California bill could force Uber and Lyft to reclassify drivers as employees
businessinsider.com
businessinsider.com
I worry that this bill will ultimately eliminate a unique niche in the job market. I have several family members who drive for Uber/Lyft and consider it a great way to make money. One of the aspects they like is how much independence they have: no manager, no set schedule, no need to work the same number of hours each week or each day. The pay is fine - not great - but the flexibility makes working for Uber much more appealing than e.g. working as a receptionist or taking another service job. Many drivers I've ridden with seem to value that component as well. If Uber switches to treating drivers as employees (which makes each driver have higher overhead) then they'll probably switch to.... well, treating them as employees: stricter rules about when you have to drive, how much you have to drive, and so on. The tradeoff will benefit some employees - basically those who are trying to make Uber into a full-time job - at the expense of others.
[0]: https://medium.com/uber-under-the-hood/an-analysis-of-ceeprs...
[0] https://axios.com/gig-economy-employment-economic-data-effec...
To me this closes a loophole. As you say these people drive for Uber, uber is doing the employing. This is not like if a contracted a builder to renovate my kitchen. That is the class of employment that are real contractors.
If they have to pay a full-time employee, they can schedule the employee and force them to drive to a certain location, and do a certain number of trips, otherwise they would just fire them. They can squeeze out more efficiency from a single driver rather than hope that there's enough random drivers to fulfill all the demand.
Hiring people to just sit around and do nothing doesn't make any sense whatsoever.
Where does it say this?
Why not?
Or more specifically: the law doesn't require this, so why would it have to change?
The bill merely states, "hey, this flexible way you've been working, that's not independent contracting, that's employment and the employer have to abide by all these other regulations." Those regulations in no way require Uber to make workers work for specific hours, pay them hourly, or schedule their work differently. In fact, it just says, "the way you're already working, that's employment." So why do you think they'd have to change how they work?
I think most of planet earth only wants to work 1 gig or at most 2 for somewhere between 20 and 40 hours. I doubt people who want to work a tiny number of hours make up a meaningful proportion of the workforce. In other words much ado about nothing.
The benefits being discussed are health insurance.
I'm not too familiar with employment law, but in most governments, employees have rights and benefits that cost a company a fixed amount that a contractor doesn't.
I think a lot of people have no idea how the old taxi business worked.. it was far worse than Uber — it was more of a monopoly as well because you were required to drive a specifically-branded car purchased or leased from the taxi company. You couldn’t use the same car to drive for other companies. Damage had to be repaired at the specifically designated repair shop (owned by the taxi company of course,) and you had to pay for insurance from the specific taxi company “vendor” (also owned by the taxi company.)
And.. you were an independent contractor; you were the customer of the taxi company. You got to pay your own self-employment taxes, but your own health insurance and if you got sick, you still had to pay the taxi company the lease fee for the car. While you did collect your own cash fares, you had to pay a very high percentage (8-10%) on credit card fares and you were paid those fares weekly. If you lost the charge slip paper, you lost the fare, however the taxi company still had the swipe, so they’d still collect the money but just not pay any of it to you.
The taxi business is and was an incredibly corrupt and nasty business. There is a reason that job was popular with fresh off the boat immigrants — anyone who had done the job more than a minute knew how much of a rip-off it was (unless you were willing to sleep in your car and drive 16+ hour days in order to save up money to start your own limo business or convenience store which was a common goal among many of the south Asian immigrants I drove with.)
The kids hating on Uber really have no idea what they are talking about. Unless someone has actually worked in the towing, taxi, limousine, hot shot, or trucking businesses (all extremely nasty and tough businesses,) it’s pretty hard to have much credibility when complaining about the gig economy, Uber, etc. Uber/Lift/Doordash is a dream compared to the bad old days. You can have one car and pretty much drive and deliver as much as you want and make money proportional to how hard you are willing to work. It isn’t easy-street, but nobody plans on being a career Uber driver — it’s a stopgap, a transition, or a supplement. Anyone thinking that this is some kind of full time career is either of low-IQ and has no prospects of doing anything better, or just lacks ambition. Being a McDonald’s cashier ought not be a career either, but there are people working in that position for 15+ years. At that point, that failure is on them. We shouldn’t be optimizing society around making low wage service jobs into some kind of permanent career. Even a high school kid gets promoted at McDonalds if they stick around for more than a few minutes, yet there are literally people who have been making minimum wage for years. At some point people ought to be treated as adults and not like exploited children. A person chooses to drive for Uber/a taxi/whatever. They aren’t Shanghaied or otherwise indentured. If people don’t want to do those jobs, then that ought to motivate them to find something slightly better — or start at the bottom washing dishes somewhere and move up through a restaurant’s ranks. But that requires hard work and dedication— traits in very short supply in an era where people that literally sweep floors think that work is worth $15 per hour.
