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Comment by manfredo | Hacker News Reader

1) Uber drivers are totally at liberty to set their own hours, and drive in location of their choice ( destination are chosen by Uber, but a worker is at liberty to drive in San Jose one day and San Francisco the next).

2) The drivers are outside of Uber's business. Uber is a software and technology company, not a taxi service.

3) Drivers are independent workers, in business for themselves.

4) Same as above.

With these criteria it unambiguously seems to be the case that ride share drivers are independent contractors. I struggle to see how one could make the case that they are employees.

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1) True. But until about 1 month ago, Uber drivers didn't get to set their own rates, and they were punished for not accepting rides. Moreover, a key issue for this test is that Uber matches drivers to riders, so the normal independence that would be expected from a "platform" does not exist.

2) I laughed so hard I scared my neighbor's dog. Uber is a transportation service that happens to use technology (in the form of software) to provide it's service. Have you read their SEC filings or any of their other legal documents? In their own legally binding filings, they describe their primary business as providing transportation and food delivery services, not as a "platform" for whatever.

3 and 4) This is false, but it's a tricky point. Under AB5, it's not enough to just drive for multiple companies; a driver must satisfy certain legal formalities related to being in business for themselves, like setting up a legal entity, getting their own insurance, etc., to prove they are "customarily engaged" in the business. (Note that points 3 and 4 were distinct in the case law but were combined in AB5.) Most drivers haven't done this.

So now Craigslist needs to be regulated as an automobile dealer because it hooks up people selling cars to each other? Is Apple in the business of recording music because it runs iTunes? Does DoorDash need to have their offices inspected for food safety because they run a market for food delivery. No. Craigslist operates a platform for selling cars, it doesn't actually sell cars itself. Apple doesn't actually make music (unless they runs studio they I don't know about), they run a market for artists and record companies to sell their own music. DoorDash operates a platform for restaurants to sell food, it doesn't actually sell food itself. Contrary to your insistence otherwise, running a platform that connects buyers and sellers of something is not the same thing as actually providing that good or service yourself. People say that it takes mental gymnastics to arrive at this conclusion. I see the opposite: how do you manage to convince yourself that people writing code at Uber are in the same line of business as getting behind the wheel of a taxi? How do people convince themselves that a PM at DoorDash works at a restaurant?

Also, you misstate (or rather, only partially state) the description of their business in SEC filings. They describe themselves operating a market for food delivery and personal transportation. They are in the business of transportation and food delivery, but they are a in a different layer than the people actually driving cars. This is akin to saying Expedia is in the airline business. Yes, but they sell airline tickets they don't fly planes. Calling Uber a taxi company makes a out as much sense as saying Expedia is an airline.

And for 3 & 4 this could easily be resolved by having driver set up their own LLCs. But I'm not convinced this is actually a requirement. Plenty of people are contractors and fill out 1099s without operating their own LLC or partnership or some other type of company.

No, not sure how you even got there with Craigslist, and even if AB5 was relevant there's an exception for direct sales that would exempt craiglist and similar sites like ebay.

AB5 doesn't apply outside of the worker classification context, so your rambling about Doordash and food safety regulations is just bizarre. You're right that DoorDash is in the food delivery business and so its delivery drivers would be its employees under AB5 (and thats what the underlying case decided). Door Dash is not in the food preparation business, so restaurant workers wouldn't be treated as DoorDash's workers.

Contrary to your insistence otherwise, running a platform that connects buyers and sellers of something is not the same thing as actually providing that good or service yourself. People say that it takes mental gymnastics to arrive at this conclusion. I see the opposite: how do you manage to convince yourself that people writing code at Uber are in the same line of business as getting behind the wheel of a taxi? How do people convince themselves that a PM at DoorDash works at a restaurant?

I agree that running a platform that connects buyers and sellers in a marketplace is not the same as providing that good/service itself, which is why Amazon Marketplace and eBay don't run afoul of AB5. But UBER/LYFT DOES NOT RUN A MARKETPLACE. They would have to make significant changes to their apps to be considered "marketplaces" by any reasonable or historic definition of the term.

