Uber and Lyft shutdown in California averted as judge grants emergency stay

I suspect this will happen ultimately with the drivers - although I can't imagine the drivers will be thrilled with a 20% cut in pay.

1) Payroll tax revenue 2) Unions feeling threatened

The implication is in either case it’s an explicitly hostile action by the government in favor of special interests, and the majority of drivers did not want this.

Can anyone more knowledgeable on the topic pitch in — is there any truth to these arguments?

>66% of drivers said they wanted to be independent contractors vs 15.8% who wanted to be an employee

[1] https://therideshareguy.com/uber-driver-survey/

Sometimes it comes up naturally (see the benefits of being a software engineer) but when unemployment is high those protections tend to go away especially for jobs that have minimal barrier of entry (ie ride share driver). Right now drivers have very little leverage or power over Lyft/Uber except for not participating in their market.

The question of AB5 is the right protections and classifying them as employees is I think the debate. I believe most drivers want independence b/c most drivers only drive part time. But the drivers who drive full time want better protections.

that sort of big brother behavior is the antithesis of independence and throws out any argument that Uber is somehow just providing drivers with lead gen software like they’re Salesforce or something

You actually see this sort of dynamic in startups where you have two people at the top. One is the creative one who pushes all the boundaries and stuff. The other person is the more pencil pusher/lawyer/business type who makes sure the bills get paid on time.

Lots of good things happen when you can get these two types working together instead of hating each other.

Why should a supposedly free society be free to accept only how Uber or Lyft might have it?

It isn’t just bureaucrats but the public that votes them in. You’re cherry picking bits n pieces from the broader social narrative to highlight. Why should anyone care what any random poster on HN thinks is just as valid and vapid a question once you take 5 minutes to think it over.

HN is just as knee jerky and shallow as Twitter and Reddit. Don’t kid yourselves folks

Pre-Uber, either the driver rented the car to a middleman who rented the medallion from a rich owner, or said owner was selling and financing (most banks won't touch these medallions!) a medallion at a ridiculous interest rate to a driver that planned to use it as his retirement savings (an extremely volatile asset and not very liquid).

The more I spoke to cab drivers the more it seemed their industry was a pyramid schemed aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber brought a breeze of fresh air: Someone could simply buy a car, calculate the depreciation and it's value on the market (since unlike medallions cars are relatively liquid assets!) do rideshare and calculate their profits or loss. They can get out of the game at anytime, and they know exactly how much they are going to get for the car they have should they sell it.

[0] https://news.ycombinator.com/item?id=24225648

In NYC, the Taxi and Limousine companies were one of the top donors to the Mayoral race and, naturally, the Mayor strangled Uber/Lyft soon after.

In this case, California created new laws in response to employee abuses at Uber and Lyft.

This notion that Uber and Lyft drivers can afford to quit and find a new career is infantile. The real world does not work that way, and people who labor for low wages should be protected from abuse.

Everyone who works for Lyft or Uber is making an active choice to work for Lyft or Uber. It isn't surprising they would choose to continue working for them rather than risk losing that job entirely. That doesn't mean these people aren't being taken advantage of by these companies.

It is comparable to someone being paid below minimum wage under the table. If that person entered into that arrangement voluntarily, they likely did it because that is their best option. If that person is given the choice of supporting a lower minimum wage or being fired, they will likely support the lower minimum wage. That doesn't mean that society as a whole would benefit from a lower minimum wage. We should instead enact laws we think are best for society as a whole (I'm not convinced that AB5 is necessarily that, but I am speaking generally here) while also implementing social policies that can take care of the people like this who are caught in the transition of raising labor standards.

However, I overwhelmingly don't want to pay for their healthcare or food stamps because they aren't earning enough money.

I personally think that AB5 doesn't go far enough. If you employ people for more than 40 hours, you should owe healthcare and benefits, period. It doesn't matter whether those 40 hours are one person or 10 people or whether the people are contractors or employees. If you can't deliver benefits, fine, then you owe as payment to the government to provide that.

We WANT people to have stable employment, not gigs.

In any idea that these folks resemble independent contractors in any way is bullshit. They can't set the rates of the rides or that they give to Uber or Lyft. They can't set the basic terms on when and where you accept rides. When someone doesn't want to drive me across the bay, I can hardly blame them, but they have no leverage to dictate their own employment except by quitting. I guess these people end up accepting some kind of opaque, kafkaesque punishment to their livelihood. Independent my ass.

Granted, single payer healthcare would ameliorate some of the problems here, but it's very difficult to categorize the cut that Uber or Lyft takes for the commodity service they provide, protected by absolutely massive moats of capital, as anything but exploitative.

Would you if some random person, who for all you know could be an Uber/Lyft employee, and even if not, is someone who uses Uber/Lyft and therefore is likely happy with it, asks you a question about it?

