The Gig Economy Is Being Sued to Death
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If, in the case of outfits like Redbeacon, the site is collecting leads and distributing them while letting the two parties work out the arrangement for themselves, the site is a referrer and the contractor is a contractor. Redbeacon doesn't require that the contractor who I hire to paint a room show up in Redbeacon attire, only do work through Redbeacon, charge what Redbeacon dictates, and follow Redbeacon's rules for how the work is done.
In the former case, people don't say "I hired J. Q. Driver to take me from my office to the airport," they say "I got an Uber." It's not "Local Delivery Service, LLC delivered my groceries today," it's "Instacart brought the milk." Being a part-time or irregularly-scheduled employee doesn't make someone any less of an employee than a 40-hours-per-week office worker.
The problem is one of enforcement. Just like how Uber got its nose under the tent by bullying through existing rules, companies like these exploit the fact that state Departments of Labor are politically hesitant (can't be crushing those small businesses, after all) and the federal DoL is limited.
Aren't setting prices and terms of contract a standard part of any contract?
If you are providing a marketplace for people to find contracts between parties, and you are in any way filtering what you will or will not allow on that marketplace, aren't you setting terms of that contract?
The IRS uses a 20 item check list. Reading though the list "So if I hire someone to play Princess Elsa at my daughter's birthday party" would clearly be a 1099. However, if they work though an agency then they might qualify as a w-2 for that agency.
This 20-point checklist is only a guideline; it does not guarantee that a person is correctly classified. Most agencies and courts typically look to the totality of the circumstances and balance the factors to determine whether a worker is an employee.
There's nothing remotely new or novel about that; it's a dodge that companies have been trying to get away with for as long as labor law has existed.
Turns out that their case was a bit overstated (to put it politely). Sure, this was a problem with the medallion model, and Uber is providing a breakthrough solution. But they're not stopping there. To achieve the growth that will justify their valuation, they've got to undermine perfectly reasonable labor laws as well. So maybe not so socially beneficial after all.
Sociopathic tendencies of the leadership aside, one has to wonder if the real problem isn't the VCs who poured their funds' money into a business that could only win by undermining clear, reasonable, historically necessary, and broadly popular legislation. Had they limited their investment to an amount that could be returned simply by attacking cartels, that would be one thing. But insisting that Uber illegally strip-mine their work force may have flipped a once-good thing into the extractive menace column occupied by outfits like...well, taxi cartels.
Well many of those VCs are ideologically opposed to the very concept of legislation being passed to regulate business in the first place, so they effectively got a double return on their investment in Uber:
* First return: actual financial gains when the business takes off
* Second return: a few more paid mercenaries elbowing their way through the rule of law
Obviously if the work is illegally portraying a trademarked disney character at a party, the time and clothes are kind of important for accomplishing that task.
The "none of your business" test failed in the linked article where the two young women were subject to numerous rules having nothing directly to do with cleaning things.
For example the electrician who installed the high power wiring to my air conditioner condenser, teamed up with an apprentice. As a contractor its absolutely none of my business, I pay a fee for a service and he can bring 50 apprentices on the jobsite, as long as he gets the job done in a workman like manner up to building code following all safety laws, etc. I can provide no input on the tools he uses or the time he takes as long as there's no OSHA/EPA violation, pass the municipal inspection, etc. I'm trading money for fit for purposes accomplishments, not renting a slave to be bossed around.
Similarly, having stipulations like "don't listen to music out loud while cleaning", is also IMO a reasonable thing to require (as someone who often works from home).
For the record, I do think that it's a problem that many companies are getting around the social safety net that employers are required by labor law to provide. But I think that's a problem better solved by decoupling our social safety net from employment--which I think unfairly ties people to their employers.
The laws are anything but straightforward. For starters there are 50 States with each one having different laws.
Take Florida where I have personally represented employers and employees/Independent contractors in these types of matters. The FL case law establishes, what in my opinion is the very worst kind of law, a factors test. So essentially there are a number of factors the courts put forward, I believe 7 factors by my last count, and in each instance a court would have to analyze each case on its own merits, and by case I am referring to each employee/Independent Contractor not each company as a whole.
One of the most heavily weighted factors is who the company pays...does the company pay the employee/independent contractor individually or pay a company formed by the individual. It would be evidence enough to simply determine which start-ups have a policy against paying any individual and requiring all individuals form companies. If start-up does't require their Independent Contractors to set up separate entities the start-ups deserve what is coming to them, a finding by the Courts these were employees.
As far as I understand the rules, the "most heavily weighted factor" you cite is in fact not an IRS employee classification factor at all. A contractor can still be classified as an employee even though they bill through an LLC. BigCo's worry about this so much that they will sometimes withhold taxes from LLCs.
Nevertheless, while the federal classification 20 factors have been around for about 30 years, since the enactment of the Revenue Act the IRS has been prohibited from issuing regulations and rulings with respect to the employment status of any individuals. As a result the IRS acknowledges the same subjectivity going so far as to admit different IRS agents may reach different conclusions, the Courts are no different and hence my calling factors tests the worst kind of law.