This is akin to saying Expedia is in the airline business.

This is not at all like saying Expedia is in the airline business. Expedia operates like a marketplace. It buys inventory from airlines and hotels and resells them to customers. The ultimate commercial relationship is still between the customer and the airline/hotel. That is not the case with Uber/Lyft as they are currently structured: both the rider and the driver have the commercial relationship with Uber and it only exists through Uber.

AB5 provides a lot of exemptions, so it's not necessary in every context. Rideshare drivers aren't one of the exemptions.

You're applying double standards here. If Expedia is not an airline, then Uber and Lyft aren't taxi companies. Uber and Lyft buy the services of independent drivers and resells them to customers. If the ultimate commercial relationship is between you and the hotel or airline when you book through Expedia, then it's just as fair to say that the ultimate commercial relationship is between the passenger and Uber/Lyft driver. Just like how Expedia's role is connect a customer with an airline and handle the payment transaction, Uber/Lyft's role is to connect a passenger with a driver and handle the payment transaction.

Crucially, your statement that the commercial relationship only exists through Uber is patently false. Drivers can, and do, driver for different ride sharing companies. A passenger could hire a driver through Uber on one day, and hire the same driver through Lyft on the next.

> If the ultimate commercial relationship is between you and the hotel or airline when you book through Expedia, then it's just as fair to say that the ultimate commercial relationship is between the passenger and Uber/Lyft driver.

When I book a flight through Expedia I enter a contract of carriage with the airline, not Expedia. This is a contractural matter, not just an abstract concept of "commercial relationship."

And when you take an Uber, you enter a contract of carriage with the Uber driver. Uber drivers have to have contract of carriage permits for this reason.

You do not enter into a contract of carriage with the Uber driver. At no point in using Uber or Lyft does the app have you agree to a specific contract with the driver, which is required for the contract of carriage to apply...

(In contrast, with taxis, signage in the vehicle indicates that proceeding with a ride does indicate acquiescence to the standard terms locally governing taxi services.)

So Uber requires it's drivers to have contract of carriage permits for no reason at all? No, you are entering a contract of carriage with Uber driver when you schedule a ride.

Taxi services and medallions specifically allow drivers to be hailed from the street. Uber and Lyft drivers don't get hailed Dr the street and thus don't need taxi medallions. This isn't something new, services like Super Shuttle operate in the same way. Uber drivers don't have such signage because they're not taxis, they're like super shuttle. You didn't hail them from the street you booked a ride through a service.

> 2) The drivers are outside of Uber's business. Uber is a software and technology company, not a taxi service.

This seems like _quite_ a stretch. With that logic you can make any modern company a "technology business" or a "logistics business", and suddenly everything a company does is outside of their core business.

> The drivers are outside of Uber's business. Uber is a software and technology company, not a taxi service.

That is some serious mental gymnastic.

No, it's not. Is Apple in the business of producing records because it runs iTunes? No, it's in the business of software (and hardware), and some of that software is used to sell music.

Trying to claim that a software service to run a marketplace to sell X is the same thing as actually running a business of building or doing X takes some mental gymnastics.

It takes some seriously bizarre mental gymnastics to call Uber/Lyft "marketplaces" when they don't provide any of the hallmarks of a marketplace, such as the option to select between multiple "stores" (aka drivers) or let drivers compete by offering their own prices.

Even more importantly, with an actual marketplace, you don't transact with the marketplace--you transact with the stores.

And with respect to your Apple analogy: Apple doesn't claim to be in the business of making music, just selling it. Uber/Lyft do claim to be in the transportation/food delivery businesses, and it's literally all over their legally binding SEC filings that the provide to investors every few weeks.

If it quacks like a duck, and it walks like a duck, and it swims like a duck, you can call it a digital platform all you like but it's still a duck.

