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Comment by jdhn | Hacker News Reader

If the state wins, I wouldn't be surprised if Lyft and Uber pulled out, or at least increased their fares by a substantial amount.

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Closing the loophole in the law that lets them treat workers as "contractors" rather than employees is going to torpedo their whole business model.

In my book, it's not a "business model" until it's consistently profitable.

I agree with some of your underlying sentiment, but this is a textbook "no true scotsman" example.

There can be a bad “business model”

Exactly. It's just a model of how to piss away money and look bad doing it. Haha.

I'm not sure why people think that drivers for Uber & Lyft shouldn't be treated as "contractors". I know I'm in the minority on this, but to me it seems that you can jump in and out of employment with Uber & Lyft quite easily, to the point that it does seem more like contract work.

As an anecdote, I took a Lyft to the airport with someone who had stopped driving for 6 months in order to get started with a new full time job, and had just started driving again to pick up a little more cash on the side. No full time employer would tolerate a 6 month break to start up another job, and then allow you to come back.

My current full time employer would be fine with that -- specifically withing 6 months, I'd keep my RSU grants too

Contractors can set their own rates. These drivers are employees.

Taxi drivers don't set their own rates. What's the proper categorization?

The taxi analogy isn't the same. The rates are being set by the local government, not some non-government third-party whom they work with like perhaps the people who actually own the medallions (most are loaned out) or the people who lease out usage of the vehicles, etc. If those places were setting rates on what could be charged then I'd say there's an argument to be made. Also, let's not forget why the government put in those rules on setting the rates in the first place - consumer protection. Cabbies were routinely ripping people off.

Furthermore, it's not just one thing. It's a set of criteria/tests that for certain states like CA and NJ are defined in the law. Taken in aggregate and not just on one single characteristic of the employment a determination can be made.

This isn't wholesale true. Some areas are highly regulated (see Tokyo) and some are not regulated at all. Also, local government sets a MAXIMUM rate in some jurisdictions. The taxis then choose to set the rate the driver can get paid.

In NYC and possibly other municipalities, the government sets the minimum rate for uber/lyft. Are they more or less of a contractor then?

If Uber drivers are taxi drivers, which Uber claims they aren't (they're limousine drivers legally), then they are running illegal taxi services. It seems mighty convenient to pick and choose from laws only when it suits Uber's bottom line.

Your conclusion presupposes that the employee/contractor dichotomy is a useful construct in its typical form.

But the current dichotomy limits the freedom of individuals to contract out their labor on terms that work form them. It replaces the free choice of individuals with the "wisdom" of bureaucrats and politicians.

Im not sure how this distinction matters.

In practice contractors still have to charge market prices. I’m not going to pay 20% more for the same quality of service.

At least in Australia I think someone is only a contractor if they earn income from multiple different companies. If it's all from one then they are an employee.

Seems for me every driver works for both Lyft and Uber

Personal Services Income is great fun as a contractor (/s). Worth a read: https://www.ato.gov.au/Business/Personal-services-income/

There are a variety of factors that the courts use to determine employment status. Single source of income isn't one

https://www.fairwork.gov.au/how-we-will-help/templates-and-g...

In my book, if you can't determine the price for your service, you aren't a contractor, pure and simple. Uber determines the rates, sets their fees, supplies the clients, and has rules about how many times you can skip/pass on choosing to accept a fare. Uber basically controls every aspect of the entire process but let's people choose when they want to work. That "benefit" is thrown out to drivers so that Uber can try to claim they are "contractors" because they can choose when to work. I don't think that should be the only test - and for the states that have rules on how to define such things, most of them do not have that as the only test. Plus, I work for a large corporation and there are salaried people here who choose when to work and when not to work. Mostly the sales team than anyone else but it definitely exists. Similar story for real estate agents, financial planners and investment managers, etc. They are usually salaried employees of a firm who can set their own hours.

Maybe the answer is that they are neither contractors nor employees in the traditionally-understood form.

But the criteria have to make sense in the context of the law. For instance, "unemployment" doesn't make much sense in the context of a driver who works for Uber and Lyft. And "minimum wage" doesn't make sense if the drivers are able to decline or cancel a request.

So can you be more specific about what aspects of employment should apply to an Uber driver?

In the UK we have "employee", "worker" and "self employed" basically. They define different rights for the worker, if the company wants more control it moves things towards employee. If they want fewer responsibilities then they have to give up some control (e.g. disciplinary procedures, setting the price, etc)

> Uber basically controls every aspect of the entire process but let's people choose when they want to work.

No, the main benefit is that Uber doesn't choose who can drive, anyone can sign up and start driving. I don't see how you can classify them as employees without Uber having any selection criteria at all for the drivers except that they have a valid drivers licence.

The workers choose to work at Uber, Uber didn't choose to employ the workers since Uber is open for all.

What about drivers rating?

Don't you start driving before you get a drivers rating? So it is not a blocker for you to start working there. After that isn't the drivers rating just a way for riders to kick misbehaving drivers off the platform? So it is the riders who fire the drivers, not Uber.

The company doesn't give out driver ratings. Other marketplace participants do.

I used to teach snowboarding as a contractor and had no choice over the price of my services. The resort set the price and I had to either accept or not work with them.