Source: I drove for Yellow Cab Houston in the summer of 2001. I also drove hot shot deliveries in Houston in 2008 and a good friend of mine owned a bike courier business. I also worked a string of shitty restaurant and bar jobs, lived on the street a short time and now I work as a software engineering project manager for one of those FANG companies.
- Pays low, doesn't pay benefits, yadda yadda. All the stuff I assume people generally mean when they talk about "the kids hating on Uber"
- Went into towns and actively broke the law (bypassing the current taxi system). Sure, "civil disobedience" and all that, but the people that actually paid any real price for that disobedience (https://www.sfchronicle.com/business/article/No-fair-say-Ube...)
- Uber is burning money in order to corner the market. Eventually they're going to either go under or change their entire pricing structure. Nobody is going to win when that happens. There's a reason countries wield financial weapons when other countries start dumping like that; it's bad for everyone involved but the dumper.
The move to increase the minimum wage to 15 is presented by the uninformed as a cash grab by the lazy. The truth is 15 dollars just isn't much nowadays. The old often have a hard time forgetting about the nominal value and considering the actual buying power.
Lets ignore the fact that minimum wage workers can't actually buy houses and compare the minimum wage of $1 in 1960 to the cost of a median house at 11,900. So 11,900 hours of work 1.35 years of labor hours worth.
In 2018 it was 210k divided by 7.25 is 3.3 years of labor hours. Divide by 10 and its 2.4 years of labor hours. Divide by 15 and its 1.6 years worth of labor hours.
Alternatively we could discuss tuition at a 4 year public university where our 1965 counterpart now making 1.25 could expect to pay 240 labor hours for a year of instruction vs 1380 hours to pay the 10k it costs now at 7.25 1000 at 10 or 667.
How about a loaf of bread 22c or 13 minutes of work at 1960s $1. Now 2.50 vs 7.25 about 21 minutes of work at 10 its 15 minutes at 15 its now 10 minutes.
In real terms people wanting $15 to sweep the floor want $15 to sweep the floor because that is what it now costs to have a barely acceptable life. Not a good or a healthy one but one which is spent sleeping indoors and eating decent food.
In fact the fact is those agitating hardest for a better minimum wage are overwhelmingly have a disproportionate share of the jobs AND above average rent.
Essentially if this minimum wage looks too high you might just be too old.
Not everyone has the same options as everyone else. Some of us are just stuck trying to get by.
If someone posts a classified ad for a handyman to fix their stairs and offers $50, I can take it or not. But taking it and then whining that I didn't get benefits... and being abetted in that whining by clueless politicians... is disgraceful.
Most probably it would be machine learning that would decide that
> when it gives no benifit to Uber?
An employee works for an hourly rates. It would benefit them in the sense that they wouldn't have to pay someone for an hour where he does nothing.
Why do your job give you a schedule?
> This is not like if a contracted a builder to renovate my kitchen.
I don't know for where you live, but here in Quebec you would usually contract a general contractor for that. Would that means that guy is now employing people and he should pay them benefits too and pay their taxes for them?
Uber is between you and the contractor, sure, but he is still a contractor, he is contracted for a single job (taking you to your destination) and the amount paid cover that job.
The contractor is free to decide when, where and for how much he works.
The solution is to update laws that reflect the future (ie, giving contractors better rights and better temporary unemployment social support) instead of protecting entrenched dying industries and their working hour/payment models, by forcing their business models to be the only one allowed.
You also don't have to defend Uber directly, this type of stuff will affect the whole market including any future or present companies that are far better run than Uber.
If you look at reviews for the old taxi companies in most cities they are all 1/5 stars. Plus they aren't shining beacons of worker protections or good pay either. Most taxi drivers were already contractors before Uber so I'm curious how these laws will affect them too.
Agreed. Classifying them as employees, per this bill, doesn’t do this.
Employment classification comes with a myriad of fixed costs. Particularly in California. Contractors lack these fixed costs—it’s all variable. That’s what makes them attractive for unpredictable workloads.
