U.S. judge says Uber drivers are not company's employees
reuters.com
reuters.com
It seems pretty clear that instead of letting people be underpaid (which affects the economy badly anyway) they prefer people to be paid properly.
In Netherlands there's a proposal that employers who use flex workers should actually pay more social benefits for such people. This as these workers will likely need more social security. That cost needs to be on the employer, plus it'll encourage companies to hire people on a permanent contract.
Companies aren't the originators of jobs. Instead, demand for goods/services can reach a threshold that makes corporate organization for profit viable, and in so doing, requires that employees be hired to fill the demand. If there isn't demand for a good/service, then even a company that is providing it will be unable to pay people. On the other hand, if demand for that good/service exceeds the capacity of the company, they will hire more people (and/or more companies will be created to compete for business).
Edit: Looks like some founders looking to create underpaid jobs with no advancement opportunities found my comment /s.
When you see a poor person struggling, remember that your public arguments contributed to their plight. If that even resonates with you.
Lol, nope.
My (single) mother drove a NYC taxi cab from 1978 through 1992 (after previous careers playing in orchestras, selling commercial real estate and being a corporate comptroller). The money she earned doing that raised two sons; she was able to invest in 6 medallions (though she was ripped off by her business partner, that's another story) and eventually helped her go back to nursing school.
Many, many cab drivers used to be able raise families on their income. In the 1980s it was a pretty decent, albeit dangerous, way to make a living. There were even whole city blocks, in Midtown, where all/virtually-all of the businesses were related to taxi service and repair (38th street on 10th avenue and another in the mid-60s on I think 3rd or 1st).
In the 90s, for whatever reason that started to become untenable and a rapid exodus of Sikh cab drivers began where they moved their families to New Jersey and started doing black car elsewhere.
Befofe Uber, unless you were at one of the few cabs stands, waiting 1 hour for a cab, that may or may not even show up was not uncommon.
Uber and Lyft have changed people's lives in most places they operate.
How long you had to wait for a cab has nothing to do with driving a cab being a good income.
I've been in cabs pre-Uber all across the US. In places like Buffalo, Albany (any college town, really), all over Long Island, DC, LA, etc., I've talked to loads of cab drivers pre-Uber and they were making okay money.
I used to take 20-minute cab trips in Long Island that cost $100. The zone and per passenger system in Albany made fares very expensive. I knew a student cabbie in Buffalo who paid his tuition and then some ferrying drunks between the campus' and the bars.
Cabs suck ass in most areas of the country because of government regulations granted them exclusive rights at the expense of the consumer. Turns out the consumer will use Uber or Lyft instead of cabs if given a choice. Nothing is stopping cabs from competing.
Also, see Cable TV/broadband Companies.
My comments were purely based on the parent commenter saying that "driving a cab was never a decent living, ask any cabbie", which is false.
This is a derail. Does raise an interesting discussion of whether consumer convenience should always be optimized for though.
If you look at clothing, it's convenient and cheap because of an exploitative labor market built on appalling wages and child labor. Maybe I don't want the pilot of my plane or driver of my car working under those conditions though...
1. A position is advertised as independent contractor
2. A person chooses to fill the job as an independent contractor while being compensated EXACTLY as agreed
3. The person sues to be considered an employee
In situations like that, it’s really difficult for me to side with anyone but the business.
When every job you can get sucks, what are you going to choose to do if the terms are massively unfair and inequitable? starve to death?
Check out Exhibits 2/3 and decide for yourself what side you think Uber drivers fall on.
Wouldn't it be nice if you could make a living being a 'fry cook?' When you leave work you could just kiss off and go have dinner, go bowling or whatever.
Each day would be self contained. There wouldn't be bad dreams tossing and tuning you because your project isn't going well at work.
Why do we celebrate this race to the bottom? There have been such stunning increases in productivity, so in theory we could all work a few hours a week and enjoy 1950s living standards.
Would that be so bad?
There's no law preventing you (or anyone else) from opening (or co-investing in) a food establishment that pays high salaries and provides benefits to fry cooks.
I think most people don't realize how thin the margins really are on food services stuff. Or even most services.
To increase salary of fry cooks and drivers to be better. You need to charge more. But if everyone else is already on tight budgets then they also need increases in salary as well.
And now it becomes a bigger economical issue. I know it's not a zero sum game and I'd like to see everyone's wages increase. But it's a hard bigger problem.
1) Improve your skill set and move up within restaurant industry, hopefully towards high-end cuisine or managerial position.
2) Get out of the industry altogether and acquire some specialization like a plumber’s or electrician’s license.
3) Use the paid gig to acquire skills, remain in the industry but readjust your stake to equity instead of salary, by running a food truck, a burger stand or a pop-up taco spot.
