California Court Affirms Right to Treat Drivers as Contractors
wsj.com
wsj.com
Lyft, Uber, DoorDash, etc are all horrible, terrible, awful companies and I cannot wait for them all to fail.
Is a bad gig job worse for you than no job at all? (If it is, then why are you doing it?)
These are serious questions, because rideshare jobs would not exist if you were compensated as a full-time employee with benefits. Uber and Lyft have never made a profit as it is, and increasing their costs would make the business simply impossible to sustain.
There is no rate card based on time/miles so every ride is an arbitrary payout based on a black box algorithm. With Lyft you’re incentivized with streak bonuses for 3 consecutive rides. The 3rd ride is always an awful fare that will lose money and if you decline you lose the bonus for the first two rides. Ride cost has stayed the same for the passenger and payouts have plummeted for drivers.
Anecdotal, but I’ve started gathering data to suggest that Uber/Lyft are capping wages to <$30/hr. When I have high tip passengers I am seemingly throttled with fewer requests and lower fares.
If I offer a electrican contractor to fix a property in a dangerous area and they refuse, I might stop calling them in the future.
If contractor rates are high today, I might choose not to hire one today.
Hell, I might even make sure to split my contracts between different contractors to make sure they all stay in business.
We do care about reliable service, though. That's something the ride share companies create incentives for with their games. But they are artificial games compared to a more free market situation where you can cherry-pick.
Do you not see why this is a policy? If you're in SF for example and drivers refuse to pick up anyone from the Tenderloin, and the Tenderloin is predominately one race, it's easy to label Uber as perpetuating racism etc.
Yes, but the existence of policies like that are why folks say rideshare isn't a contracting scenario.
https://www.irs.gov/businesses/small-businesses-self-employe...
"You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done)."
They're basically saying they don't want to work with unreliable contractors.
I don’t see how that’s any argument in favor of being a contractor
"You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done)."
They tell you "Hey, Joe wants a ride from A to B and we will pay out $X for that, do you accept this job?". They're not telling you "Hey, Joe wants a ride from A to B, you must take it and you must perform it within 15 minutes and you must do x y z"
“Do you accept this job? If you don’t take this job we won’t give you any jobs in the future” — contractor
“If you don’t take this job you’re fired” - employee
It’s identical. Nobody is forcing you to do it in either case, but the result is exactly the same. Whether you’re an employee or contractor makes no difference in the result, even if the wording is different.
Maybe I should tell that to half the HVAC guys in my area so they can start collecting health insurance from me
The issue is where the middleman determines all of the terms for both the contractor and the end-customer.
If I as a customer can reach out directly to a bunch of contractors independently, then that’s a fair free market, and the contractors can compete for my business or not accept it at all if they don’t like the terms, without harming any of their other customer relationships.
But if I as a customer can only reach out to a middleman, and that middleman decides who works for me. And the contractor also doesn’t get to pick their individual customers. Then it’s clearly not a fair free market at all.
If there were a company called SanFranciscoHVAC and I reached out to them to fix my heater. They send someone out to fix it. But I don’t get to pick who comes to work on my house, and they don’t get to pick who their customers are. And they can’t refuse a job or else SFHVAC stop giving them jobs. Can you really call them contractors?
Consider a property owner who contracts a property management company that has a lease (contract) with a tenant, who complains about broken AC so the management company contracts an HVAC contractor to replace the AC, and the HVAC contractor in turn contracts a drywall guy because they needed to open walls for their install.
Who is the employer of the drywall guy in your theory and why?
If you put out an offer, and a company consistently rejects it, then it’s fair to say you don’t want to waste your time with them anymore.
Big or small, companies are at least knowledge and serious about analyzing their situation. Individual people can’t do that and once you start using them you have to treat them as employees, no matter how lenient you are about punishing them when they don’t follow orders.
I’ve been a contractor. I didn’t have the ability to randomly reject assignments as the contract was for a term of time, not job to job.