>As far as I understand the rules, the "most heavily weighted factor" you cite is in fact not an IRS employee classification factor at all. A contractor can still be classified as an employee...
This is likely due to the IRS being prohibited from issuing rules and regulations, and as a result in the words of the IRS, "Previously issued guidance may not reflect current case law, statutory changes, or changes in workplace situations." However, you are correct that this factor, under FL case law, though weighted more heavily is not determinative by any means.
I've read this 3 times and I don't really understand what it means, so I'll just repeat myself:
The IRS contractor rules are the most important employee classification rules with any bearing on this discussion, and they are both clear and very well-understood by employers.
You're a lawyer, so I feel like it's weird that we're having this discussion. I am not a lawyer, but I am something like 99.999% sure that 1099'ing an LLC does very little to ensure that a contractor can't be retroactively classified as an FTE for whom W2 withholding was required.
You can not say IRS rules are more important than State case law for purposes of classification or this discussion. Such a statement shows the law is anything but clear. Federal/State classifications are an independent determination and require separate analysis.
Example, say A hires B as an Independent Contractor, having focused on complying with only the Federal factors, then B sues A at the State level after being was injured on the job claiming A misidentified B, whereas B claims he was really an employee and should receive workers comp. The Court is not going to apply the Federal Rules/Law they will apply the State Law, in fact we can go ahead and assume B was correctly a Independent Contractor at the Federal Level, but the Court could find under State Law B was classified and the relationship was that of employee/employer now A is liable for failing to comply with State Law and have to pay B's workers comp. This is the exact type of lawsuit that could be replicated hundreds or thousands of times sinking any Start-up, who fails to comply with any aspect of the classification paradigm.
>I am not a lawyer, but I am something like 99.999% sure that 1099'ing an LLC does very little to ensure that a contractor can't be retroactively classified as an FTE for whom W2 withholding was required.
As I said you are correct, just because you pay a company rather than a individual does not automatically make that an Independent Contractor relationship, but it is one factor. For example, in the Florida Worker's Compensation Statute (which provides its own factors, separate from both Florida Case Law and the IRS 20 Factors) factor number 2 reads:
"(II) The independent contractor holds or has applied for a federal employer identification number..."
[1] http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Displ...
"Recently, the U.S. Court of Appeals for the Ninth Circuit and the Kansas Supreme Court both held that FedEx Ground had misclassified employees as independent contractors who were operating as business entities or subcontracted additional routes to other drivers."
http://independentcontractorcompliance.com/2015/01/14/four-l...
"Some state laws expressly carve out from their definitions of “employee” status a business entity where the hiring party does not exercise direction or control over the performance of the services and meets other requirements. Thus, companies that wish to minimize independent contractor misclassification liability wisely do not rely solely on the fact that the independent contractor is a business entity."
This is consistent with what I have detailed throughout the thread, i.e. it is a factor in some States with an emphasis in Florida where it is included in the statutory definition of Independent Contractor. I can not imagine any lawyer who would advise their Client to enter an Independent Contractor Agreement with an individual, even if it is not determinative of the classification, it is good business practice and there is nothing to be gained by entering the contract with an individual over a company.
In this case, it is all about benefits and awards. That is why they are talking about California law.
It's actually not that hard to sum up the difference between a contractor and an employee. If the suspected employer regulates the time, place, and manner of the work being performed, chances are they're not contractors.
Yes, there's more nuance than that. But most of the supposed controversy usually involves people trying to pretend that basic premise isn't true for some reason. Usually without success.
I think the time, place, and manner argument comes into much sharper focus with the personal service type "gigs" that are out there. Low level janitorial work is really not likely to be an independent gig, and whatever claims to that were had by the company in the original post start to evaporate when they dictate bathroom breaks, what shirt is being worn, etc.
There's really not much to argue here. They don't get to pick the times (booked by the customer via the employer) the places (same) and the manner (as the article states) by which they complete their work. They are part time workers for janitorial service that solicits business online.
>A person who is a professional driver, owns their own equipment (the car of course), can pick their own shifts and accept or reject a ride
These would all be arguments towards a proper Independent Contractor relationship. However, as you highlight you see the flipside, which might include the following arguments. One could argue while the driver supplies the car/insurance, a service such as Uber provides not just software but other equipment such as the iPhone that must be used to facilitate rides/payments (why can't a driver use their own phone?). Driver's may create their own hours, but Uber pays "bonuses" (i.e. hourly wages) for drivers to drive at certain times. Then there are issues such as mandatory meetings and training. I have had a driver tell me Uber pays attorney's fees when drivers are arrested for violating taxi laws.
All things being equal, it is entirely foreseeable that different Courts could rule differently given the same facts - the epitome of genuine gray area.
The IRS 20 factors: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ...