This change didn't happen overnight. AB5 was passed 6+ months ago, after over a year of political negotiation.

The drivers seem to like the situation they are in.

I could really care less about the "technically..." type of arguments. The drivers don't think they are being exploited, they like the job and the freedom it gives them. Any law that puts an end to that is _bad_ for those people.

Just because these laws were put in place to help people doesn't mean they always help people. The people who are supposedly being helped by the law here think it's hurting them. The law is supposed to serve the people, not the other way around. The law needs to change to allow these people to continue the situation they enjoy.

It drives me crazy to read people arguing about the technicalities of the law and ignoring what the supposedly exploited people are saying.

Currently, we all paid for their Covid unemployment benefits that they did not pay into.

We pay for unpaid hospital bills after accidents because they did not pay into workers compensation.

We’ll pay for disability after those accidents that they did not pay into.

Uber and Uber drivers a freeloading off a system we are paying into.

If they want to pretend they are not employees, then they should all have to pay into all these things themselves.

This whole business has nothing to do with the drivers, neither what they want, what's good for them or even what's good for customers.

It's about a class of politicians (unions and the leftist politicians they back/finance) scared to death to see their historical grip on power disappear because of a paradigm shift and who are using the people's goody-two-shoes knee-jerk reflexes to try and regain said grip.

There are some issues though; for one the state ends up subsidising workers who don't have good unemployment and health insurance.

The best solution would be UBI - give people enough money to live on while removing worker protections like minimum wage and mandatory insurances.

To those of us not living in US, America just feels like a nation that constantly shout at each other, and now it is amplify by its a dominant media platform; Twitter. Considering lots of news media quote, find new information and use Twitter.

And no one wants to compromise.

Imagine that you held an opinion that was counter to a major legal and public option battle that company was engaged in.

In the situation, what would you say if someone approached you while you were on the job and started asking for your opinion on this topic?

1. Valid survey questions are very hard to phrase. Asking someone about their job when their job depends on your goodwill in not conducive to truthful answers.

2. Given the corporations' behavior, the driver's job depends on their following the corporate script.

Why would you bring this up every time you get in an Uber? Have you considered that maybe, just maybe, these people are concerned about complaining to a stranger about their "employer"?

Imagine someone walking into your office and asking you, "hey, do you like this company?"

Because, that's not the argument. The argument is the precedent it sets. We've seen companies utilize weak independent contractor regulations in the past to take advantage of individuals (most specifically, the Dynamex case that lead directly to this), despite many of them not knowing/not complaining. This is why California is so hard on independent contractors. I would prefer a state strong on worker's rights than vice versa.

> From my experience the drivers are perfectly aware of the costs that go into driving so I really don't buy the exploitation argument.

Your anecdotes don't mean anything, sorry. We have vast evidence that companies will take advantage of worker's in an independent contractor situation to their benefit. We have evidence that Uber had requirements in it's worker interactions (route penalties, hour requirements, etc) that do not fit independent contractor ideals.

> Seems like a loss for everyone except bureaucrats.

The bureacrats gain nothing.

> Also don't see how it's realistic to expect them to be able to adjust to this on a dime.

I can only assume you don't live in California. This isn't on a dime. They were notified over three years ago. The FTB and legislature have been on them about it constantly. The law was introduced in 2018-12-03 and signed into law on 2019-09-18. I know operations can be slow, but two years should be plenty of time, considering how fast they were able to adjust to failing markets like Germany that they ultimately lost anyways.

> Although large, California is still a minority of their revenue.

It makes up 16% of Lyft and Uber's users. It has the highest valued rides, lowest effective overhead (driver retention, driver acquisition, passenger acquisition) and most effective mileage.

But you're right, they should give up their most established and profitable market or California should shut up. Because you talked to some people.

The further allowance of classifying people as contractors will only expand until companies can further use this as a tool to pay people less and avoid taxes (where based on federal judicial precedent, the healthcare premiums both individuals and employers pay are considered taxes under federal law). Today Uber drivers, tomorrow nurses and teachers, ect. Also people are absolutely being forced into working as rideshare and delivery drivers, the alternatives are often destitute poverty.

These companies had a long time to get their act together on this issue, they just decided that a capital strike was more favorable to them at this time.

Until we live in a country where healthcare is separate from employment, hiring someone on as a contractor just so you can avoid healthcare costs for them is absolutely exploitative (both of the law, and to the workers themselves).

You can't just hand waive away a fundamental difference like that. From my conversation with some Lyft/Uber drivers they really treasure that aspect and they would rather quit if they are forced to be regular employees with dictated working hours.