Is this true? Or is the driver contracted from the time they sign on to the time they sign off, with nondiscretionary jobs given to them in that interval?
I never understood what this means exactly, and I think a lot of other people are confused.
It clearly doesn't mean that a contractor decide to install a sink when I asked them to install a toilet. It doesnt mean that if I pay them to do it to code, they can decide to disregard the codes.
If my original example is what we went with, you could because tenderloin is smack dab in SF, and it would be clearly discriminatory to pick up passengers from everywhere in SF except that one neighborhood.
I have tons of rides that originate in the TL/Mission that are unaccompanied minors or small children (toddlers or actual babies) without car seats. Lyft/Uber don’t care why I canceled. Only that I canceled and now I am penalized for following the law.
I know they are unsafe.
To put it simply, taking peoples' income away by killing their employers does not help them; it hurts them.
Are you opposed to that regulation also, or is there some rubric we can use to choose what regulation is acceptable?
You can't take something away from someone if they never had it.
Is regulation created today different than regulation created in 1950 for some reason?
Like sure, it's worth accounting for the 1950 regulation apparently working well enough to keep when you look at it, but you are arguing that further restrictions are self evidently bad and existing regulations are (apparently anyway) self evidently fine.
Our dwindling birthrates make this harder and harder to do unless we stop supporting retired seniors and end retirement benefits. Seniors are on their way to outnumbering other demographics. Historically, working adults outnumbered seniors 4 - 1. Now it’s getting closer to 2 - 1 which is still unsustainable.
Just like capitalism, socialism and socialist programs need the right kind of population growth; or both systems fall apart.
> It's not, because our economy works on wealth creation not wealth extraction.
This can be true of the economy overall, but false of particular actors or actions within the economy, as in the case of rent-seeking, for example.
Seems everyone conveniently forgot about the medallion system Uber and Lyft disrupted. Pre-Uber/Lyft, 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). Sure back then the dispatch only took a 15-20% cut, but medallion payments took at least a 50% cut on every ride. That money didn't get re-invested or re-distributed as incentives to drivers, no. It went straight to the pockets of the local rent-seeker.
The more I spoke to cab drivers the more it seemed their industry was a pyramid scheme aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber/Lyft 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.
And I'm not even touching the usual pain points and often discriminatory practices of medallion drivers (refusing card payments, refusing rides to non-white passengers and to non-white neighborhoods...).
A. Attempted to be a taxi driver so never saw that system B. Grew up in the Uber generation and has only seen the improved taxi system that happened as a result of ride share C. Never experienced the refusing cards and non white stuff.
It really is looking at it through rose colored glasses. I remember when Uber first emerged on the scene everyone that I talked to thought it was a God send because they were so tired of taxis being garbage and scammy
Like I mentioned previously fares are pretty consistent over time, but driver pay is plummeting.
Same rides 8 months ago are paying 30-50% lower to the driver in my experience.
In what way?
I’m a CA resident, and I support the contractor status (mainly due to general support of a flexible labor market). I’m willing to change my stance if there is a good reason to do so.
By and large, this only benefits the employer. Why would you support anti-human markets?
There are lots of reasons, and people that do not want to be considered an employee, with all the limits that come with that, mainly people who are using the apps as "side hustle" not full time employment
Fraud, or lying would be things I consider "fucking people over". Presenting a work for hire situation where adults agree to the terms is not "fucking people over"
>I’ve never gotten into an Uber or Lyft that wasn’t clearly a full time hustle.
My guess that is very regional.
Have you participated in this part of the labor market? Or have you talked extensively with folks who have?
Before voting on prop 22, I made an effort to talk to “gig workers”. A few observations:
1. Guaranteeing a minimum pay rate when working with prop 22 was something that they welcomed. Apparently some of the apps made offers that were basically noob traps — probably not out of malice by the company, rather incompetence.
2. They almost universally did not want to have scheduled hours and/or be a full-time employee. There were a number of reasons for this, but the desired state was the same — flexible schedule.