We need a third category, a low fixed-cost zone between contractors and employees, that includes some employee rights but not others, and confers some employee restrictions but not others. That would be transformative to our economy, and strengthen it to boot. Unfortunately, that’s is not what the California legislature is discussing. (Surprise.)
Umm, I think you both agree. There's no disagreement that I see.
It doesn't make sense to pay people low wages to the point where they need governmental assistance in the form of food stamps and BMR housing, and then pass on the savings to private companies who do their best to avoid paying the taxes that fund those programs. It ends up being other, traditionally employed FTEs who subsidize this business model via their own tax bills.
From the pure view of the 30 year old customer: obviously. Low prices, decent quality.
From the view of society: not so much, as society has to now take on the costs that were previously paid by the employer (and indirectly the customer)... think food stamps or social security funded by taxes instead employer contributions to an unemployment insurance, or healthcare given that normal employment would have health insurance but many contractors don't.
From the view of the 70 year old customer living on pension and depending on taxis e.g. to go to dialysis treatment: not so much, as Uber, Lyft etc. have wildly variable pricing, compared to the regulated price of a taxi.
From the view of a customer or a third party involved in an accident: Taxis have proper commercial insurance that picks up medical costs of people involved. Uber/Lyft/other companies? Not neccessarily and either people are left with the medical bill alone or society has to pick it up.
The "gig economy" is only so cheap because a lot of cost factors that made the regular services so expensive are now picked up by society at large.
I am in the UK so I don't mind paying to support Medical Training, and training in stem skills those jobs are a net benefit to the state.
Technology can give us jobs that free us from the traditional chains that we all know but we also need to figure out how to make sure those workers don't get exploited.
Technology is just part of the answer. We also need to have social and political changes. So we can have the jobs that we want without destroying the worker protections that our previous generations have fought so hard to gain.
Making sure that there are laws that protect workers is the start. The answer to the right pay for the gig economy workers will come. But we can't do it by removing all benefits from the workers and not have any other way for them to get them.
I know one thing. What Uber and Lyft provide is needed so companies will figure out how to provide it even with new laws.
And I’m with you that we should question whether we want to live in a world where so many workers lack basic benefits.
In the long term I want to see us end employment-based social programs, but we’re not there yet. Until we get there, we definitely should make sure workers are treated as workers with all the legal benefits that entails.
Have you ever read Murray Bookchin?
I have not but it sounds like it's someone I should. Thx.
When people carp about "benefits," that's really what they're talking about, isn't it? And it's an anachronistic result of incompetent legislation from the WWII era.
Fix THAT. Then we can all have "benefits" without any dependence on a particular job.
The bill does NOT say, Uber drivers need to change the way they work.
The bill does say, the way Uber drivers work is considered employment with respect to the law.
It changes the definition of employment to include the type of flexible work Uber drivers are currently doing.
In other words, Uber (or any similar gig-economy business) could keep working with their employees as they always have, it's just that they'll now have to provide those employees with a bunch of benefits they currently do not provide and pay a number of taxes they currently do not pay.
The idea that "employee" means particular way of scheduling hours is false. The bill doesn't say that. The law doesn't say that. There's nothing that requires that. These newly defined employees could keep all the flexibility they've had. If Uber reduces that flexibility, that's Uber's decision.
I think over half these problems go away with government issued healthcare. Companies and workers can be more dynamic.
Will it really result in the side effect that piecemeal work will cease to exist if workers have to be hired as employees? I don't know, but I think that's what's being suggested.
Making companies pay these benefits will actually drive them to start lobbying for just that, no?
So no, government issued healthcare is likely to make the issue even more starkly obviously wrong.
Contractor fees are somewhat assumed to include the rates necessary for a genuine contractor to pay the full NI amount, but Uber/Lyft relies on their 'contractors' not really being fully aware of that.
In the US, employers pay part of some taxes, with the employees themselves responsible for the rest. Self-employed folks pick up both halves, so the government gets a similar amount of money either way.
Does this not happen in the UK? Otherwise, it seems like it would be fairly easy to audit Uber (etc) “contractors” and to collect that money.
Yes, this could, and should happen, most Uber drivers would not be correctly filing their taxes and NI contributions, almost all would likely end up with hefty fines or prison time.
Most of those drivers are going to then be pissed at Uber for not making it clear to them that as contractors they are responsible for paying NI contributions and properly filing self-employed contractor status taxes. It wouldn't be pretty, but it'd be fun.