Ferrying passengers is a very risky business. So protect the passengers, Uber/Lyft have no other option but to kind of police every aspect of the driver - passenger transaction. Despite all that, there were multiple rapes of women in Uber/Ola cars in India, drivers were ghosting Uber/Ola, they have tried to outsmart the routing algorithms by crowding in hot zones, tried to take cash from passengers without running the trip and what not.

While I espouse for drivers being treated fairly, whether as employees or contractors it's not that simple to bring in protections for the drivers without monitoring/scrutiny.

The contractors/employees of McDonalds are in a very different setting, and their customers are almost at no risk and there is little to no scope for embezzling cash, short of robbing the joint. So the comparison doesn't really hold true.

Which other businesses commonly allow people to work when they want, work for whatever competition they want, take any amount of 'vacation' in between?

You're fitting something new into an existing category by handwaving away lot of important nuance, when it is exactly this nuance that makes a ton of difference and why the new type of work may not fit into an existing category.

Uber let’s drivers set their own rates in CA [0]. What is also interesting is that before Lyft/Uber many taxi drivers were contractors renting their cars for an hourly rate. With rates set by the government, it’s really not much different than “rideshare”, just less flexible for them and the customer.

One issue is the type of market transport is and the variability in demand. You can do just a few Lyft trips, or just 1 and then do something else. CA employment law does not allow “micro shifts” like that, you have to pay the employees for a few hours. With no government restriction the market works itself out, with a large number of people who work a bit at peak supplementing those who are more full time. I think the legislature took the lazy way out, they could of set up rules for minimum compensation, benefits, And worker protection without the rest of the employment baggage.

0 - https://www.uber.com/blog/california/set-your-fares/

If you were to drive full time, that would get you about 27k/year, which is about the average income that a taxi driver makes. Rideshare companies are asking you to take more personal financial risk than you might as a taxi driver, but giving you more flexibility.

Still 27k/year is not much money really anywhere in the country. I think this is a symptom of some major underlying problems with our economy rather than an indictment of the rideshare industry. If we can't afford to pay drivers a living wage to do their work, then the people who are using these services aren't as well off as they think they are.

Any normal employee or freelancer is not happy, but still goes to the job because there are bills to pay. It is normal to want things to be always better but low skill jobs are not going to be goldmines no matter what the regulation says.

If the employers don't want the change...

and the employees don't want the change...

and the customers don't want the change...

and the shareholders don't want the change...

and the residents of California don't want the change (exhibited by the threads yesterday with outcry over the decision to shut down)...

Why is the government of California trying to force the change? Is this a breach of the social contract?

Another is that once you explain that California allows flexible schedules even for employees a lot of people who say they want to stay independent contractors change their mind. The biggest thing that drivers want is flexibility in their schedules, and there's a lot of misinformation saying they'd be required by law to sign up for shifts if they were employers. Once you correct for this FUD and drivers realize their favorite part of being a contractor isn't at risk anymore the answer seem to shift quickly.

Even if it was true though- most people who work at sweat shops are happy to have the job because they need the money. That doesn't mean that it's right to allow crappy conditions for them.

[0] https://www.npr.org/2020/08/10/901110994/big-rigged

As others are mentioning, the survey was very simplistic and most drivers don't understand the full ramifications of AB5.

That said, I still think the majority of fully-informed drivers would vote against AB5.

Enforcing AB5 will very likely result in: 1) substantial increase in benefits 2) slightly lower base pay 3) half of drivers losing their job 4) scheduled shifts.

My guess is #3 is the biggest issue for most drivers.

This. I dislike how other people ("officials") are deciding what workers want for themselves. How about we stop patronizing the workforce and let them make decisions for themselves. People lean on Uber and it's not like they don't understand what money they're getting for their time. At the end of the day, shutting down Uber would just be a pain in the ass for the people.

But do you tip at Mc'Donalds, the gas station or the supermarket?

EDIT: Adding a source, https://en.wikipedia.org/wiki/Tipped_wage

Or they already have another job (or several) that does not pay enough. However, they can't find yet another job with flexible enough hours.

When the job market is garbage, "just let the market solve it" doesn't really cut it.

Remember that the free market didn't end child labor, create weekends, or the minimum wage.

Because we're not monsters.

Traditionally the answer to that is unions or professional group who can bargain on behalf of all their members, but it's hard to unionize fields with low barriers to entry (and harder when the workers are living paycheck to paycheck and thus can't strike easily), and impossible to unionize independent contractor drivers based on how the laws are written.

The market is great at optimizing certain imbalances, but a large scale imbalance of power between actors is not one of those imbalances.

- no healthcare means you're a slave of whatever you can find,

- tipping culture means your employer can pay you shit

> Uber/Lyft do not force anyone to hop online.

Yeah, let the drivers eat cake, hmm?

The majority is not high tech types, nor does it need to aspire to be.

How do you separate this all from physical reality so easily?