3. Some of the folks who would likely be full-time candidates were not well-educated or skilled, but they knew how to work hard. They felt like they were rewarded fairly for their labor, often times at better net pay than they could get elsewhere.
4. Uber/Lyft seemed to be the most liked. Folks who didn’t want much human interaction and/or had an older car preferred uber eats / door dash. Instacart seemed ok, but it didn’t seem to have as many fans as the others.
I talked to about 20-25 people. Everyone seemed to like the current system. When asked specifically about full time work, the only support I heard for that was from a couple of people who said something like “it would be nice, as long as the schedule was flexible” — which is not how full time would likely work.
I think that many of these gig apps hit product-market fit both with workers as well as customers, and that’s why they are successful in this two-sided market.
EDIT: Fwiw, I also heard a lot of kvetching about AB5 from both employers and employees. That legislation may have won some political points from certain voter bases, but I don’t think I have ever heard anyone praise it (although I’m sure they exist).
People have this thing called “agency”. If you have an issue with Uber not providing benefits like health insurance, blame it on the ass backwards American health care system where your health insurance is tied to your job.
Jason Snell, a former editor in chief for Macworld who went independent a few years ago but still writes for Macworld and a few other places independently and he is a podcaster and a blogger said that the laws they were initially trying to past in California were going to make it harder for him to stay independent.
I assure you that he isn’t a big business conservative by any stretch of the imagination.
You heard the same from truck drivers that said they would move from California so they could stay independent.
https://www.cbsnews.com/sanfrancisco/news/ab5-independent-ca...
There's no need to actually click that link; it's what it looks like - Doordash teaming up with Marvel to create a comic book that shows "Dashers" as super-heroes. Seems pretty condescending to me.
But on a day-to-day level, these companies will use every dark pattern available to them to encourage drivers to make deliveries that are uneconomical to that driver.
A ride share or delivery company could offer flexible hours with part-time workers too, so flexibility is not why the delivery companies created Proposition 22. As I understand it, Proposition 22 was necessary in order to:
* Allow drivers to use their own car rather than forcing Uber to manage all the cars in their fleet.
* Avoid paying drivers when they are parked waiting for an order, which allows drivers to have multiple apps open looking for orders.
Most companies are scared of the legal liability of hiring willing contractors.
Actual contractors practically dont exist as a result. Most contractors you see in tech are actually empoyees of a 2nd firm, which takes 50% of the paycheck to shield the tech company from liability.
My company is extremely picky about who they will engage with for actual contrating. They must have a demonstrated contracting work history, and get no more than 1/3 of their annual income from the contract. This is all to prevent worker misclassification lawsuit.
Those are only offered during rush hour and aren’t consistently offered.
What do you think the difference really is between being a contractor and being an at will employee?
If they fail you'd no longer be able to do rideshare, right? Why are you still doing it now?
The first one might take you slightly out of zone. You’ll get back to the zone and maybe you’ll wait 30m for a ride or maybe your 2nd ride will take you an hour away to the middle of nowhere and pay under $1/mile and $.30/minute. The market at that destination is dead so you’ll travel back without a paying customer. If you decline that ride you ruin the streak and forfeit any bonuses. I’ve had $21 streaks and the 3rd request is a 4hr drive away.
You could take 2 truly awful rides that come out to pennies because of gas costs banking on the bonus and then the 3rd ride never happens. I’ve waited an hour to finish a streak only to give up. Meanwhile Uber is blowing up so it would seem the market isn’t dead at that time.
There’s also anecdotal evidence to suggest new drivers get preferential rates to encourage the jump to full time only for it to dry up after the honeymoon phase and/or they’ve rented a fancier car through the rideshare app because drivers are bombarded with in-app ads to increase their income by renting a Tesla for example.
So let's wait for the appeal to the California Supreme Court.