All venues pretty much scream “Get out of this fry cook gig as soon as you can. There’s no outcome where you’re guaranteed a happy retirement and a golden watch”.
I strongly believe everyone below ~$50-60k a year in the US should be paid more, but that's a separate conversation. In a world where teachers, firefighters, policemen, social workers etc. earn $35-50k a year + benefits, it feels wrong to complain about ridesharing drivers making $35k-50k a year without benefits.
There are plenty of drivers who made a good living. I had a friend in college from britain. His father was a taxi driver and who was able to provide for his stay at home wife, send his 3 kids to college ( one to NYC ) and buy a vacation home in spain. A solid middle class living as a taxi driver. So your premise about drivers always making shit pay is verifiably false.
But I do agree with you that uber is a disruptive technology and a middle class life as a driver is not something that can be maintain in today's environment.
We've always had the 'gig' economic problem.
It's maybe me but I don't get it. Treating employment as subcontracting tilts benefits massively to the employer and reduces unionisation. It's anti worker. It's retrograde. It's going to increase dependencies on state benefits due to the lack of savings, depressed lifetime income and absense of 401 self funded retirement.
Yes. However the venn diagram of people who know/learned this, and people who are willing to change it, and those who have influence requisite to make change do not overlap enough at present.
I get most surprised that this is the steady state of things in a large supposedly democratic republic like America -- if the country was reckless in hopes for growth and selling Special Economic Zones and stuff OK, there's clearly a large problem maybe even a short-sighted goal issue (oh they're trading worker's lives for short term maybe long-term economic growth), but that just isn't the case with the US.
I took a job where I was paid through an international company (well 3/4 of my pay was that way, and the rest was a normal contract) here in Spain.
When I saw my pay go in before taxes it looked significantly more than what I had seen before, and I though I was doing well out of the deal. Of course I had to pay all the taxes anyway. It was only a year later when I got changed to a full Spanish contact I started checking numbers (to make sure they were equivalent) that it occurred to me that I would only have been getting 1/4 of the pension payments before then, which in Spain is a significant amount.
I doubt most Uber employees are seeing noticing anything like that (though to be fair I have no idea how those extra are paid in the US).
Of course I'm sure Uber will simply not agree to any modifications of their standard contract, but they do have competitors that the drivers could go to.
Oh, and contractors should always set up an individual 401k; it has the same tax benefits as you'd get as an employee, and then some.
Imagine an extreme case where minimum wage is $8/hour and I'm offering a contracting job that comes out to $0/hour before incentives. If people work 8 hours a day on the schedule I want and do everything else that employees have to do, I give them $4/hour. Now most of my workers will be just as good as employees, but at half minimum wage. They say "I'm working like an employee, I should get minimum wage." I say "They have all the freedom a contractor has, they aren't employees."
Sure, in this scenario there are still people happy to work an hour here and there and earn the $2/hour or whatever it comes out to, but this isn't about whether those people exist or in what proportion. This is about the people who feel compelled by Uber's incentives to treat themselves as employees of Uber without receiving the legally mandated protections and benefits afforded to employees.
This also isn't about supply/demand, the free market, and whether people want to work for that $4/hour or not. The fact that we have minimum wage in the first place is proof that the country has made a decision to not leave employment terms to natural equilibria.
Uber thinks they are offering a reasonable deal. The people doing the work obviously think that it is the best deal they have available. The government is going to need to stamp down pretty heavily to stop that, because the actors in this situation have no particular incentive to change anything.
I know in this case, the assumption is that the deal offered will magically get substantially better. I don't think that generally works nearly as well as the abstract arguers argue.
That's interesting framing. What if the "best deal that individuals have available" is objectively bad for them, exploitative, or one more step down in a "race to the bottom"?
IIRC, The Grapes of Wrath described several "best deal[s] that individuals [had] available."
An analogy that I think fits is the availability of abortions. For an individual pregnant woman who wishes to terminate the pregnancy, many people [likely including her] would view the option of having an abortion as an objectively bad yet best deal available outcome. It would be preferable to a wide swath of people's opinion had she never become pregnant in the first place, via education, wider availability of free/trivial cost birth control, whatever. In aggregate, the world would be a better place if the rate of abortion was reduced via these means (less physical and emotional stress, etc).
That doesn't extend to banning abortions, for that doesn't help the particular individual woman.
[1] - It is chiefly for this reason that I prefer something like a UBI over a minimum wage law. If someone's labor is only able to create $4 of value per hour, I would rather let them choose to do that than not be allowed or be forced to do that only as an entrepreneur. To reduce the amount of desperation that might "force" someone to do that, UBI takes some of the economic pressure off.