Florida 10 factors, Keith v. News & Sun Sentinel Co., 667 So. 2d 167 (Supreme Court of Florida, 1995), for purposes of determining worker's comp eligibility:
• The extent of control that the employer may exercise over the details of the work; • Whether or not the individual employed is engaged in a distinct occupation or business; • Whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; • The skill required in the particular occupation; • Whether the employee or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; • The length of time for which the person is employed; • The method of payment, whether by the time or by the job; • Whether or not the work is part of the regular business of the employer; • Whether or not the parties believe they are creating the relation of employer and employee; and • Whether the individual is or is not in business.
First you state:
>If, in the case of outfits like Handy and Uber and Instacart, the "employer" is laying down rules, requiring certain performance, setting the price, and enforcing metrics, they are an employer and the person doing the work is an employee who should be treated as such.
Then you state:
> If, in the case of outfits like Redbeacon, the site is collecting leads and distributing them while letting the two parties work out the arrangement for themselves, the site is a referrer and the contractor is a contractor. Redbeacon doesn't require that the contractor who I hire to paint a room show up in Redbeacon attire, only do work through Redbeacon, charge what Redbeacon dictates, and follow Redbeacon's rules for how the work is done.
So the standards you've listed start by saying an "employer" can't lay down rules and ends by giving an example of "true contractors" that follow Redbeacon's rules for how the work is done.
If you can't even write four paragraphs without a blatant contradiction[1] perhaps the case doesn't seem nearly as simple as you make out at all!
[1] (No offense, I spotted it because I was reading carefully for guidance and your two sentences were strikingly parallel and started with the exact words "if, in the case of outfits like" [a] and then [b], where you listed the difference.)
EDIT: I misread the second sentence as "Redbeacon doesn't require a, only b, c, and d."
"Readbeacon DOESN'T require that the contractor who I hire to paint a room show up in Redbeacon attire, only do work through Redbeacon, charge what Redbeacon dictates, and follow Redbeacon's rules for how the work is done."
I actually read this as:
Redbeacon DOESN'T REQUIRE THAT the CONTRACTOR who I hire to paint a room SHOW UP in Redbeacon attire; ONLY (THAT THEY) DO WORK through Redbeacon[1], CHARGE what Redbeacon dictates[2], and FOLLOW Redbeacon's rules for how the work is done.[3]
It's clear that this isn't what you meant. But not so clear that I didn't misread it. Rules against disintermediation, arbitration of disputes, terms and conditions, are all things that make contractors seem more like employees...
[1] i.e. not disintermediate by connecting directly off-site and cutting out redbeacon
[2] i.e. what is advertised on Redbeacon's site
[3] i.e. terms and conditions
Redbeacon requires none of the following things of its contractors: 1) that they show up in Redbeacon attire. 2) work solely through Redbeacon. 3) charge what Redbeacon dictates. 4) follow Redbeacon's rules for how the work is done.
>If, in the case of outfits like Redbeacon, the site is collecting leads and distributing them while letting the two parties work out the arrangement for themselves, the site is a referrer and the contractor is a contractor. Redbeacon doesn't require that the contractor who I hire to paint a room show up in Redbeacon attire, ONLY do work through Redbeacon, charge what Redbeacon dictates, and follow Redbeacon's rules for how the work is done.
What probably confused your reading is that the word "only", coming at the end of clause, seems like it changed the sense of the rest of the sentence, whereas I believe the author meant it to apply to the phrase "do work in Redbeacon clothing".
If some companies like Uber and Instacart can nullify a nefarious law using loopholes, this is a Good Thing.
In general, there are strong reason to believe that regulation which restrict the freedom of contract are harmful, and the result of special interests trying to secure a competitive advantage through legislative means.
It's uncontroversial, even among most libertarians, that people should be held liable for the hazards created by their profit-making activities. If your business is shuttling people around in 3,000 pound metal death machines, you should be on the hook when one inevitably hits someone. Not just out of concerns of fairness, but because the contrary rule eliminates any incentive on the part of the business to minimize hazards incident to their profit-generating activity.
- If it falls on the driver, the driver will demand higher wages / fares to compensate for the cost of insuring himself.
- If it falls on the company, the company will demand higher fares to compensate for the cost of insurance
- If it falls on the passenger, the passenger could demand lower fares. However, the company would soon realize that by accepting to take on the liability, they could command a much higher fare. Not only would it relieve the customer of the burden of the liability, but by better aligning incentives, it would also send a credible signal that the cars are safe and the drivers are cautious.
What if the liability is on the drivers and they are uninsured and likely insolvent in case of an accident? This is the same scenario as shifting part of the liability on the customer, it likely wouldn't be very appealing.
You can make an argument that consumers are irrational and are unlikely to really look into whether or not the cars / drivers are insured, but that's a different argument than externalization, and it is by no means obvious. A single accident where the victim isn't properly compensated could be disastrous for a company.