No, the Apple analogy is entirely accurate. Apple is in the music business. But it's not in the business of making music, it's in the business of selling music. Apple is in the music business in the same vein that a record shop is in the music business.

Uber is in the personal transportation business, at a broader high level. It's in the business of operating a market for rides. Just like how a record store doesn't actually compose and record the music it sells, Uber isn't in the business of actually driving people around. That task is fulfilled by independent workers, who use the platform Uber and Lyft operate to find customers.

Can you point out in said SEC filings where Uber says, "our company's primary business is operating motor vehicles to transport customers"? As in, actually driving their own cars? Because from what I've read they're very careful about describing their business as operating a marketplace for drivers to conduct their own businesses.

We agree that Apple is just selling music, not making it. We disagree on how analogy that applies to Uber.

On its 10K, Uber identifies "gross bookings" as its primary revenue stream. Not "net bookings" or "commissions" or "marketplace fees." Gross bookings. Meaning that it treats all of the income from a ride as its own income, meaning that it's primary business activity is providing transportation services. The same is true for Lyft.

If they want to claim to be technology companies that only make their money from marketplace fees/commissions, they're free to do so but they'll need to change their financial and legal filings to match (and possibly their fare structures as well, since there's a mismatch between what riders pay and what drivers actually get). The reason they haven't done so is because that amount would be a lot smaller than the gross bookings number, but they can't have it both ways.

What impact does this have on the classification of drivers? When Uber takes $10 from a passenger for a ride, and contracts out a driver to transport the passenger for $8 then Uber has a booking for $10 and an expense of $8 for contracting out that ride. This doesn't change the fact that the driver is a contractor who sets their own hours and can drive for competitors.

Yes, Uber and Lyft are involved in providing transportation services but their involvement is in connecting customers with transportation providers. Calling Uber and Lyft taxi companies makes about as much sense as calling an Expedia an airline. Expedia provides air transport, but through reselling the services of airline companies like Delta or Alaska. Uber and Lyft provide transport by reselling the services of independent contractors. Uber and Lyft are taxi companies as much as Expedia is an airline: they're not.

It's a basic principle of contract law that parties can't agree to a valid contract if they don't know the basic fundamental financial terms of the contract, like say, the price.

A driver does not know how much a passenger is paying for the ride. The passenger does not know how much the driver is receiving for the ride. Ergo, they cannot have formed a valid contract with each other. On the other hand, the passenger knows how much they are paying Uber, and the driver knows how much Uber is paying them. This indicates that the common relationship is Uber, and that the driver is acting as Uber's agent with respect to the driving services. This is supported by Uber/Lyft treating gross booking as their revenue. It is a long-standing principle of GAAP that if you are collecting money on someone else's behalf as their agent, it's not your revenue. If you are treating the money as your revenue, and their services as an expense, that indicates they are acting as an agent on your behalf with respect to the services/whatever that gave rise to the revenue. Because the driver is acting as Uber's agent, AB5 comes into play to determine whether they are an employee or independent contractor.

I don't know why you're fixated on Expedia. Expedia is a reseller, which is a thing that has existed as a legal construct for over a century and has an actual meaning and requirements defined by law. Expedia doesn't resell services, it sells reservations/tickets/etc provided by third parties that represent a right to a specific performance of a specified service at a specified time and place by that third party. Importantly, once a transaction is completed on Expedia, the customer must generally seek customer service from the third party, not Expedia, because Expedia's role in the transaction is completed, and Expedia only provides relief if the third party will not, and that relief is limited to refunding the customer for the amount they paid Expedia.

UberLyft don't sell services provided by third parties, they sell a service (transportation or food delivery), and it happens to be performed by third parties on UberLyft's behalf. In contrast to Expedia, none of the participants in the transportation or food delivery service get to select their putative counterpart to the transaction, or the financial terms of the transaction, and after the driver's part is concluded they usually have no further interaction with the passenger as customer service service issues are provided by UberLyft, not the driver. IOW, there are no hallmarks of a business relationship between the driver and customer.

