Okay, so Uber mixes both those scenarios.
I wonder if Uber has filed SS-8 to have the IRS evaluate the situation.
They have fixed performance guidelines (star ratings) and fire employees for not picking up jobs (rides). The employee also only works for Uber (not the individual customer, who is anonymous until the job is accepted), who determines the rate and is the ultimate decider if the completed work is accepted (they resolve all customer disputes and are the final say on whether you get paid, not the customer). Uber determines the method of completing work (e.g. how long you have to wait for customers before canceling).
Critically, these “contractors” are integral to Uber’s regular business operations. 100% of Uber’s product relies on its drivers.
On the other hand, they don’t provide equipment or set schedules. Clearly their mode of work blends aspects of W2 and 1099. But also, because these drivers are integral to Uber’s business, it’s possible they’re in violation by not compensating for/providing equipment. Again, the drivers are told who to pick up and where to go, and if they don’t do it while they’re on shift, they get “fired.”
The only factor that comes close to making them a contractor is the lack of schedule, and maybe the fact that they can go work for Lyft too. But every other aspect of the job looks like W2 to me. More checkboxes are on the W2 side of the guidelines.
So, California’s law fills in that logical gap by determining that, in this scenario, the workers are W2 employees.
If the IRS has a problem with the law in California, I assume they might have said something by now, or sued the state?