That's true, but it's irrelevant to the point murbard2 was making. He's not arguing that the person who gets hit should bear the liability; he's arguing that it doesn't necessarily have to be Uber that bears the liability, at least not as an initial condition; it could be either the individual driver or the passenger, since all of those parties can transact to shift the burden. (Notice that he didn't list "the person who gets hit" as an option.) Since you were arguing that Uber should bear the liability (instead of just arguing that the person who gets hit should not), his point is a perfectly justified response to yours.
This part makes me think that he did not consider the scenario of a driver hitting someone else. It is precisely the problem of externalization. If the initial liability isn't on the company, it will be on a party (the driver or passenger) that won't actually have the assets to pay in the case of an accident. In that case, it is de facto externalized onto the poor sap who gets hit.
Why not? In the hypothetical Coasian scenario where the company doesn't have liability but the driver and/or passenger will negotiate with the company to change the terms to compensate, the driver and/or passenger know that they are liable and the company isn't. (If they didn't know, they wouldn't know to renegotiate the terms.)
What you appear to be assuming is that the driver and passenger will not know, i.e., that they will be blindsided by the fact that they are liable, the first time the vehicle gets in an accident. But even if that's the case, why is that the company's fault? Isn't the driver responsible for knowing what he is and is not liable for when he takes paying passengers? Even if he wasn't taking paying passengers, he'd still have to have insurance, so it's not like the concept of him being liable when his car hits someone is new to him. (The passenger has more of an excuse here, since he's not driving and would not be expected to bear responsibility under just about any legal standard currently in play.)
Um, I had assumed that "liable" meant "liable", not "technically liable but not actually liable". We're not comparing scenarios where the law is the same but we arbitrarily shift the "liable" label from one party to another. We're comparing scenarios where:
(a) the law says the company is legally liable when any driver they contract hits someone while driving a passenger under that contract, and has to carry insurance accordingly, vs.
(b) the law says the driver is legally liable when they hit someone, and has to carry insurance accordingly--commercial insurance for when they're carrying passengers under contract, and ordinary insurance for when they're driving for personal reasons.
The Coasian point is simply that under legal regime (b), as compared to (a), the drivers will negotiate for higher wages or other additional compensation to offset the increased cost of their insurance.
> If you do have such a law, then we're not talking about anything Coasian--we have just picked the driver to carry the cost of accidents.
Sigh. This is just case (b) above, and the Coasian point about the comparison with case (a) does apply.
In the case of pedestrians, the liability depends on who owns the street. It the street is owned by the municipality for instance, it may require cars to have civil insurance. This has nothing to do with whether or not Uber drivers are employees or contractors.
To be fair, however, yours is a mistake than many, many people have made -- including some very successful economists.
It's also interesting to notice that the Internet and IT in general is lowering transaction costs and pushing us further into a Coasian world.
Coase said that in a world without transaction costs it doesn't matter who the liability falls upon. When you turn to the real world, the fact that it matters greatly who the liability falls on shows just how important transaction costs are.
Coase was trying to get economist to stop ignoring transaction costs and pretending that the type of bargaining in your comment will solve all our problems.
Here's Coase himself:
The world of zero transaction costs has often been
described as a Coasian world. Nothing could be further
from the truth. It is the world of modern economic
theory, one which I was hoping to persuade economists
to leave
If you don't regulate them, you wind up with a race to the bottom and have unsafe cars, untrained drivers, lack of insurance, etc.
And, gee, once Uber wasn't paying top dollar to drivers anymore, the quality crashed and all the problems appeared that everybody expected. Go figure.
Do you have any evidence regarding your safety claims?
"n 1932, 16,732 cabs roamed New York City streets, according to taxi historian Graham Hodges’Taxi! A social history of the New York City cab driver.
The competition “was merciless,” according to Hodges, and “Many cabbies turned to petty crime to help make ends meet.”
There were strikes, and there were fare wars."
The solution isn't to wipe out the medallions. The solution is to issue more until you achieve the balance you seek.
First of all, the medallion system does not raise the pay of cab drivers in the long run, since those medallions are eventually traded and leased out.
Second, there are plenty of jobs which pay very little, and somehow this is not brought up as a concern.
Basically let me get mine while the getting is good.
Many aspects of Uber and Airbnb's business model are awesome. The problem is that they have growth targets to hit which require breaking a few eggs.
Hang on, lemme get my tiny violin to properly eulogize the loss of an opportunity for VCs to get rich on the backs of low-wage workers. Won't you please think of the billionaires?
"Startups with business models based on sidestepping worker protections and labor regulations are being sued to death". As they should be.
@frostmathew - isn't downvoting supposed to be used to drop conversations that are trolling in nature? Not simply because you disagree with someone? Isn't this a place for constructive conversation and discourse? That is certainly why I value it so much and come here often to see what intelligent minds have to say about lots of issues. I don't like complaining about it, it just felt like I got trolled via the downvote and while I agree my complaining clutters the conversation, I have no idea who moderates such things.
