In California, Uber/Lyft drivers now classified as regular employees

[Travis]

https://www.msn.com/en-us/news/us/california-lawmakers-pass-bill-that-could-upend-uber-lyft-model/ar-AAH7MrN?ocid=spartanntp

California is about to pass a law classifying "Gig economy" workers as employees rather than independent contractors entitling them to wages, benefits, and unionization.  I'll admit I'm no expert on this business model, but don't those drivers work as much or as little as they want?  They weren't exactly "hired" in the traditional sense were they?



Tangential to the main story, I found that last quote in the article ironic.  The fact that Uber drivers make below minimum wage after taxes and vehicle maintenance are factored in shouldn't be news to anybody unless they just haven't been paying attention.

[Bloop Bloop]

Guess a lot of Uber drivers are going to have to get used to the concept of minimum shifts, hourly pay, insecure rosters and wearing Uber livery. Because those are things that employees do.

[ecchastang]

The fact that Uber drivers make below minimum wage after taxes and vehicle maintenance are factored in shouldn't be news to anybody unless they just haven't been paying attention.

There are 10's of millions of people that work regular jobs that make below minimum wage after taxes and vehicle maintenance.

[Travis]

Guess a lot of Uber drivers are going to have to get used to the concept of minimum shifts, hourly pay, insecure rosters and wearing Uber livery. Because those are things that employees do.

It seems that Uber will either have to dramatically raise prices or go out of business.  They're still not a profitable company and just announced they're laying off hundreds of support staff.  Their "product" is labor intensive, but this court ruling just made labor even more expensive.

[habanero]

This is the key part: (quote from New York Times)

Under the measure, which would go into effect Jan. 1, workers must be designated as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company’s regular business.

From what I've read about working as an Uber driver there is a significant gap between how you have to operate and how you would operate as a truly independent business owner. It's among other things if you in reality can reject rides you don't feel like taking for various reasons.

If someone is interested in the topic, the last part of the book "Hired"  by James Bloodworth describes his experience as working as an Uber driver in London for a couple of months. (Uber lost a high-profile case on the driver's status (employees or independent contractors - it's pending supreme court hearing after Uber appealed)

Whatever eufenism is choosen to describe it, at the end of the day it is a way of lowering labor costs and having a workforce with less rights than if they were formally employed at whatever company operates the App in question. This is less popular some places than others.

From
https://www.theguardian.com/technology/2018/dec/19/uber-loses-appeal-over-driver-employment-rights

The judges found there was a “high degree of fiction” in the wording of the standard agreement between Uber and its drivers, which it argues are self-employed independent contractors with few employment rights.

The judgment handed down on Wednesday said: “For [Uber] to be stating to its statutory regulator that it is operating a private hire vehicle service in London and is a fit and proper person to do so, while at the same time arguing in this litigation that it is merely an affiliate of a Dutch-registered company which licenses tens of thousands of proprietors of small businesses to use its software, contributes to the air of contrivance and artificiality which pervade’s Uber’s case.

[Bloop Bloop]

Uber might just have to limit itself to jurisdictions without the employee classification. No doubt, paying someone min wage + benefits to do a very simple thing that probably is going to automated within 15 years is not a tantalising business proposal.

[chemistk]

Uber might just have to limit itself to jurisdictions without the employee classification. No doubt, paying someone min wage + benefits to do a very simple thing that probably is going to automated within 15 years is not a tantalising business proposal.

I generally agree. If somehow they can't successfully fight this and exempt themselves (and my money is that they will, at least in part), then in the short term drivers in California (and any other regions wishing to adopt a similar classification) are going to be the biggest losers and the riders will eat the cost.

Really, all Uber has to do is just exist long enough until driverless cars are accepted enough to be considered a legal form of transportation. If/when that happens, they can dump notion of a human driver altogether.

What will be much more interesting coming out of this legislation is how the numerous other companies affected will do and whether they will continue to exist in their current form. 

[BECABECA]

Hopefully this will result in getting driverless Uber/Lyft on the road sooner. My 14 year old car needs to last me until then.

[BECABECA]

This is the key part: (quote from New York Times)

Under the measure, which would go into effect Jan. 1, workers must be designated as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company’s regular business.

...

When I was doing work for a small government contractor I had to be brought in as a part time employee because the work I was going to do for them was part of the company’s regular business. So this requirement seems to already be in place for companies contracting to the government. So to me it is strange that this wasn’t already a requirement for all companies and not just government contractors.

[FINate]

I don't have a horse in this race, except that I would like to see ride sharing survive in some shape or form. But it's fascinating how many industries got carve outs from the new rules:

https://qz.com/1706754/california-senate-passes-ab5-to-turn-independent-contractors-into-employees/

In May, AB5 was amended to exempt certain professions, including doctors, insurance agents, securities brokers, accountants, barbers, and hairstylists.

I believe there was some kind of exception added for journalists as well.

It all seems very inconsistent, like California is fine with legacy industries exploiting labor loopholes, we just don't want tech companies doing it. Wondering if this will hold up to an equal protections challenge.

[GodlessCommie]

Uber's entire business model hinges on driver's inability to grasp the concept of depreciation. Which is not illegal, but not something that one would brag about on a TV show. Add to that that ridesharing increases miles driven, and as a consequence traffic. In places that have public transit, it mostly competes with public transit. So I'm not sure the net benefit for the society is there. In fact, Uber being forced to raise prices may be, on net, beneficial.

[GuitarStv]

Guess a lot of Uber drivers are going to have to get used to the concept of minimum shifts, hourly pay, insecure rosters and wearing Uber livery. Because those are things that employees do.

