11 years ago

This is not riding the edge at all.

This is explicit in the FLSA, see 29 U.S.C. §213(b)(17), which exempts (from overtime)“any driver employed by an employer engaged in the business of operating taxicabs.”

bsder3• 11 years ago

Aereo is a really bad example to cite since it looks very much like they were simply lying through their teeth rather than riding the tech edge.

DannyBee5• 11 years ago

???? AFAIK, they were playing the edge of the law, and lost.

yueq• 11 years ago

What are the impacts to Uber if drivers are employees?

titanomachy2• 11 years ago

The most important changes would be that

- Uber has to take on a lot more of the associated risks (in practice that means paying a lot more insurance)

- Uber has to pay benefits to their drivers and ensure that their hourly wages meet local minimums

EDIT: Or, Uber has to change the way it operates so that it can continue to treat its drivers as contractors.

s73v3r39• 11 years ago

Theoretically very little. There's a decreased profitability, but not much else. Presumably their tech was what set them apart, and so it shouldn't matter whether their drivers are employees or contractors.

In practice, their entire business model is built around externalizing all their costs and shoving them onto their drivers.

bickfordb• 11 years ago

If all California Uber drivers become employees, wouldn't Uber be on the hook for reimbursing past Uber drivers for all past vehicle expenses?

prostoalex3• 11 years ago

Why, even the pizza delivery jobs quoted in the decision do not reimburse vehicle expenses.

Shifting the expense burden to employer instead of employee creates wrong incentives, e.g. one can then choose to deliver on a Hummer instead of a Prius, because maintenance/fuel is paid for by someone else.

jussij• 11 years ago

The only problem I have with Uber is they get away with not having to compete on a level playing field.

I live in Sydney Australia and catch a fair few taxis.

That taxi diver I use has to pay many $100,000.00 to buy a taxi plate just to work (or work for someone who has bought such a plate), but the same Uber driver does not have such an overhead.

Also, that taxi has to pay insurance in case I'm injured while I'm in their cab, another cost the Uber driver does not have to cover with an insurance policy.

So government has to decide, does it want to eliminate those costs and make it a level playing field, making it an effective free for all.

But why politicians will never do that is because the first crash with the resulting insurance claim will bring the industry to it's knees and from that point on all hell will brake loose.

At present the politicians just don't want to make a decision because it is just a little too hard.

cosmolev• 11 years ago

So you have full control and it's up to you to choose whether you pay more for the being insured and ride with a plate or pay less and ride Uber.

Why do you want government and politicians to enter the game?

s73v3r39• 11 years ago

Except he doesn't, because there are more people on the road besides just him and the Uber driver.

See, this is what the libertarian types constantly forget: You are not an island. Your choices do not happen in a vacuum.

woah3• 11 years ago

Uber cannot be applauded enough for sidestepping the legalized monopoly and bribery of "plates" or "medallions".

bigdubs2• 11 years ago

There is a reason the cities regulate the number and type of cabs on the road; too many cabs leads to increased congestion being one reason. It is also important to license cabs and certify the drivers of said cabs. The main reason though, is so that there isn't a glut of taxi drivers chasing a fixed rider pool and ensures that drivers can make a decent living off taxi driving.

The plate/medallion system gets out of hand when non-driver entities (read, taxi companies) can own the medallions and buy large quantities of them and lease them out at a profit, driving up the barrier of entry.

s73v3r39• 11 years ago

Bullshit. Uber likes having those laws in place, so it can break the law and have an unfair advantage. If Uber had actually lobbied to remove those laws, then they would be deserving of applause.

ahupp• 11 years ago

" that taxi has to pay insurance in case I'm injured while I'm in their cab"

Uber pays for commercial insurance for it's drivers. See http://newsroom.uber.com/2014/02/insurance-for-uberx-with-ri...

grellas• 11 years ago

A few thoughts:

