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Comment by Animats | Hacker News Reader

All those "gig economy" companies are going to be forced to treat their employees as employees. The main Uber lawsuit goes to trial in June.[1] The lawyer behind this, Shannon Liss-Riordan, has previously won against Starbucks, American Airlines, FedEx, and over a hundred other companies on similar issues.

Uber's attempt to block class action suits and force arbitration failed. US District Court Judge Edward Chen rejected the validity of the arbitration clause. He called the clause "both procedurally and substantively unconscionable."

Uber is going to lose this.

Homejoy already lost, and shut down.[2] Postmates, Shyp, Instacart, Lyft, and Washio are being sued too, over the same issue. Labor law is pretty clear on this.

[1] http://uberlawsuit.com/Uber%20sued%20by%20drivers%20excluded... [2] http://techcrunch.com/2015/07/31/why-homejoy-failed-and-the-...

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Is labor law all that clear on it? I'm in Canada, so maybe there are differences, but under our law a case like Uber's seems like a grey area. The vehicles aren't standardized. Drivers aren't required to drive at any given times, or at all, I believe.

It's not clear to me what distinguishes Uber drivers from, say, Airbnb hosts, who are clearly not employees.

(There are factors that point towards Uber workers being employees, but no single factor is determinative.)

The Homejob article actually focusses on the leakage aspects. I think their business model was doomed regardless of how they classified their employees.

> It's not clear to me what distinguishes Uber drivers from, say, Airbnb hosts, who are clearly not employees.

If Uber/Lyft were like AirBnB, it would be providing you a car with keys with the occasional optional driver.

With AirBnB, getting "service" beyond the lodging is optional (and less common than it used to be).

However, Uber/Lyft always provides the driver. The fact that the driver is an inseparable part of the service is what is eventually going to cause them to lose.

> Is labor law all that clear on it?

In the US, I think it's pretty clear that they are employees.

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Emplo...

"Does Uber control how the worker does his or her job?" - Yep. "Are the business aspects controlled by the payer?" - Yes, almost entirely.

Even if they passed that, there's a special category for workers called "Statutory Employees", where some contractors are treated as employees even if they don't meet the normal check, which includes :

"The service contract states that all services are to be provided by them personally" - Yep. Uber drivers can't accept a route for someone else, or vise-versa "The services are performed on a continuing basis for the same payer." - Yep. Uber drivers routinely drive for Uber.

If the court respects the current rules as written, I don't see any way Uber can claim their employees are independent contractors.

>The service contract states that all services are to be provided by them personally" - Yep. Uber drivers can't accept a route for someone else, or vise-versa "The services are performed on a continuing basis for the same payer.

That section you quoted applies if someone is in one of the four categories for a statutory employee. It's to decide whether to withhold Medicare and social security taxes from those already determined to be statutory employees.

The closes of the four categories is the first (beverage or food delivery driver), but it doesn't fit Uber.

Whether or not someone can subcontract is generally an important factor in employee contractor, but it's not necessarily determinative. In a variety of personal service cases you wouldn't want your contractor switching with someone else. However, you wouldn't mind if they hired others to handle the non-personal aspects of their business. Similarly, Uber doesn't care if drivers subcontract out cleaning and maintenance of their cars and other non-driving aspects.

Whereas they would care if "Steve" is in fact "John", because the service depends on reviews. That's similar to, say, Upwork, where if I hire "Steve" I want to know I'm talking to Steve. I don't care if he subcontracts, but at least part of the situation must be handled by him, because he's the one with reviews.

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Emplo...

Meanwhile, you quoted a line from the financial services section, business control. But take a look at the factors actually listed in that section:

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Emplo...

As far as I understand it, Uber drivers have significant investment (their car), they have unreimbursed expenses (car maintenance, food while driving, etc.), they can profit and lose money (if they are no good and their expenses exceed earnings), their services are available in the market (they can drive for others), and payment is per trip rather than an hourly salary (this last one is the most ambiguous, there are likely special considerations for the transport market).

I really don't think it's as clear cut as you're making it out to be.

p.s. I'm not saying I'm right. I'm hardly an expert on US labor law. If I'm missing a major factor, I'm interested to hear what might be decisive in a case like Uber's.

>All those "gig economy" companies are going to be forced to treat their employees as employees.

I wouldn't make that bet. Here's why.

There are 2 paths forward for companies like Uber:

Option 1: Keep all of their "control" rules such as non-negotiated pricing, etc and then be forced by the government to convert all drivers from contractors to employees. Government to Uber basically boils down to: "hey, you CONTROL the drivers too much so you must pay the price by becoming their employer."

Option 2: Tweak some of their control rules so they are closer to the model of eBay's sellers and Apple App Store and iTunes musicians. This avoids the reclassification of drivers to employees.

#2 seems to be a much more realistic option. Currently, ebay's sellers are not employees. Also, the programmers submitting iOS apps and musicians that upload music to Apple iTunes are not employees either. There also doesn't seem to be any political pressure or worker's rights advocates pushing for reclassifying them either.

#1 does not seem financially possible unless Uber drastically raises the fares to pay minimum wages, extra employee taxes and maintain profit margins to provide returns on the capital invested.

Which seems more realistic? Raising fares to become a big employer of drivers like UPS, or relaxing the code of conduct rules for drivers so they are perceived more like eBay/Apple?

The problem is the rules in Option 2 that would enable them to remain classified as a contractor.

Specifically, Uber would have to allow drivers to set their own rates.

From an end user's perspective, that's a big shift from where we are today. The vast majority of people taking Uber/Lyft never took Lyft when you set your own "tip." There is a reason Lyft switched: users hate "tipping", drivers sometimes get screwed, and it is confusing. Humans aren't known for their rational purchasing decisions.

On the other hand, letting drivers set rates now requires users to pay attention whenever they call a car. Rates fluctuate rapidly with wild variation—think how much we love buying airline tickets—so drivers who want to make a living are now in effect playing the stock market.

Maybe that's a good thing, to leave it to the market. Maybe it isn't. Either way, it is a large change in the status quo.

The "gig economy" companies are actually a way of giving more people a chance to make money.

They aren't the bad guys here. The taxi unions, which stifled innovation, forced out all competition with the medallion system, and created a monopoly, which resulted in terrible, overpriced, and outdated systems only hurt the consumer.

Child labour was also a way of giving more families a chance to make money.

Well put. Anyone can find a job and "make money". The issue here, of course, is much broader.

It's worth noting that the NWTA, what most people mean when they say "taxi union" is not by any means a traditional union. Since taxi drivers (in most jurisdictions) are contractors and not employees, they have zero collective bargaining rights.

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