I think it's ok to use the up and down arrows to express agreement. Obviously the uparrows aren't only for applauding politeness, so it seems reasonable that the downarrows aren't only for booing rudeness. - Paul Graham[1]
2. Smart people occasionally say dumb things. This may be a case in point.
The way HN makes articles very hard to read when they have only a handful of net negative down votes, whereas a handful of net up votes just moves the article up on the page, indicates that they are not functionally the opposite of each other. A down vote de facto means that you believe that people should not see the comment.
Contract law is funny. In a perfect world, anybody should be able to make a contract with anybody else to perform a legal act for them. But the world isn't perfect. You have to take into account that the contract you just made might well be replicated hundreds, thousands, or millions of times, in countless different contexts.
Sex is legal. Forming a contract involving sex is not. Even if nine times out of ten, it's perfectly fine, that would generate huge social costs. It's why gambling is so controversial and tends to be relegated to a select few adult playgrounds that are set up to handle those costs.
Labor laws came into force awhile back to reduce the risks of employment. Before labor laws, if you got hurt on a job, it had the very real potential of ruining your life. Your employer would not pay for your care, you'd be fired, even if it was no fault of your own. And managers were often ruthless about coercing employees into performing dangerous tasks with no safety protocols. Labor laws protect you against yourself, no one should be exposed to some risks even if it means putting more food on the table.
Not necessarily. Most car insurance companies won't cover you if you're using your vehicle commercially unless you get a commercial policy. You could be put into the position of having nobody to foot the bill in the case of an accident. The market will eventually adjust to these new kinds of insurance customers, but if the insurance companies start catering to Uber drivers, that could cause problems for them seeing as how ride-sharing is illegal in many if not most places.
So the insurance companies could be exposed to legal risk for facilitating illegal businesses, just as banks would be exposing themselves to criminal liabilities if they start catering to the marijuana industry. So they have to be careful. All increasing the risk of you getting into an accident and having no one but yourself to pay the hospital bills and getting sued by the other party or your customer for failing to carry proper insurance. The ride-sharing companies offer to shoulder the risk themselves by carrying policies, but it's unclear as to whether this is really enough.
Well, unless it's a marriage contract, but that's another beast altogether.
Looking at some of the companies that are popping up, it's looking more like the case where the "contractors" are getting squeezed more and more. So yeah, in answer to your question, a lot of the gig economy is looking like exploitation.
On another note, Uber started off as a fantastic opportunity for "gig work." But a lot of Uber's latest changes are definitely exploitation.
What if I spend 15 hours a week? Am I a contractor or a part time worker? What about 40 hours? Am I an employee yet?
Now let's make it worse. I drive 60 hours a week, but I drive for Uber, Lift, and a hypothetical third rid share company. Am I an Uber employee? 'No because you drive for three services.' But what if 90% of my 'gigs' come from Uber?
It can get really hard to draw that line.
And that's ignoring thins like companies paying 'temps' or 'contractors ' for years to work one hour less than full time.
That is an egregiously poor litmus test for determining whether or not exploitation occurs.
The Gig Economy will be a thing, and it should be.
But it needs to be legitimate, and it should lead to more autonomy and freedom for the Giggers, not less.
To accomplish this, businesses that treat contractors like employees should absolutely be punished!
If we really are to replace the old "master-servant relationship with a purely economic one, between equals," (like Paul Graham said so beautifully in his fantastic 2005 OSCON talk) then autonomy is important.
Those people who worked for Handy -- they were ostensibly contractors, but only labor contractors. The value that they create is cleaning + peace of mind. But as contractors for Handy their relationship isn't with the client; it's with Handy.
Okay, so they're labor contractors. Extremely fungible.
But, as independent contractors, one of the freedoms that the law guarantees them is a certain degree of autonomy.
They get to choose (varying from state to state, and the nature of the work) where and when they work, whether to listen to music, when to go to the bathroom, whether or not to scratch their butts on the job ... or at least that should be the case.
If it wasn't, that's a problem.
The value derived from being an IC that's truly independent is being able to charge more for the "temporary" nature of the work and the risk of end-client fickleness. But this chunk of value is getting eaten by the middlemen (marketplace and escrow).
As such, this is especially evident in companies that have integrated a "marketplace payments platform" directly into their systems -- AirBnB, Uber, Kitchit, Instacart (any one of the companies whose payment processor is a member of the cartel: http://ink.hackeress.com/2014/12/crowdfunding-is-too-expensi...).
But it's actually less grim than it seems:
1. there are laws,
2. the price pressures exist for the coordinating companies as well, as long as there continues to be competition, and
3. 'real' autonomy has a lot of benefits for people who are into that.
So first, there are already laws for this. (Which may or may not be sufficient regulation, but they cover a certain amount of what's discussed in the article, hence the lawsuit). Existing laws already stipulate what is/isn't a private contractor, for instance.