1. This is an appeal from a decision by a hearing officer of the California Labor Commissioner. Most of the time such officers spend their days hearing things such as minimum wage claims. Hearings do not follow the strict rules of evidence and are literally recorded on the modern equivalent of what used to be a tape casette instead of by a court reporter. Such hearings might run a few hours or, in a more complex case, possibly a full day as the normative max. The quality of the hearing officers themselves is highly variable: some are very good, others are much, much less than good in terms of legal and analytical strengths. In a worst case, you get nothing more than a pro-employee hack. The very purpose of the forum is to help protect the rights of employees and the bias is heavily tilted in that direction. That does not mean it is not an honest forum. It is. But anything that comes from the Labor Commissioner's office has to be taken with a large grain of salt when considering its potential value as precedent. Hearing officers tend to see themselves as those who have a duty to be diligent in protecting rights of employees. Whether what they decide will ever hold up in court is another question altogether.

2. Normally the rules are tilted against employers procedurally as well. When an employer appeals a Labor Commissioner ruling and loses, the employer gets stuck paying the attorneys' fees of the prevailing claimant on the appeal. This discourages many employers from going to superior court with an appeal because the risk of paying attorneys' fees often is too much when all that is at stake is some minimum wage claim. With a company like Uber, though, the attorney fee risk is trivial and all that counts is the precedential value of any final decision. It will therefore be motivated to push it to the limit.

3. And that is where the forum matters a lot. The binding effect of the current Labor Commissioner ruling in the court is nil. The same is true of any evidentiary findings. The case is simply heard de novo - that is, as if the prior proceedings did not even occur. Of course, a court may consider what the hearing officer concluded in a factual sense and how the officer reasoned in a legal sense. But the court can equally disregard all this. This means that the value of the current ruling will only be as good as its innate strength or weakness. If the reasoning and factual findings are compelling, this may well influence a court. Otherwise, it will have no effect whatever or at most a negligible one.

4. What all this means is that this ruling has basically symbolic importance only, representing what state regulators might want as an idealized outcome. Its potential to shape or influence what might ultimately happen in court is, in my view, basically negligible.

5. This doesn't mean that Uber doesn't have a huge battle on its hands, both here and elsewhere. It just means that this ruling sheds little or no light on how it will fare in that battle. You can't predict the outcome of a criminal trial by asking the prosecutor what he thinks. In the same way, you can't predict the outcome here by asking what the Labor Commissioner thinks. In effect, you are getting one side of the case only.

6. The contractor/employee distinction is highly nebulous but turns in the end on whether the purported contractor is actually bearing true entrepreneurial risk in being, supposedly, "in business." There are a number of factors here that do seem to support the idea of true entrepreneurial risk but that just means there are two sides to the argument, not that Uber has the better case.

7. In the end, this will be decided in superior court and then, likely, on appeal to the California courts of appeal beyond that. It will take years to determine. In the meantime, the Uber juggernaut will continue to roll on. So the real question will be: should we as a society welcome disruptive changes that upset our old models or should we use the old regulations to stymie them? Courts are not immune from such considerations and, as I see it, they will apply the legal standards in a way that takes the public policy strongly into account. It will be fascinating to see which way it goes.

jackgavigan• 11 years ago

If I'm reading you correctly, the next step for Uber is to appeal this judgment in superior court. When is that likely to happen?

What do you make of the Berwick Enterprises wrinkle?

joez• 11 years ago

+1 for visibility. This comment needs to filter to the top.

marcelsalathe• 11 years ago

Thanks for the clarification. This is a discussion worth having. As a consumer, I'm all in favor of Uber et al. But I'm worried about the implications of a society where "sell your services by the minute" becomes increasingly frequent.

I very much enjoyed reading this (longish) piece by Nick Hanauer and David Rolf, "Shared security, shared growth":

http://www.democracyjournal.org/37/shared-security-shared-gr...

s73v3r39• 11 years ago

Regarding 7, I fail to see how following the law would be "stymieing" them. If they have to break the law in order to be viable, then they're not viable.

