California Labor Bill, Near Passage, Is Blow to Uber and Lyft

And what, in your opinion, is the way to do this?

You can be available to drive for more than one company at a time, but that's generally true of W-2 on call temporary work, so I don't see how it is inconsistent with them being employees.

Most people still have the same rough, basic needs. A "supplementary" income is not enough to do this. Every single Uber driver I've ever asked does it as a full-time job, but doesn't get the pay or protections of a full-time worker.

Especially in the UK and other more regulated countries than the US, becoming an Uber driver takes time and money as you require a licence. People aren't doing it as a side-gig. It's their job. And Uber knows it.

Those two things do not compute. How does the amount being paid determine where a person can/cannot work? I can hold two jobs now if I wanted (even though I'm being paid way more than minimum wage), and that's as long as I honor the contract I have with my current employer.

>- I don't want drivers to lose the flexibility to do this on a casual or flexible basis. Quotas and the like will mean the only option is to drive full-time. I'm all for people being able to supplement income. I feel like this is useful to a lot of people.

This one too. I get that companies will start to prefer full time drivers, but just like in other industries, there will be temp workers and part time workers.

And depending on how the laws are written, there will also be "contracting" companies that lyft and uber could use to fill up their drivers. Kind of like how Via is doing in NYC - from what I can tell very few drivers actually work for Via, instead they work for all these other car companies, and Via delegates rides down to those companies who then dispatch the vehicle.

These regulations will cause a sea change in how this industry works. Whether it is for the better or not is something time will tell.

The worst part of the medallion system were the title transfers. Quotas and a fair lottery system can be ok, and can even be in the public interest to reduce traffic. However, letting the medallions go to auction for hundreds of thousands of dollars creates perverse incentives that squeezes small players out of the market or force them into crippling debt.

If you drive more than 30 hours per week or 120 per month for one company and meet the 5 criteria, you should get benefits and be taxed as an employee for that period from that company, unless you are already receiving benefits from another company.

There is no reason to prevent them from logging in and out when they want.

For example in the Bay Area Uber could start five shell companies for the East Bay, SF, Peninsula, South Bay and North Bay. Then each driver is restricted or algorithmically encouraged to work in a different zone for each 10-hour segment.

The TNCs already (or at least used to) operate different companies for different markets. This scenario doesn't seem to far fetched.

Being an employee DOES NOT require (1) only full-time work, (2) fixed schedules, or (3) exclusivity with one company.

Being an employee DOES require employers to compensate for all work an employee performs. Drivers shouldn't have spend 20 minutes of every hour off the clock while driving to pick up riders. Drivers shouldn't have to spend 45 minutes off the clock in the airport cell phone lot waiting for their turn at the top of the queue.

If the business model only works by making people work for free, then it's necessary for the state to set minimum standards.

The reality isn't because of Uber and Lyft, it's because of Pizza Companies. When a company like Papa John's spins off itself and makes a company called "Red Delivery Guy" which they claim you're an independent contractor for, and then uses that company to rip off its employees (this actually happened with the Papa John's on Chicago Ave in Riverside, CA, illegally taking employee tips, classifying them as IC when they're in fact employees, etc.)

Ubar and Lyft are just following that particular scam started by pizza companies. Hit the pizza companies instead of Uber and Lyft and you would see this practice disappear almost overnight.

The market has a giant moat, via the mind blowing amounts of VC and IPO cash that they used to buy market share.

The “risk” of regulation stopping new entrants seems so laughably minor compared to this that it makes one question the impartiality of the whole argument.

This is a non-point. People often have more than one job, and they're considered employees at each of their employers.

Also, a minimum wage per hour is going to probably be much better than driving for both companies in practice, since you'll still be getting paid even if Lyft alone dispatches fewer rides. You're even saving money there since that idle time isn't burning up gas.

> the flexibility to drive for multiple companies at once

A point of clarification: Lyft effectively prevents XL drivers from dual-platforming. They "keep you busy"* with regular and shared rides which you're not supposed to turn down. Accepting these rides renders you unavailable for UberXL rides when Lyft has no XL rides to offer.

* - https://help.lyft.com/hc/en-us/articles/115012926367-How-to-...

1. with a contractor you are creating a contract around the deliverables and the time frame for those deliverables. You do not have the ability to reach into the contractor and have any say in how the work gets done (e.g. can Bob work on this task Tuesday instead of Thursday even though it's not related to interfacing with me). To me this satisfies the "person is free from the control and direction of the hiring entity in connection with the performance of the work" part.

2. "the person performs work that is outside the usual course of the hiring entity’s business" is the tricky one, but I think it more has to do of what you explain your business to be. If you are running a SaaS platform and enter into a contract with someone who provides software development expertise the relationship between your business and the contractor is different. In the cleaner case in one of the other trajectories there is a difference between someone providing supplemental cleaning services for existing cleaning businesses and someone who provides cleaning services. The relation is probably distinct enough to be interpreted this way, as someone pursuing to sell their capacity to someone else is different than a business acquiring a contractor to deliver the goals of their business.