Ie, for work like programming, usually one can't be mandated to work in a specific office, or on specific hours, unless there's something about the job that particularly demands it. (Not that this sort of thing comes up a lot in programming, but there are definitely laws around this).
And in fact it's much easier for companies like Uber and Handy to be targeted for misclassification of workers than the more informal economies of construction workers, etc. So if there are holes in the law and they get plugged, that could be cool.
Secondly, "taking a heftier cut than it should from the business transaction" isn't a very damning indictment. But if Uber faces real competition with Lyft, for instance, the cut they can take is dictated by the market, both for drivers and passengers!
Lastly, it's not just workers taking on risk. Workers also gain freedom.
That sounds comical to some.
But I know a lot of people who are very passionate about volunteer work, and absolutely love jobs that they can do for a few hours a week and forget about -- even if it means they're living very simply. (I'm one of those people myself).
I have a feeling that your 'there are laws' is more a general rallying cry rather than the particular nuances around these laws.
So, ie: for work like programming, usually one CAN BE mandated to work in a specific office, on specific hours. It happens all the time. The consequence is usually the exercise of the 'at will employee' and being terminated. Subordination is a valid reason for termination and it does happen.
As for misclassification of workers, the issue isnt there are holes in the law, the issue is likely that these companies are actually just violating the law.
Finally, the competition Uber vs Lyft thing hasn't actually worked to reduce the Uber cut in a percentage-basis. Competition isnt a magical bullet. It often ratchets up the abuse and pushes marginal contractors to the edge. This is the very nature of competition, working harder for less.
What kind of cut should they be taking? Bear in mind that Uber takes a smaller cut than Apple does. Lyft goes as low as 10%.
Either it's about doing evil right now (skirt or violate laws and regulation) or it's about luring investors with something that could be evilly-monetized in the future (invade privacy, put ads on everything, sell all the users' data.)
* Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
* Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
* Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
Uber drivers are employees under all three tests. Uber tells them where to go and when to go. Uber controls the pricing and payments. Uber has an ongoing relationship with their drivers and it's a key aspect of the business.
Mechanical Turk could argue independent contractor. Anyone can take a Mechanical Turk task when they want, and Amazon doesn't control how they do it. Amazon doesn't set the prices; it's more of a bid system. Whether the relationship is ongoing is a question.
If the US had enforcement of labor law that was anywhere near as strong as traffic or drug laws, Uber would be out of business by now.
[1] http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ...
Your analysis of "Type of Relationship" is also flawed. Uber does not supply any employee-style benefits, and they do not rely on specific drivers to carry out "key aspects" of the business beyond the discrete work units they've wilfully contracted to perform at their convenience. There is no ongoing expectation that any particular driver will drive at any point in the future.
There is no boss to call Uber drivers and say "Please, you are killing us by not picking up your shift tonight".
I think the differences between traditional employment relationships and gig providers are pretty clear. I expect these lawsuits are just from people trying to get big settlements, since it's pretty obvious opting to bring someone a Jamba Juice on TaskRabbit once every 2 months is a lot different than a 9-5.
No. Pando Daily writes "Uber drivers are, after, all independent contractors ... On the surface, it seems they should be free to accept or reject any ride they choose. According to forum comments, however, Uber drivers are required to maintain a minimum 80 percent ride acceptance rate to remain in the company’s good graces – the best performers exceed 97 percent, the company tells its drivers. Ignore too many inbound ride requests when you are the closest vehicle and the result could be some combination of reprimand/probation, lost bonus income, or, in extreme cases, deactivation of the driver’s account."
"There is no boss to call Uber drivers and say "Please, you are killing us by not picking up your shift tonight".
Yes, there is, although it may not be human. It texts, bugging drivers to get out there and drive during "surge" periods.[2]
[1] http://pando.com/2014/09/04/uber-continues-to-screw-its-part...
[2] http://uberpeople.net/threads/text-messages-from-uber-are-ou...
"If Solominsky had built his own handyman business, he would not be so impacted by the decisions of another company. But all he has of his supposedly independent business—his pages and pages of glowing reviews, his nearly unanimous five-star ratings—is tied up on the TaskRabbit platform."
Something to keep in mind as/before we replace an economy built on independent small businesses with an economy of "independent" Uber drivers, Amazon sellers, etc.
"Your civilization is based on the technology of the mass relays, our technology. By using it, your society develops along the paths we desire. We impose order on the chaos of organic evolution. You exist because we allow it, and you will end because we demand it."
Replace "civilization"/"society"/"organic" with "business", "mass relays" with "platforms", and there you go.
Something that keeps coming back to my mind in cases like this since the Twitter API fiasco of 2012/2013.
I have my dislike for these lubricating platforms (because eventually they will go vertical --uber with autonomous vehicles, for example) but for the time being they create a marketplace for these contractors (or alternative not-quite-employees)
He isn't tied to one platform at all, and good luck to him (nice large Merk as well).