CamperBob26• 11 years ago

So your position is that the purpose of the law is largely to protect incumbents? As with matters ranging from racial segregation to the 55 MPH national speed limit, the only way these types of laws ever change is by widespread civil disobedience.

mfringel2• 11 years ago

That was a great analysis, although I do have a small difference of opinion with you on point #7.

Uber's key innovation and disruptive influence is in the customer experience, and I look forward to them finding a way for them to focus on that without exploting technicalities in worker characterization.

beatpanda2• 11 years ago

Key for you, maybe. Key for their ability to make money is their "innovation" in avoiding regulation and reducing labor costs.

tzier• 11 years ago

+1. The media has gone wild with the "Uber drivers are employees" headline since it sells. The reality is that this is an individual case from basically an arbitration board. The most important point is that it affects public perception, which will potentially skew the jurors' thoughts in the actual lawsuits against Uber/others.

rodgerd3• 11 years ago

So the real question will be: should we as a society welcome disruptive changes that upset our old models or should we use the old regulations to stymie them?

Well that's a hilariously unbiased way of framing it.

cactusface• 11 years ago

It's like you're trying to say that something obviously good may have a downside. The important point is that Uber and its drivers are partners in a mutually beneficial relationship. If everybody starts contracting out services from each other, and we're all in business together, then nobody will be sitting on top of a pyramid supported by the state. How can that possibly go wrong?

emodendroket7• 11 years ago

In the meantime, the Uber juggernaut will continue to roll on. So the real question will be: should we as a society welcome disruptive changes that upset our old models or should we use the old regulations to stymie them?

That seems like a loaded way of phrasing the question.

sharkyl• 11 years ago

You can say that again.

Here's another loaded way to ask the question: should we as a society welcome disruptive changes that allow companies to turn defacto employees into at-risk "entrepeneurs", or should we rely on over a century of established practices for protecting employees from being unfairly exploited?

reviseddamage• 11 years ago

Despite this, Uber will still take over the taxi industry, albeit perhaps a bit slower. The quality control over all its components that Uber exercises will continue to bring market attraction to its services and will keep winning market share.

Marazan• 11 years ago

That depends on the cost of actually compiling with employment law. Once they are no longer avoiding costs by illegally ignoring regulations and laws their profits might vanish.

s73v3r39• 11 years ago

If that's the case, then it turns out their improvements weren't that valuable.

a-dub• 11 years ago

To be clear, this is not new regulation. This is a hearing that weighed the facts against the current set of laws as they are written. Under those laws, they're pretty clearly employees.

Changing the existing laws is a different issue entirely. There are serious pros and cons on both sides and the right answer is not obvious.

smiksarky• 11 years ago

Control is the key factor when determining a 1099 vs W2 employee. FedEx has been doing this for many years...which is why they just got fined a shit-ton. I think Uber drivers will just unionize within the near future causing all of their future driving 'employees' to get paid more - thus cutting profits - resulting in either a new business model which is again bending the new rules, or back to the way things were in the good ol' yellow cab.

Spearchucker2• 11 years ago

Uber and Lyft are operating a model that clearly works for customers. And yet they rightly face legal issues.

The thing that perplexes me is that existing taxi companies, who are licensed and otherwise compliant with the law, don't adopt the best parts of Uber and Lyft?

Why can't I call a black cab in London the way I call a ride from Uber?

seehafer• 11 years ago

They're trying that in SF. It's called Flywheel. And it's more expensive than Uber and not as good of an experience, because you have no power to rate down poor drivers.

s73v3r39• 11 years ago

Rating poor drivers has limited benefit, as I don't believe taxi drivers are allowed to turn down fares.

gmisra3• 11 years ago

This is incorrect, after every ride you have the opportunity to rate your experience on the same low information 1-5 star scale as Uber.