In the Uber case a driver who works for Uber to deliver their core business is different than a company formed to provide taxi service capacity to other companies who are running a taxi service.

3. Then the last clause "the person is customarily engaged in an independently established trade, occupation or business" I think for software development this is easy to say when someone is trying to demonstrate themselves as a contractor vs. someone who is 'hired' as a contractor.

I think if you are worried about really the first case that is just something that should enter your contract language as a deliverable of the other entity. The relation between you and the entity you are contracting is different than discussions with the downstream contractors. Since the smaller contractors inevitably have this end up being the same person this could be confusing. Based on the writing of this rule I feel like you would be able to ask the entity for updates, information related to the deliverables, schedule meetings, and so on. You may be able to ask for accurate accounting for hours worked but you can't have any say when those hours were because the entity would be billing you the number of hours.

For the second case I think you would be fine if you were soliciting someone to contract some hours to work for you because the other person would be representing themselves as a consultant who has hours to sell. You would be buying hours of work in expertise X which is different than your goal of selling Y. If the relationships were built this way then I think this satisfies the third clause as well as because then this contractor would be in an independent business who could satisfy the terms of a contract between entities.

I feel like as long as you treat the other party as a business and not a person, and the other party understands this you are able to operate normally. You may have to emphasize this nature more to be compliant with this rule and focus on milestones and deliverables and contractual obligations (it is still fair to say to enter a contract that says it has to be delivered by 2pm Friday), but you have to keep your hands off defining hours to be available/hours on call/punch in and punch out times, etc. I would stick with buying and selling hours of work for some contractual outcome.

The reason for these types of regulations is basically that society benefits from people having secure jobs and benefits and the security translates into higher investment back into economy (ie people save, buy houses etc)

I'd suggest to consult a lawyer.

Looking at https://www.thebalancesmb.com/what-is-the-abc-test-for-indep... it appears the intent is to handle trades like construction subcontracting, which is very similar to what you want to do.

So what are companies going to do in this case? Well, California is an at-will employment state, so maybe they’ll get really good at onboarding and then hire and fire FTEs within one month to cover the busy season.

That doesn’t seem desirable to workers either.

From another article:

" b) is doing work that isn’t central to the company’s business, "

Bam. How many contractors lose their jobs from that sentence? Ridiculous.

a quick edit: Now that I think of it, does FTE imply an hourly rate? If so, how do you reconcile an Uber model of piecework with that? Perhaps they could simply rent out an Uber medallion.

There is such a thing as a temporary, part-time job (as an employee). See, e.g., every single Walmart ever. Most major fast food chains. Most retail stores during the holiday season. Etc.

The primary change is that companies will start having to handle payroll taxes for part-time workers rather than pushing these administrative costs onto the workers by claiming that the workers are actually their own businesses.

Software development contracting, as it is right now, is intensely problematic at pretty much every level.

Hiring closely-managed contractors to work on-prem basically creates an underclass in the industry: they're just like employees, except they get no insurance or PTO, and they're excluded from most company functions, and it looks bad on a resume because they're rarely at one company for long. Hell, they tend to get treated differently because they typically wear guest badges instead of employee badges. This is simply harmful, and while a lot of companies may feel like they're financially pressured into doing so, society has a vested interest in stopping this practice.

On the other hand, hiring a remote consulting company where you give them a requirements sheet and say "do your thing and get back to me with something that fulfills this"—i.e., actual, proper contractors—inevitably turns into a nightmare. I've seen these consultants go incommunicado for weeks at a time, find every excuse to push deadlines back, and when they do turn something in, they turn in a pile of awful code that needs to be rewritten by the actual engineering staff. My experience with these people has lead me to start referring to them as "dairy farmers" because they just milk their clients, and every one of my colleagues who I've introduced the term to has fallen in love with it.

Honestly, I think software engineering contracting should just go away. Either you create and exploit an underclass or you get screwed by dairy farmers.

The only way I can see to save this situation is to legally delineate "temp employees" as a class. Temps would be employees in every way except that they have a fixed term of employment stated up front (where "fixed" can mean either a set amount of time or until a specified project is delivered). They would have benefits and PTO, just like other employees. They would be employees for the purposes of who can attend company events, what kind of badges they wear, etc. It still wouldn't be perfect because the short length of employment would look bad on a resume, but it's a far cry better than the current situation. And if it costs companies more to hire them, then that's just the cost of doing business in a society. I've seen the same arguments used to demean basic dignities such as minimum wage, overtime laws, mandatory sick leave, paid vacation time, etc., and they're all spurious.