But since Uber were simply forced to accept that their drivers are employees, and thus Uber is responsible for the 13% NI contributions, it won't happen to Uber at least.
Thereby driving them out of business and eliminating this form of employment (which is clearly contractual and not "regular").
Do they really make enough money to pay for their food, housing in the city they work, health care, pension, kids and kids education?
If not these sorts of jobs (or with this pay) should be banned. Else it's just subsidies from taxpayers who need to pay for these things through government "subsidies".
Where I live (a nordic country) eg. taxi drivers used to be able to live a very comfortable life with their pay. And the taxi service was excellent. Not even that expensive if you think about having a private chauffeur driving you around.
Now they changed the rules (to enable "gig economy") and most of the taxi drivers don't pay proper taxes or know any address without gps, and they don't get paid nearly enough to get by without government handouts/social security, or have any pension accruing so they will need even more government/tax money when they are old.
If I were to work for the same company constantly as an freelancer the state would rightfully assume that it is to avoid the costs connected with employment. And as a freelancer I can choose my dates myself as well.
I don’t see why a more flexible scheduling system should allow you to avoid paying into a system that is there for a reason.
Before Uber was a thing, I tried getting a taxi in the Bay Area at 3 different times. Months apart. Calling different companies (that I found by searching "Bay Area taxi"). In ALL cases there were issues, huge issues:
* the first one I called said he'll be there in 20 minutes(!!) but 30 minutes later he didn't show nor called. I call back and someone else answers and says they'll be there in 20 minutes, ofc 30 minutes later nobody showed up...
* the second time I needed a taxi I called, said they will be there in 30 minutes and never showed or answered any subsequent calls
* third time I think someone DID show up, after about 30 minutes (15 minutes later than they said they will)
Absolutely horrible, unacceptable experience. With Lyft/Uber I never had any such issues and I took many more rides with those. Not to mention it was much cheaper (the latter likely has something to do with the main complains being raised now by their employees).
Look, I fully support cab riders to get a living wage, even if that means significantly increasing my fare, but I do hope the new legislation doesn't result in going back to the pre-Lyft/Uber taxi experience because that was just insanely bad. Also, at least some of the drivers I talked to were doing this as an aside so it makes total sense for them to be contractors (one guy was temporarily in the Bay Area doing some construction work so he was Uber-ing on the side for extra money) so that is another issue that needs to be considered in legislation to still enable this type of use case.
In the case of taxis, replacing them by Uber and lyft made no sense globally, because it was just exploiting the drivers, and using venture capital in an unsustainable manner.
The difference is that Uber and Lyft won't leave one of their biggest markets.
The actual scuffle was because the City of Austin wanted ride-level trip data and a larger fee from the individual rides. Further, Mayor Adler's goal was a tax+security screening system for anyone who wanted to transact online. Those are his words, not mine. Quoted in the post below.
I detailed some of it here: https://medium.com/@CaseySoftware/mayor-steve-adler-is-scamm...
> Like camera-wearing meerkats, taxis provided insight into the city’s transportation ecosystem. Are cabs speeding along a certain stretch of street? Time to review the street design. Getting stuck at the same intersection every rush hour? Maybe rethink the traffic light timing.
Do you work for Uber, or do you just have an amazing memory?
I too have absolutely terrible pre-uber experiences (in the DC area). If one was out drinking in DC, and needed a cab back across the river to VA, you had to hope the cabbie had the doors unlocked, because they couldn't refuse a fair once you got in and sat in the car, otherwise they'd just drive away if you told them where you were going. And it was "cash only". Which I later learned was a load of BS, when I had a $100+ fare for work, cabbie happily pulled out the old cc scanner complete with carbon paper... Things didn't get better until my roommate introduced me to his "driver". Which is was just a guy with a Town Car that I could call, tell him where I'm going and when, and if he was available, he'd quote me a price (there was no meter or anything). And then there was the stress of is the cabbie I called for going to show up in time to get me to the airport at 6am. Uber/Lyft crushed it for all these reasons, and if the prices need to rise a little, sure fine. The example of a new company in Austin doing it's own little Austin thing is fine, but the other huge benefit of Uber is it travel. If I get off a plane in Europe, NYC, SF, small po-dunk town, whatever, I've now got a very frictionless path to getting myself some transportation. Don't gotta look up the local cab company, don't gotta mess with the local mass transit, all my billing info is setup and ready to go. Makes me wonder if everyone seemingly hating on them or wishing them harm is too young to remember how shitty things were before. On the "employee" side, I do know a number of people who drive for either or both company, but they all do it on the side, fwiw.