> but to me it seems that you can jump in and out of employment with Uber & Lyft quite easily, to the point that it does seem more like contract work

You can't really look at one aspect of it and make a determination, it's based on several factors. The main ones that come up in this scenario are if the contractor/employee can set their own rates, and how closely management monitors how they do their job. Flexibility of employment - either in terms of scheduling or to take periods of time off - is not considered.

What's the difference between setting your own rate and being offered a rate that you can choose to accept or decline? Is it the marketplace function of Uber (determining a price point between riders and drivers) that makes it different? Does being a contractor really require the ability to set a rate that no one is willing to pay?

I think there are plenty of low level jobs that would allow that like waiters, cleaners, construction workers, warehouse workers or delivery drivers.

All jobs that are desperate for workers. It's constant shortage if you listen to the news, but when you see conditions it's more that people don't want to work there because the conditions and the pay are quite bad.

That's ok. They're welcome to pull out. But they won't. Time and time again we see that business rather just raise their fares and make money than pull out of large markets. They are after all money-driven.

The brussels effect[1] is a good argument for this. People said the same thing with GDPR, labour laws and enviromental laws.

[1] https://en.wikipedia.org/wiki/Brussels_effect

Wow this (and the similar California effect) are a great name for exactly the "feeling" I was talking about. I'll use this from now on. Thanks.

California's done this with emissions.

as long as there is a penny to be made, someone will make it. If Uber leaves another will fill the gap. I don't feel that regulation generally stifles business, only margins.

or they could just follow the law?

In 2015 Uber made 9 million rides in New Jersey, and the article said they were ordered to pay $50M in employment taxes in that year, so drivers would be forced to give up $6 per ride extra in taxes. I don't think the drivers would want this.

In order to make the taxes not ridiculous Uber would be forced to start declining people who want to start riding, you'd have job interviews with an application process ensuring that the driver is going to be worth the significant employee tax, since a driver only driving a single time will cost them significant amounts. That is how normal businesses do this, and I think it would be a huge loss. The ability for anyone to just start driving for Uber with no questions asked is extremely progressive, not sure why anyone is trying to ruin that. I don't understand why people think that making money needs to be so controlled like it is today.

Source on number of rides in New Jersey:

https://eu.app.com/story/news/traffic/commuting/2015/11/12/u...

> so drivers would be forced to give up $6 per ride extra in taxes.

how is this different than anyone else who has to work in the state? You can replace drivers with almost any other job. Why should uber drivers get special treatment when its comes to paying taxes?

They'd lose out on a huge market where there are already competitor apps to both Lyft and Uber.

... is that bad?

Personally I think they should pull out nevertheless and make an example out of NJ. That should give enough signals for other lawmakers not to come between consenting parties.

There are plenty of competitors in NJ chomping at the bit to eat Uber and Lyft's lunch.

What are these competitors? I go to NJ frequently and haven't heard about any of them.

They get bought out frequently. Juno is big in the NYC metro area that covers a lot of North Jersey. Curb, Via, and Gett also operate there.

> make an example out of NJ

If Uber left, it would look more like NJ made an example out of Uber. Other states would see NJ's success in beating down Uber, and might be inspired to tighten their own labor law enforcement.

Also, Uber would be leaving behind a very lucrative market in NJ: it's the 11th most populous state, 3rd highest in income,[1] and a large part of its population is in the NYC metro area (high population density, lots of rides to commuter trains, etc.).

[1] https://en.wikipedia.org/wiki/New_Jersey

"We should just let corporations do whatever they want"

I wonder how many people have this opinion just to stick it to "the man" -- seems like most of the anti-Uber HN crowd does not actually drive for Uber, but nonetheless express a passionate hatred for their business model.

why would not working for someone preclude you from having an opinion about that companies questionable business practices?

but hey, it's easier to sleep at night when you just dismiss opposing opinions due to their lack of the exact same life experience as you?

They are avoiding taxes which indirectly increases ours

Your comment doesn't make sense, are you saying that all independent contractors are tax avoiders and leech from society? Either the taxes independent contractors pay are fine and Uber paid a fair amount, or we need to raise the rates for all independent contractors.

They are not independent contractors they are employees its the employer side that is going missing.

An in the USA (vs the UK) actually self employed workers get screwed over getting 20% over a FTE i seen as good where in the UK I would go out for 3x my FTE sallery.

Don't know how that works in US, but here in Europe the answer is yes, the main reason people become contractors is because taxes for contractors are lower than for employees, which means more take-home pay for the same cost for the employer.

In the US, contractors have a higher effective tax rate than employees, and are responsible for FICA withholdings that are usually part of an employer's payroll tax.

Consenting parties? The asymmetry is such that you can't really speak of consent any more. It's about as consensual as a 15 hour workday was in the 1920's.

Just like how Uber pulled out of Austin, and in their place, a half-dozen firms with similar business models sprung up, to serve that market?

Uber's not some irreplaceable God's Gift to Man.

I don’t know why this is downvoted so much. If the state wins, Uber will absolutely have to either pull out or raise fares. And I would think pulling out might make more sense because the difficulty of accounting for some drivers as employees and some as contractors would be extremely punishing.

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