It's more expensive because the cost is not subsidized by VC capital, and the rates are regulated in order to provide wage floors for the drivers (amongst other things). Not everybody values minimum wages, but it's worth knowing why the cost is higher.

jonlucc• 11 years ago

Uber and Lyft are operating a model that clearly works for customers. And yet they rightly face legal issues.

It isn't terribly surprising that they can offer cheaper service than incumbents by avoiding the costs of the incumbent. The technology problem they solved is very convenient, but I'm not sure that contributes significantly to the lower costs.

Spearchucker2• 11 years ago

Hey this is anecdotal, be warned - many of my friends (all of those with kids) say they'd be happy to pay more for the peace of mind. To most of them the illegalities of Uber and Lyft are hazy, if not opaque. But they all know things aren't entirely kosher.

rbobby• 11 years ago

If Uber was smaller and hadn't pissed off so many taxi companies they could pivot into providing a front/back office system to taxi companies.

Taxi companies could then get rid of their own dispatchers (gotta be a significant savings right there), their own radio network, and the per car radio transmitters. Plus the rating system would help cab companies identify crappy drivers.

Customer would still get the convenience of hailing and paying for a cab via a smart phone. Plus the rating system could be used to ensure that if a customer gave a driver/car a bad rating that customer would never see that driver/car again.

Uber per transaction gross would be smaller... but they could enter many more markets much faster, have a significant legal services savings (i.e. they wouldn't be sued anywhere near as often), and possibly a savings on marketing (no longer need to market to drivers and customers... only need a sales team that targets taxi companies). And insurance savings... Uber wouldn't need to provide car insurance during trips. And HR savings... the hiring and vetting of drivers remains with the taxi companies.

justincormack3• 11 years ago

Well actually you can order taxis in London, either in advance, which you cant do with Uber, or immediately - London radio cabs has been on 020 7272 0272 for decades. Yeah there are apps too.

s73v3r39• 11 years ago

Customers are not the only piece in the equation.

And many taxi companies do have apps similar to Uber. At least in the populous areas of the States.

gmisra3• 11 years ago

In many places, you now can. And it is worth noting that Uber/Lyft put significant pressure on taxi companies to modernize into smartphone friendly businesses (pre-Uber apps, like TaxiMagic v1, were awful).

ps - are you aware that in American English, your username is a rather offensive racial epithet?

r00fus• 11 years ago

Well, to use a potentially inappropriate analogy, prostitutes also operate a model that clearly works for their customers and face legal issues as well.

dragonwriter9• 11 years ago

The thing that perplexes me is that existing taxi companies, who are licensed and otherwise compliant with the law, don't adopt the best parts of Uber and Lyft?

If, by that, you mean the ride-hailing app -- the main part that isn't challenged as an evasion of either taxi laws or labor laws -- they are (e.g., the Flywheel app.)

Not as much visibility, because it doesn't have the dedicated capital and media attention flowing into it from being "disruptive".

fragmede2• 11 years ago

They're less well known compared to Uber, but such a thing exists, at least in a couple major US cities: http://flywheel.com/

vacri• 11 years ago

Uber and Lyft are operating a model that clearly works for customers. And yet they rightly face legal issues.

Well, the same applies to child-labour sweatshops that make shoes...

6d6b732• 11 years ago

If the ruling holds, Uber is finished. It will have to play by the rules set by the same rules any taxi company has to follow.

chx• 11 years ago

You all downvoted my comment three weeks ago: Uber is constantly trying to run from the law but eventually the law will catch up with them and finish this farce. Good.

Well, there you have it.

randomname23• 11 years ago

Reuters and Techcrunch may have jumped the gun here. This ruling only applies to a single driver. Reuters has updated their headline accordingly now: http://www.reuters.com/article/2015/06/17/us-uber-california...

Uber's response:

"Reuters’ original headline was not accurate. The California Labor Commission’s ruling is non-binding and applies to a single driver. Indeed it is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver ‘performed services as an independent contractor, and not as a bona fide employee.’ Five other states have also come to the same conclusion. It’s important to remember that the number one reason drivers choose to use Uber is because they have complete flexibility and control. The majority of them can and do choose to earn their living from multiple sources, including other ride sharing companies.'