Economics is not physics. The math is defined by biologically biased humans. Physical reality works how it do regardless of the syntax you want to emit about sound economics.

You really are just asking questions that have been debated forever. The answers haven’t changed. The narrative you would choose to recite isn’t the same as many others. And westerners aren’t a literal majority

You compared global market cap/revenue losses to just the impact of CA. What happens when other markets follow in CA's footsteps?

per barclays the figure for uber is 500M a year not 300. 300 is the figure for lyft

market cap is the total value of the companies issued shares. they don’t have access to that money.

100m to fight a law that would cost them 500m/year seems like a good investment.

burning 2b last quarter is proof they can’t afford any additional costs as they already aren’t profitable.

adding 500m a year would be increasing their quarterly spend by > 10% just to service a single state

One proof point, workers in a TON of fields have absolutely flooded Sacramento to get exception after exception into this law. This is not a normal principles based law. This a law with "principles" that are so ridiculous that everyone then goes let's carve these random folks.

Get a grip.

Imagine if we had laws like this elsewhere. It's pathetic - really.

Some of the carevouts.

physicians surgeons dentist podiatrists psychologists veterinarians insurance brokers lawyers architects and engineers private investigators accountants securities broker-dealers and investment advisers direct sales salespeople (often horrible abuse here with door to door sales) marketing professionals travel agents human resources administrators graphic designers grant writers fine artists enrolled agents payment processing agents through an independent sales organizations photographers or photojournalists freelance writers editors newspaper cartoonists and lots more I think gig musicians want to be sure they have a carveout. Fisherman are doing carevouts. I think truckers are getting a carevout. A bunch of beauty industry jobs A ton of contractor and subcontractor work

There has got to be some transit union or something pulling strings here - because the law is horribly unworkable even for folks who DO want to do the right thing. Most are resigned to waiting until everything is carved out but uber and lyft.

That's not a conventional strategy but perhaps you can make a good argument for why it will work.

XD There are countries (like any other country then US) that have something called PUBLIC TRANSPORT. And people use is every day regardless of pandemic.

> The ride-sharing economy has just evaporated

Uber is still much more "healthier" than public transport.

Piece rate work payment exists in construction, agriculture, and other industries. People are permanently on staff, but only paid in direct relation to their productivity. It's an old trick to extract the value of labour.

What is particularly egregious is how traditional taxis are being ignored, despite having most of the same labor problems as app-based transportation services.

Companies pay taxes for their employees (different tax relationship altogether). Another way to think about it is... do you ever pay taxes for a painter or plumber that does a job for you? (probably not)

By Sept. 4 each defendant must submit a sworn statement from its CEO “confirming that it has developed implementation plans under which, if this court affirms the preliminary injunction and Proposition 22 on the November 2020 ballot fails to pass, the company will be prepared to comply with the preliminary injunction within no more than 30 days after issuance of the remittitur in the appeal.”

From: https://www.sfchronicle.com/business/article/Uber-Lyft-win-l...

With the advent of E-protests they are finally being able to highlight against injustices taking place anywhere in the world.

We detached this subthread from https://news.ycombinator.com/item?id=24228435.

If there was no unemployment insurance uber and lyft would still exist and saying that uber and lyft depend on these social safety nets is just dishonest rhetoric.

edit: Unemployment insurance is paid by companies for their workers who may use it in the future. It's not a shared social obligation from taxes. Nor is everyone eligible to use it merely by existing.

In a competitive market there is no such thing as “free profit” for companies. Most savings that apply to all market competition across the board transfer to lower prices in the general market.

Uber would only net the profit if for some reason it was the only company that didn’t have to offer those things out of pocket.

Yes, it's because they are expecting future returns on their "burnt" money. But considering the risks, the enormous amounts involved, the meagre margins involved even in a market dominant postion and that there are still no signs of profitability or even positive cash flow, I don't see how this can be seen as just a wealth transfert from society to the wealthy. Even in their best case scenario, they will be able to get meagre returns from perpetually capital intensive, low margin businesses. That's far from obscene wealth extraction imo.

Sure, some early VCs made tons of money off of this new era of unicorns, but that was pretty much all coming from other VC or private equity that have had to keep the money pump going.

"You had years to plan for us removing 95% of your business!" is quite the argument.

If California lawmakers are using this as negotiating tactic that's cool with me - but I'm not sure why we wouldn't expect Uber or Lyft to negotiate as well.

Why is this getting downvoted? The strategy seems fairly obvious: by threatening to end service, they're trying to scare voters (and the legislature) into repealing this law.

Uber and Lyft could, under this law, continue to operate in a legal, legitimate manner, no longer relying on the legal loopholes that this law closed. The fact that they would rather shut down entirely than follow their own state's laws is deeply disturbing.