> Oh, and contractors should always set up an individual 401k
You say that like you think they don't know the option exists. That's not why they don't do it. They don't do it because they don't have the money to do it, which is the real problem.
I can tell you from experience that your cost per month as a tiny company is MUCH higher than being an employee at a larger company.
No, you get it.
Yes. At this point we have to assume it's intentional.
Not even that, it's only binding in the Eastern District of Pennsylvania.
This ruling is mostly inconsequential, in my opinion; it's mostly a formality to get to the Third Circuit.
Every single driver I've ever asked (in 1000s of rides taken over 7 years) has always said they prefer the freedom of being able to work when and where they want. Students, retirees, stay at home parents, and others who specifically do not want to have a FT job.
I always hear this line about the sheer variety of backgrounds of the drivers, and that an Uber job is a way to collect a bit of extra cash. That they have something going on that is far more preoccupying, and that the Uber job is a mere sideline.
In my experience, 9 out of 10 Uber drivers in London are 25-60 years old, from East Africa or the Middle East, and do the job full time if you include working for other mini cab companies. It's their main occupation.
Might well be different elsewhere and probably is, but I can see why Uber might prefer to push a certain story that doesn't reflect reality.
Also, are there any negative consequences for the driver when a ride is canceled, even before the start of the ride? I can imagine that Ueber can detect when driver and client are within talking distance (from cellphone GPS coordinates), so they can detect and penalize this form of "gaming".
Interesting. If that makes you not an employee then half the flexible working time companies don't have employees :)
In my experience (as a software engineer) most companies take a hybrid approach, where they define a few core hours a day when you are supposed to be working (to assure that everyone is in at the same time for at least part of the day), but let you decide when to put in the majority of your hours.
to pick a job at random: teachers are salaried. they certainly have fixed working hours.
You can't be unprofessional about it and take the piss an not get sacked for cause but you cant micro mange and try and fire some one for being 5 mins late.
Uber basically decides the interaction with the client. They place relatively strict conditions on how to deliver the service (can only use these kinds of cars, etc). Uber guides almost all parts of the service.
Another that doesn't get talked about a lot: This is Uber's main business. Uber is essentially a car-rental service. The fact that the drivers are providing the primary service of Uber is another potential indicator that the drivers are, in fact, employees.
The very flexible schedule + commission-based payments are more evidence of a contractor relationship, of couse.
I would just like to commend Reuters for giving an explicit, concrete citation of the case in question.
We should really hold journalists to the minimal standard of actually pointing us the the primary source. It's not hard; they know what it is they are referring to. All they need to do is to put it into the article, as was done here. Good job.
(The same goes not just for "some court has ruled that X", but also for "a new study found that Y".)
Footnotes.
'Click for conments'
etc
But...
If you’re fighting for the ability to not pay your front-line people minimum wage, I have to wonder if you’ve got a viable business.
These are the people who interact directly with your paying customers and the ones who actually provide the service your customers value.
Keeping costs down is great, but you cannot squeeze the life-blood out of your business.
> U.S. District Judge Michael Baylson on Wednesday said San Francisco-based Uber does not exert enough control over drivers for its limo service, UberBLACK, to be considered their employer under the federal Fair Labor Standards Act.
The factors for the FLSA determination are not identical to the factors that the IRS considers for the purposes of making their employee/contractor determination. [1]
Also, of course, this is just one US District Court judge, so it's not binding on other District Courts or Courts of Appeal. Basically, we're still in the early days.
1: https://www.lexology.com/library/detail.aspx?g=062eba8d-8fad...
In the eyes of the State you are ONE or the OTHER. Can't have only the good halves of the bad halves. If the State hasn't figured out what 'Uber drivers' are, then this discussion will lead only to more confusion and pain.
Funnily IR35 is written so that self employed barristers don't get caught - even though they work on the same case for the same employer for over a decade.
He also found that drivers often handed out business cards to encourage repeat customers to pay them directly (avoid taxes+Uber, etc). Further, customers abused drivers various times (e.g. it's used as a cheap moving service incl expecting you to carry boxes), etc.
Entire article (use Google Translate): https://www.volkskrant.nl/kijkverder/2017/uber/
That said, Dutch people tend to be (let me say it nicely) 'very considerate on their spending patterns'.
The biggest object I've moved with Uber was a 40" TV which I carried and placed in/removed from the trunk.
What I know from talking to people is that the Uber drivers used to make above average wage after taxes and expenses. Now Uber takes a bigger cut and there is competition, so it's below average. Also you get a car with all expenses paid.
I think the problem is that in Europe the state covers healthcare and other benefit so Uber drivers are doing alright here.