    – Uber spokeswoman

shawnee_• 11 years ago

Beekeeping analogy: both über and lyft are hives. The California Labor Commission's ruling does more to preserve hives in general (and thus the well-being of bees (drivers) as a whole), rather than any specific hive. Yeah, it's making things a little harder on one specific hive right now, but maybe this just means more hives will be popping up. It's the right call.

The phenomenon in nature is for bees to switch hives if theirs is in demise. "Any worker bee that is bringing in food is welcomed." [source: http://www.beemaster.com/forum/index.php?topic=8374.0]

marcusgarvey• 11 years ago

How long will Uber's appeal take?

What happens if they lose?

Can other jurisdictions use this finding to change the way Uber operates?

pbreit15• 11 years ago

I don't think this holds. Either Uber makes slight changes that comply, some other legal body re-evaluates or laws are changed slightly to accommodate.

This is too powerful of a concept to dismantle so easily. Being able to pick and choose when you work and still be able to make decent earnings is very useful to society.

dotBen• 11 years ago

Just to point out -- the California Labor Commission’s ruling is non-binding and applies to a single driver, it's not a class-action or applies to anyone else. Reports of the demise of Uber due to 'all partner drivers now being employees' is grossly exaggerated. Uber is also appealing. [disclosure: I work for Uber]

(see http://newsroom.uber.com/2015/06/clcstatement/)

kposehn• 11 years ago

From Uber:

Reuters’ original headline was not accurate. The California Labor Commission’s ruling is non-binding and applies to a single driver. Indeed it is contrary to a previous ruling by the same commission, which concluded in 2012 that the driver ‘performed services as an independent contractor, and not as a bona fide employee.’ Five other states have also come to the same conclusion. It’s important to remember that the number one reason drivers choose to use Uber is because they have complete flexibility and control. The majority of them can and do choose to earn their living from multiple sources, including other ride sharing companies.

jacquesm• 11 years ago

This is going to put a knife into a lot of 'modern' start-ups. The theme where the company sets the prices, controls the payments and so on and where the people doing the work are contractors without employee protection or benefits applies to many of the business models of the new middle men.

gmisra3• 11 years ago

The right answer is that the "on demand economy" does not fit into existing labor structures, and trying to shoehorn these new jobs into current legal frameworks is probably doomed to confusion. This is especially complicated because, in the United States, too much of the social safety net is explicitly tied to employer-employee relationships (workers comp, unemployment, healthcare, etc).

What I want is confidence that somebody providing a service to me is provided these benefits - if you work 40 hours/week in "on demand" jobs, you should receive commensurate coverage from the safety net, and you should receive at least the mandated minimum wage. If you work 10 hours in a week, you should receive the pro-rated equivalents of those services. This is, of course, complicated - how do you account for people working two services at the same time, or the "uber on the couch" issue, or who pays for vehicles and other capital goods. But pretending that existing labor laws will cover the changing workforce is silly.

We hear all the time about how the nature of work, especially service work is changing. It seems like a logical consequence that the nature of how society classifies, supports, and regulates work should also change. Uber, et al, and their VC comrades have a huge opportunity to shape the future of how people work, and how the social safety net works - to effect real disruption.

Based on their actions, however, it is hard to conclude that Uber, et al are actually interested in this discussion, beyond the marketing rhetoric it enables. As far as I can tell, they view the friction between existing laws and their business model as a profit opportunity and not a leadership opportunity. And so the inefficient behemoth of government regulation will inevitably step in.

TheOtherHobbes• 11 years ago

you should receive commensurate coverage from the safety net

It's going to be hard to make that stick when the entire business model of these companies is based on avoiding as much personal, social, and corporate responsibility as possible.

The real question is political - should we consider this kind of entrepreneurial activity a good thing, when its effects are so uniformly negative for most of the population?