It is obscene that if I work for a huge company I can dump 25k per year free tax in a 401k, but if just work for myself I am s** out of luck
We really need to sever all the ties between employment and benefits. Get paid for your work and buy the benefits you want.
If your post was intended to be sarcastic or otherwise wasn't serious, sorry for missing your meaning.
- overtime - if it is enforced , all Uber has to do is not allow someone to work over 8 hours a day. Does that help Uber drivers?
- unpaid leave - if Uber drivers need to take a break and be guaranteed a “job” at Uber that’s already the case.
- child labor - you can’t drive Uber if you are underage
- farm workers - not applicable.
Did I miss anything?
"Labor rights" may or may not be the right term for that piece, but regardless
It seems like it would solve all of the problems. Rideshare companies aren't responsible for labor obligations of b2b partners. Drivers have the option to itemize and deduct the cost of their cars and maintenance and gas. Drivers would have to pay self-employment taxes to the state.
In my mind, all the stated concerns should be addressed.
The bigger court case was today in the 9th U.S. Circuit Court of Appeals, which effectively adjudicated that carveouts to AB5 were arbitrarily made, which they were. Notably two of the three judges were appointed or blue-slipped by Democrats.
It's amazing given the havoc that AB5 has caused that this ghastly law hasn't been tossed, together with the CA Supreme Court Dynamex decision, in entirety. When crafting AB5, they were careful to exempt key constituencies and power brokers. If a federal court invalidates the carveouts, it's game over for AB5. Note that USDOL is trying to implement AB5 on a national scale with their proposed rule.
More to the topic, I think the law on the scope of contractors is overly vauge, and this hurts both individuals and business. Both benefit from clear legislation and the topic of contractor definition has mostly been hashed out in case law precedent.
Lately (as in, the last 30 years) it feels like the original intent of the CA initiative process has been lost and has swayed the policies of a state back and forth / patched things haphazardly without real public understanding of the implications or tradeoffs.
I mention this because a big aspect of Prop 22 was the specific disqualification of the legislature from modifying certain provisions of it (to prevent it being watered down or negated). 7/8 legislature vote required to change it! Why not just make it 99% vote at that point...
And btw, part of the court's decision / explanation was that in CA jurisprudence, when an initiative has spoken on a certain topic or requirement, deference to the people's will is mandatory and cannot be circumvented by the legislature against the conditions set by the initiative. In fact that's a good aspect of initiatives.
But:
-- Initiatives need surprisingly few people to start them, and then it turns into a money-fueled marketing campaign that goes crazy, trying to sell people on very simplified arguments about major policy changes. And then the issue must be decided, there is no deferring it. Perhaps the days of when idealistic founders thought that initiatives would be debated clearly and carefully in the town square are anachronistically long gone, and that check is no longer effective.
-- The public as a general group is asked to make big decisions on things that eventually turn into huge debt obligations, change to our fundamental government process, etc. without full understanding or discussion behind the longer term implications. And of course, since when has the general public been a good judge of fiscal restraint or future responsibility? Pitch a spending initiative the right way and of course it will be approved. $500M vs. $20B? Who cares.
-- While the notion that the people themselves should be able to put forth legislation directly and override the legislature is admirable and in some circumstances very fitting that some questions go to the people, initiatives are being held on things that the legislature in fact should be the decider or deliberator of. Again, things that have budget impacts, specialized knowledge, etc needed.
-- Initiatives are very bad at publicizing or making people aware of who benefits and who does not. And especially in the future. Initiatives never have a time limit to them, freezing the policy in place to solve a problem-at-one-time, but then they go on for decades with unintended aftermath. Prop 13 I'm looking at you.
Anyway, this is all part of a larger (admittedly half-baked) theory I have about the problems democracies face when we don't have 4-5 major problems that everyone agrees on, but 200-300 first world problems where everyone thinks theirs is the most important. How is a democratic process to solve: which problems it should spend the time and energy to fix?
I would love to know if any progress is being made in CA on the initiative and constitutional processes.