For those that believe that Uber and the like are good for the US and the economy, I have a question for you:
1. What happens if we have 10% unemployment? We already have; this answer is simple.
2. We turn the screws of automation and computerization: what happens to our country/society if we have 50% unemployment?
3. What happens, when we find out that everybody's job can be hyper-specialized and broken down so robots can do them... which leads to >95% unemployment?
4. Capitalism leads to reduction of costs and risks by all means necessary. This would imply that human labor would be too expensive once more technological advances are made. So, how does capitalism work if there are few workers?
In such a society, 95% of the people will get to do whatever they want, rather than working for a living. I don't see the problem.
Too often, the assumption that near-100% employment is desirable goes unchallenged. We're people, not ants.
In that case, they will do what they want, as long as it doesn't include costs. That seems like a very dead society, with people depressed about no work and no money.
Once you start looking for this meta-pattern, you'll see it a lot. A chemical company concentrates the profits from synthesizing a useful compound, but diffuses the risks and costs of pollution and disease into the commons. A social network distributes the effort and cost of building up a massive, informative graph, and then centralizes the profits from exploiting that information. A contract-work marketplace pushes the risks onto individual drivers, and centralizes the profits from matchmaking.
My personal view is that this will always happen to some extent, and is intrinsically linked with the system of inequality that drives the turbine of ambition in our society. Therefore, it will never be done away with, and arguably shouldn't be.
But, especially when there is no consent to the socialized externalities (e.g. pollution) or very lopsided or coerced consent (e.g. "Grapes of Wrath"-level treatment of workers), decency requires, and eventually the pitchforks-and-torches will demand, some balancing of things by the Leviathan.
In my mind, as long as everyone has open eyes up front, it's all good. If Uber treats people poorly, they can go to Lyft. The key is insuring more competition for the workers. That more than anything else will drive how they get treated. If there are 100 cleaning jobs, and only 90 workers, and multiple vendors, then Handy can't mistreat the workers.
On a side note, I've used Handy in the past, and have had mixed experiences. Some are great, some show up so late that I've had to cancel appointments. Not sure if this would have changed if they were employees.
Or they could, you know, charge more.
The problem with "let the market solve it" is that customers are generally extremely price-sensitive, and if all the other cleaning companies are getting away with misclassifying their workers, the one that does the right thing and treats them as employees voluntarily will be at a serious market disadvantage. If Good Guy Cleaners charges $25 while Bad Guy Cleaners charges $20, Bad Guy Cleaners will get rich and Good Guy Cleaners will go out of business. The only way out of the trap is to remove the option for any players in the marketplace to do the wrong thing.
Not necessarily. The price for these services probably settles at an equilibrium relatively quickly due to competition, and a company charging above the equilibrium for the same service won't be able to stay in business for long. They could seek to have higher quality workers and then indeed they could charge more. But at that point it's not even the same product and so what are we even talking about?
Why force a company to choose one way or the other?
I'm now talking in the abstract, and not defending one company over another. I'm also not defending a situation where there is a clear case of everyone actually being full time employees.
One suspects that both Good Guy Cleaners and Bad Guy Cleaners are going to have problems.
However I'd like to throw in my own personal anecdote. I am a full time software engineer but I am signed up as a Postmates bike deliveryperson on the side. I do ~3 hours of work on Saturdays and Sundays because it's basically paid exercise and I like to explore. I am clearly NOT an employee of Postmates. If new laws are passed, would people like me just be told to go away? I think one of the coolest things about the gig economy is that there are a lot of people like me just taking on flexible employment because it's such an easy way to use idle cycles (no pun intended).
I worked for a paper in the 2000's, not as a deliverer, but their deliverer's were all independent contractors.
These were two different papers at two different parts of the country, I'm sure not all papers handle it this way but I wouldn't be surprised if this was the case for most.
In the case of Handy, Uber, etc... it is in fact Handy, Uber, etc.
In the case of Amazon, the price is determined by the contractor themselves.
Is there some major flaw in this thinking? Employees are not generally empowered to determine the price at which their work is sold, and yet contract suppliers are. I think this works fairly well to determine whether or not the person actually performing the work is really an employee or a contract supplier.
http://www.careerusa.org/resources/career-files/100-resource...
But that's hard to build. Once it's built, the two sides can compete on reputation, cost, or whatever else, crafting their own strategy and the overall wealth of the system will go up. The gatekeepers often hold the system back - even the ones who built the system.
I believe that platforms should be decentralized and free, enabling wealth creation at smaller scales more in touch with the individual.
Think about the problem as this: A worker sets up a website offering services. A potential customer is looking for a local purveyor of that service to hire. How does the customer find the website? If there are 25 local workers willing to do the job, how does the customer choose between them? If the customer wants to pay with a credit card, how does the worker get the money?
That's the role that Uber et al are playing. It's possible to decentralize that but it's not trivial.
Right, but these issues that the Web currently faces (discovery, signal-to-noise ratio for example) will plague any given open marketplace after a critical mass is reached as well.