I have memories of several times I was stood up or unreasonably delayed by bad taxi service / rideshare service, and the higher-stress ones (e.g., when I was trying to catch a plane) are the most vivid. One's from over a decade ago - I can't remember where I was going, but I remember the room I was in, pacing back and forth, calling the taxi dispatcher for the 3rd time.
I remember those taxi experiences because those were the only 3 times I needed a taxi in the first few years in the Bay Area, so quite easy to remember. If I had needed to take many rides/often then likely I won't remember as many details.
Housing utilization goes up with Airbnb, not down.
The changes described in the bill seem surprisingly minor. As long as Uber isn't expected to pay its drivers a fixed salary, or control their work hours, I don't see how "better benefits" will fundamentally destroy their business model. It is fundamentally no different than raising the rates paid by riders, and passing those increased rates along to drivers in the form of better benefits.
As long as it is applied consistently to both Uber and Lyft, neither of them will lose market share. Ridership will decline incrementally when rates are raised incrementally, but the majority of Uber riders aren't going to take buses instead just because prices went up 15%.
I've long been a fan of the gig economy and of companies like Uber/Lyft, but the new regulations described above sound pretty reasonable. Saying they will devastate Uber's business model sounds like clickbait on the part of BI, and FUD on the part of Uber.
People think that once uber is dead ridesharing will disappear, but reality shows that once idea is in the wild it's almost impossible to stop it.
Classifying the people working these jobs as employees increases the risks and liabilities for the platform providers.
And those claiming we'd be better off with those jobs not existing are lying to the public. It's against the worker's interest to remove any employment (or self-employment) opportunity from the job marketplace. Now of course they will accuse opponents of the bill of lying, so the public has to investigate and decide for itself.
Sure you're probably not going to be raising a whole family with a white picket fence on Uber alone. They NEVER claimed you could AFAIK. Its never been portrayed as anything more than supplemental income. PROTIP: Uber is a job for the bored college student looking for a little extra spending money not the main means of survival for a struggling single mother of 10 kids. If you're at the point where you're relying on CA to force Uber to pay you more so you can put food on the table or get kidney surgery you're doing it wrong and you have far bigger problems than a company that has done you no wrong other than existing and not paying very much.
Now we're going to destroy this unique business model forever because of the greed of the taxis and people who can't understand that not every single job on earth is meant to earn you a solid middle class income.
I was just talking to an Uber driver in India just the other day. In India Uber got its dominant market share by offering incentives to the drivers when they joined. Something like if you do n number of trips you will get more money. The incentives were great and so a lot of people got into driving. Bought their own cars. Got cars financed from Uber. And then as supply increased Uber pulled off the incentives with nowhere to go for the drivers.
Now a driver who got 800 rs for an airport trip by himself has to make do with 400 rs in his pocket and Uber gets a 200 rs commision.
Uber, Lyft (on basically all other on-demand/delivery services) are making urban living qualitatively far worse on average than the benefit of extra commerce facilitated by them. They should be banned outright. Give us our streets back.
Back when ride-share and on-demand/delivery services were not so ubiquitous, you could either get out and do a chore yourself or do without. For example, one recent weekend I casually mentioned to my wife that I was craving a specific sweet popular in my hometown in Eastern India. She surreptitiously looked up a vendor selling that sweet where I now live and had it delivered. I loved the gesture but it made me think that without delivery, I wouldn't have caused a bike messenger to pick up my snack and bring it a few kilometers to my house. Ergo, no environmental impact, no added traffic, less use of plastic and packaging, and all manner of downstream impacts attributable to me.
Yes, there are positives - less skilled/more entrepreneurial people are able to support themselves as drivers, money flows around from consumer to producer as it should in a healthy economy, my cravings are being met and my wife is able to exercise her love language, and so on but IMO, the negatives outweigh the positives.
The extra traffic introduced by delivery is untenable, at least in urban India. Delivery persons drive often don't obey traffic laws with minimal consequences. Becoming a driver provides MVE - minimal viable employment - for someone facing economic pressures so instead of upskilling to earn more, they stagnate. The environmental impact of delivery alone should make us worry about their usefulness.