Expedia is a perfect example because they're doing in essence the same thing that Uber and Lyft are doing: reselling transportation services. When you book an Uber what you're doing is informing Uber that you want to go from point a to point b. The Uber finds a third party willing to fulfill that task, and resells this service to the customer at a markup. It's exactly the same thing Expedia does, only in real time.

> UberLyft don't sell services provided by third parties, they sell a service (transportation or food delivery), and it happens to be performed by third parties on UberLyft's behalf.

Which is exactly why the drivers are contractors. You seem to understand that the drivers are third parties, yet are fixated on irrelevant things like revenue from bookings to try and distract from this fact. That Uber treats all of the money paid by the passengers as revenue does not alter the fact that it's drivers are contractors that set their own hours and can drive for competing services.

Yes, Apple is absolutely a music publishing company (among other things) because it runs iTunes.

It's a music publishing company as much as DoorDash is a restaurant. You use DoorDash to get food, but DoorDash is not the person actually making the food. Likewise Apple sells music, but said music is actually recorded and published by some other entity.

Apple has Apple Music, a publishing division, where the head of it has the title Global Director of Music Publishing. It's kind of absurd to say that Apple isn't in the business of music publishing.

If Apple has actually started publishing its own music then indeed Apple would be a music publisher.

But has Uber done the same? Can you charter a car actually driven by Uber employees? As far as I am aware, Uber exclusively builds a platform to link passengers with independent drivers - who can and often do drive for competing services. Akin to what iTunes was before Apple started publishing its own music.

Your argument is circular. Uber drivers aren't employees because they are contractors. They are contractors because driving isn't Uber's core business. Uber's core business isn't driving because they don't have any drivers as employees.

Uber buys cars and leases them to drivers, it offers full-time professional drivers through Black, it invests billions of dollars into self-driving cars, it offers delivery as a B2B service. Look at the Uber Eats advertising[1] - they aren't claiming to connect you to drivers, they are claiming to connect you to your customers.

Uber's core business is clearly driving.

[1] https://www.ubereats.com/restaurant/en-US/signup

No, the logic isn't circular at all. Uber drivers set their own hours, crucially, and are free to work at competitors. Someone can drive for Lyft 5 hours one week, and drive for Uber 5 or 15 hours the next. And Uber doesn't tell them when they need to work.

You say that I Uber offers full time drivers through black. Do you mean that Uber assign drivers to work at a specific time frame for a significant duration? All I can tell about Uber Black is that it offers drivers with more stringent requirements (more licensing, more permits), I don't see any advertisement of having someone chauefer you around for a week. If Uber does offer that kind of service, then drivers rendering that service should be employed.

> Look at the Uber Eats advertising[1] - they aren't claiming to connect you to drivers, they are claiming to connect you to your customers.

Yes! This is entirely the point. The driver is a fairly minimal component of an Uber Eats order. Deliver usually amounts to less than a third of a delivery at least where I live and easily under a fifth. And for that reason Uber contract out this part of delivering an Uber Eats order. Simply asking the public "who wants to take this order to the delivery address?" and creating a market for labor is a more effective solution than making hiring decisions, trying to schedule people fairly across the day.

If object to the contractor model as a whole that's its own criticism. But it is exceedingly hard to claim that Uber's relationship with drivers who participate in the market it runs is that of an employer to employee.

> 2) The drivers are outside of Uber's business. Uber is a software and technology company, not a taxi service.

What good is all that software and technology if a driver doesn't pick me up when I request a ride. Uber very much depends on drivers to perform their core function.

Absolutely. This actually a type of relationship that many businesses have. Most hair salons don't actually employ any hairdresser. They employ the people that clean the shop, and run the register. But the hairdresser themselves are independent and lease a stall in the shop. The salon very much depends on the independent hairdressers to function.

Pointing out that Uber would cease to function without independent contractors is entirely correct, but does nothing to demonstrate that that these workers should be categorized as employees rather than contractors.

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