Hasn't this been proven to rarely ever actually work? I've been on multiple corporate projects with strict deadlines / late penalties approaching where management from every angle wanted to "just throw as many contractor bodies as possible" at the problem. How did we get the product shipped without missing the deadline? A handful of really high level, non-contractor full time engineers swooped in and saved the day.

Another use case at the same company:

Stuff is blowing up all of the time in prod. Who is around to fix it? Contractors who have no clue what is going on and only make the code worse. The stuff is blowing up in prod in the first place because of pure lack of competency.

That's my contractor experience at least. Probably worked with 1-2 good contractors out of 100-200. Most couldn't pass FizzBuzz, knew nothing about the concept of consistent style / linting. $75/hr+ to just got tossed from project to project/fire to fire, on average making things worse.

Examples of a contractor here would be: hiring a third-party graphic designer for a few months while you ramp up hiring at a startup.

To attempt to summarize in a way that answers your questions: First do you know how to do the work and use your own expertise to adapt to circumstances or do you follow specific direction, training, and escalation procedures as dictated by management? If you are following a script as trained and have someone overseeing you as you work then you are an employee. If you know what to do and get only summary instructions then you are likely a contractor. Second, if you are hired by a cleaning company to extend their cleaning capacity using their methods and equipment then you are likely an employee, but if you are hired by a software company to sweep their floors whenever they get really dirty then you are probably a contractor. Finally, if you do cleaning on your own for various clients and are hired to do cleaning then you are likely a contractor, but if you clean for one client by their instruction and with their oversight and support then you are probably an employee. Note that each of these criteria has substantial wiggle room and the idea is they all work together to support a decision one way or the other.

You can ask them to dust, but can’t order them to dust a certain way. Of course you can make requests - don’t use cleaning product XYZ because I’m allergic, don’t dust the China because it’s too fragile, etc. But I suppose at some point it could be argued that too many such requests cross over into essentially supervising how they dust.

I think you’re right about contracting out for help. If you have employees already, and then you expect another person to join in and operate just as an employee would, why wouldn’t they also be considered an employee? I’m sure there could be some loopholes however.

> free from control and direction of the hiring entity in connection with the performance of the work

An independent contractor should be free to work when, where, and how they want. IE, you can't demand a contractor show up from 9-5 at your office, wearing a company uniform, and following employee policy.

> the person performs work that is outside the usual course of the hiring entity’s business

for example, a company that sells software, might hire a contractor to update their online advertising. The company doesn't sell online advertising or have any expertise in it, and they don't have a need for a full time position for online advertiser.

this one is going to be interesting for uber and lyft. right now, they identify and brand themselves as a ride sharing company. So rides ARE their business model. They might, for example, be able to pivot into a software company that licenses their ride-hailing software to drivers (who are license the software to help run their own independent businesses), then maybe they can get around this after some work. but right now its appears that drivers work for uber and lyft to deliver services to Uber/Lyft customers.

> person is customarily engaged in an independently established trade, occupation or business

this is the most straight forward of them all. If an IC provides their services, the same service, to more than one company, that's a good indication that they are running their own business and not working as an employee for another. Here, Uber and Lyft actually benefit from each other because a lot of drivers drive for both Uber and Lyft. Thats why we've seen both uber and lyft drop their exclusivity arrangements with drivers in recent years.

As I understand it, the US is essentially unique in the idea that jobs come with insurance.

What was frustrating about the labor laws is that there were never any clear rules about what constitutes a contractor versus employee, there are just some "smell tests" and guidelines but it's ultimately deferred to the judgement of California's labor bureau.

> a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation or business

The new laws being proposed here don't look much different from the guidelines that already exist, they're just more black and white leave less room for interpretation. I think the most troublesome one for startups is "the person performs work that is outside the usual course of the hiring entity’s business", but it shouldn't affect general contractors unless they're working for a general contracting company.

It's pretty clear that NC has become a different state already compared to the one that used to send Jesse Helms to the Senate not too long ago, just as CA changed from the home state of Richard Nixon and Ronald Reagan to what it is today.

There are many companies now starting up in places around the US. The funny thing is that nowadays you don't even need a real physical presence to get things done.

I've heard this for a long time, and yet the most profitable companies continue to be concentrated in a select few HCOL areas that have comparatively better rights for workers.

California is the 5th largest economy in the world so choosing not to operate in California would be like giving up on a huge piece of the market.

All that will happen is that the cost of goods will increase to cover the cost of increased regulation. This may increase competition somewhat but the size of the CA market will almost certainly make up for it.

This is why the whole ABC test of the new proposed law came into being.

1) Equating Uber and Lyft to taxis in the sense of employment rights isn't a fair comparison.

2) All that's going to happen is that Lyft and Uber are going to increase their prices to cover the cost of the overhead. The market will determine if the increased cost is worth the convenience.