And that's an old question - who should benefit the most from the social value created by work, and why?

At the moment the game is rigged to reward those who are motivated primarily by greed and self-importance. I'd suggest that's not just an unintelligent way to do these things, it's also a really expensive way - because the value of the missed opportunities created by lost economic activity and lack of broad spectrum prosperity is almost unimaginably huge.

astaroth360• 11 years ago

Please, please let Uber get pwned in the face for their general combative business practices :D

Seriously though, they give the "ride sharing" economy a bad name.

pbreit15• 11 years ago

I tend to agree with Uber here: http://newsroom.uber.com/2015/06/clcstatement/

I don't think this ruling will have much of an impact on anything.

randomname23• 11 years ago

HN mods:

Techcrunch have retracted their original headline as this ruling only applied to a single driver, could we get the HN headline updated accordingly to "Uber Driver Deemed Employee By California Labor Commission"?

codecamper3• 11 years ago

I'm surprised that Uber discouraging their drivers to drive for other providers was not called out.

From what I understand, if you are an Uber driver and you do not accept a call too many times, Uber will simply stop giving you ride requests. This effectively squashes a driver's desire to drive for other networks because if he/she is busy with another network's ride when an Uber request comes in, he cannot accept it. Do that that some unknown number of times, and you don't get more work from Uber.

sudioStudio64• 11 years ago

The regulations on taxi drivers exist for a reason. Uber found a way to skirt some of those regulations for a time. Avoiding that regulation created a revenue stream that they used to operate and grow. It was always in danger of regulators catching up to them.

If you read some of the driver's reports then it becomes hard to really buy their "big taxi" schtick. That being said, they obviously provided something that people want. Taxi companies will have to adjust to this. (In some places like SF they already are.) In the end, I think that Uber will go the way of Napster and the taxi companies will end up adopting their techniques the way that the big record companies did.

gregoryw• 11 years ago

Anyone who has hired contractors knows where the line is. The damning part is the drivers have Uber provided iPhones in their cars. You have to provide your own equipment to be a contractor.

anigbrowl3• 11 years ago

One of the downsides of so many tech companies being privately held due to the unfashionability of IPOs (per the Andreessen Horowitz slide deck the other day) is that we lose out on the price signals that a stock market listing would normally provide in response to something like this.

big_data• 11 years ago

Better hurry up with that IPO ...

jleyank• 11 years ago

Stupid question, perhaps, but IANAL... How does the Uber situation differ from the contractor situation Microsoft dealt with 5-10 years ago? If there's not significant difference, isn't this all settled case law?

paulsutter• 11 years ago

If this sticks, it just means that Uber drivers will get paid less in cash, more in benefits, and lose the ability to take business tax deductions.

Is that really better for the drivers? Sounds worse to me.

I ask because many people have been claiming Uber is a bad actor for making drivers contractors, but it's not clear to me that it's a big win for the drivers to be classified as employees. Actually it seems worse in many ways.

joshjkim2• 11 years ago

You can estimate how much this will cost Uber in CA as follows: $0.56 multiplied by total miles driven by UberX drivers over all time.

It’s almost as simple as that, since damages were given out almost entirely on those grounds.

I'll leave it to HN to figure out a guess on mileage =)

Some other interesting notes:

Plaintiff was engaged with Uber from July 23 to Sept 18, less than 2 months (p 2)

She worked for 470 hours in that time, so quite a bit (p. 6)

Damages broken down as follows: $0.56/mile reimbursement, for a total of $3,622, tolls for $256, interest of $274, for a total of $4,152 (p10)

Claims for wages, liquidated damages and penalties for violations were all dismissed (p11)

joshjkim2• 11 years ago

Side note: the $0.56 is an IRS number, and therefore federal, so could even be used as a proxy for all US =)

beatpanda2• 11 years ago

I hope this spells the end of labor exploitation as an "innovation" strategy by "technology" companies. It's getting sickening.

Uber Drivers Deemed Employees by California Labor Commission

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