> If the customer wants to pay with a credit card, how does the worker get the money?
There are numerous payment systems that aren't terribly difficult to implement for small transactions (PayPal, Stripe, et al). Sure, a little HTML, JS knowledge might be needed, but that is really nothing difficult to do after a small amount of reading.
Looking for a cleaner? Google "cleaning service <city>". Choose from the top 5 results.
Want to offer your cleaning services? Set up a simple website, read some SEO articles or get a friend to help with that. Maybe go in with a friend or a family member (like the sisters the article described) to share those costs. Get a square reader for taking credit cards, lose 2-3% instead of 15-20%. After each job ask for a review that you can put on your website.
Small business don't have a unified marketplace and reputation tracking system. In fact nothing is unified. People like these marketplaces because of the single meta layer above the individual workers.
http://www.vice.com/en_uk/read/permanently-temporary-0000176...
Also this article has some very basic errors in it, missing words etc. Looks like it wasnt proofread at all.
1) Marketed web front-end for consumers
2) Confidence aggregation / metrics for both parties
3) Payment gateway / escrow service
4) Insurance and (sometimes) materials
The (1) point could be replaced by an indirect revenue model, or by open aggregation apps.
(4) would then be put back in the hands of the actual service provider, where contractual liability belongs. A new business model could be born, where "Uber" simply has a nice phone app that references public blockchains to get you a driver, and sells insurance packages to drivers themselves. They wouldn't be locked down to just being an "Uber" driver, however.
There have to be real consequences for gaming search/ratings/matchmaking sites. If the government is interested in policing this sort of fraud, then 1-4 above will be easier to commoditize, but in the meantime, companies need to enforce discipline and professionalism among the people filling gigs.
This issue reminds me a lot of Coase's https://en.wikipedia.org/wiki/The_Nature_of_the_Firm problem/paradox - if markets are so efficient and optimal, why do large corporations exist and operate internally by non-market mechanisms? The usual answer is friction or transaction costs, but the whole point of things like Uber or TaskRabbit is that the Internet and smartphones hugely reduce these costs...
2) risk : contractor fucks up, contractor is legally responsible. Employee fucks up, firm is reponsible.
3) Ease of firing and the resulting pressure that can be applied to employees. Contractors don't even have to be fired to be fired.
4) Customer/payment risk. Suppose a customer doesn't pay. In the case of an employee, the employer has to pay the employee and the infrastructure. In the case of a contractor, the contractor is screwed (in some cases they actually have to pay transaction costs even if the customer doesn't pay)
Essentially these companies "own" connecting supply and demand, but I fail to see how that prevents competition from forming and providing a better alternative for both?
Right now, as a demand user of Uber, I like that the company is very protective of my experience, something that is painstakingly difficult with traditional taxi services. But if Lyft offered me the same experience or better, my switching cost is nil.
It will. But "the market" doesn't care about who the winners and losers are. Some of these services are essentially transferring wealth from low-skilled workers with few alternatives to "App middlemen" and VCs.
The reality is that most small and many large businesses cannot afford to pay their employees fair or competitive wages and benefits. That has been the case for years, especially any time the economy has a downturn.
The internet has made it so that this issue comes out in the open as it presents obviously with large centralized companies that put smaller companies out of business.
I personally have been part of the "Gig Economy" for most of my life. I am an extremely experienced programmer. I rarely have had a real "full-time" job with benefits. Although almost all of my jobs have been full-time, they just haven't included the benefits of a "real full-time" job.
I have done contract and temporary work because I needed to. The option has always seemed to be to struggle for what could be months to land the ultimate "real" full-time job, or to take what was available as contract work. Since, when I need a job, I usually need it then and not X months down the road, I have had to take the contract work.
The reality is that there just isn't enough money circulating out there for the majority of people to have good pay and benefits. So, from what I can see, the traditional economy is useless and there is no point trying to make it work.
We need to take advantage of technology to solve some structural issues. Money is great, but there isn't enough information in it.
Everyone deserves to be able to live. Most, like myself, are just struggling to survive. This is the result of the Social Darwinist structure created which does not place any intrinsic value on human life.
This is my github. http://github.com/runvnc. Maybe I don't deserve to be able to afford health insurance or a car or to be able to pay my taxes. Perhaps I am just a shitty programmer who should have died on the street years ago.
This is where it doesn't feel like an employer. Employers take more like 50%. So yeah, you don't get protections, and you get higher take-home pay. It sounds like a pain in the ass when you have to buy your own supplies, handle customers, etc., but all that is not uncommon even for employees. The result of leaving the workers responsible for all these details (and risks) is increased potential: the ability to optimize your work, and very directly benefit from that.
http://thebillfold.com/2014/10/my-day-interviewing-for-the-s...
Sounds like working for Handy is hell, whether they try to classify you as a contractor or not.
He'd prefer that we sell our services to a lower bidder?