I've been an employee my whole working career and never had a uniform, have never had minimum shifts/insecure rosters, and have always been paid on salary.  The things you're listing aren't necessary (in any way) to be an employee.

[Villanelle]

The fact that Uber drivers make below minimum wage after taxes and vehicle maintenance are factored in shouldn't be news to anybody unless they just haven't been paying attention.

There are 10's of millions of people that work regular jobs that make below minimum wage after taxes and vehicle maintenance.

Right.  By definition, I suppose any worker paid minimum wage makes less than minimum wage after taxes, vehicle or bike maintenance (or bus fare, or shoes--my husband is burning through shoes now that he walks to and from the bus or train!).

[Villanelle]

If Uber drivers must be paid a minimum wage and classified as employees because they perform what is basically the heart of the company's business and because the company fundamentally controls the way the person performs the work, then I wonder if all the MLMs can get away with continuing to consider their "distributors" to be... nothing at all, or however it is officially/legally set up?  It seems to me that LuLaRoe's business is selling clothing, and the "distributors" sell that clothing.  I'm sure there's a ton of nuance there, but I'd love to see someone try to apply this to various MLMs, and hopefully drive them out of business, or fundamentally change the way they do business. 

[Laserjet3051]

AB5 goes far above and beyond just impacting Uber and Lyft. They are just token businesses writers use to discuss the new/proposed law. Make no mistake, AB5 will impact thousands of different businesses in CA, well beyond rideshare services; with specifically exempted professions excluded (e.g. doctors, lawyers, architects, etc). For example, medical professional contractors will be subjected to AB5. This proposed law will be very far reaching across CA's entire economy.

[Bloop Bloop]

Guess a lot of Uber drivers are going to have to get used to the concept of minimum shifts, hourly pay, insecure rosters and wearing Uber livery. Because those are things that employees do.

I've been an employee my whole working career and never had a uniform, have never had minimum shifts/insecure rosters, and have always been paid on salary.  The things you're listing aren't necessary (in any way) to be an employee.

You've never worn a uniform, had crappy rosters, or gotten an hourly wage? Then you must have never been a paperboy, swim teacher, McDonald's worker or any other minimum wage job.

All (or nearly all) of those things apply, because that's what accompanies a min wage job, for better or worse. Unless you think that Uber is going to be so kind as to treat its employee drivers like how we treat senior white collar employees, I suspect they will all have to deal with rosters, shifts, and livery, just like your typical teenager at a McDonald's store.

[GuitarStv]

Guess a lot of Uber drivers are going to have to get used to the concept of minimum shifts, hourly pay, insecure rosters and wearing Uber livery. Because those are things that employees do.

I've been an employee my whole working career and never had a uniform, have never had minimum shifts/insecure rosters, and have always been paid on salary.  The things you're listing aren't necessary (in any way) to be an employee.

You've never worn a uniform, had crappy rosters, or gotten an hourly wage? Then you must have never been a paperboy, swim teacher, McDonald's worker or any other minimum wage job.

All (or nearly all) of those things apply, because that's what accompanies a min wage job, for better or worse. Unless you think that Uber is going to be so kind as to treat its employee drivers like how we treat senior white collar employees, I suspect they will all have to deal with rosters, shifts, and livery, just like your typical teenager at a McDonald's store.

Had an hourly wage when I was working jobs in high school and summer break at university but not since.  Worked plenty of shitty jobs though (telemarketer, automotive assembly line, stocking stuff at a lumber yard, packing parts at a steel tempering plant, Home Depot stock picker, exterminator, and technician in a place that grew parasitic wasps).

All jobs have been 40 hour a week on a steady shift (although several of them allowed for overtime).  None of them were at or below minimum wage . . . harder jobs weren't as easy as the min wage stuff, but they payed better.

I don't know why making an Uber driver an employee is supposed to require that they wear Uber shirts.

[Travis]

If Uber drivers must be paid a minimum wage and classified as employees because they perform what is basically the heart of the company's business and because the company fundamentally controls the way the person performs the work, then I wonder if all the MLMs can get away with continuing to consider their "distributors" to be... nothing at all, or however it is officially/legally set up?  It seems to me that LuLaRoe's business is selling clothing, and the "distributors" sell that clothing.  I'm sure there's a ton of nuance there, but I'd love to see someone try to apply this to various MLMs, and hopefully drive them out of business, or fundamentally change the way they do business.

I think they'd have a convincing court case. I wonder what the enforcement mechanism is to declare a business subject to this law.

[daverobev]

What I can't get my head around is that people signed up to do thing X, voluntarily.

Now they want thing X to be thing X but with better conditions and protections... but if they get those better protections, many many of those people will no longer be able to do thing X because the economics doesn't work.

What they are basically asking is to become taxi drivers. But they wouldn't be employed (or self employed, or running their own limited company) as taxi drivers because the entry costs are high, and the number needed is much lower when you factor the price (because people will choose to go back to getting the bus/train/taking their own car).

You can't have both things (autonomy, low entry requirements AND guaranteed pay, holiday). The company already loses money. They are basically asking to lose their jobs.

I just don't understand what the workers are thinking. Short term gain? Or is it just the "professional" drivers doing it and not the real casuals? I guess so.

[By the River]

What I can't get my head around is that people signed up to do thing X, voluntarily.

Now they want thing X to be thing X but with better conditions and protections... but if they get those better protections, many many of those people will no longer be able to do thing X because the economics doesn't work...

I just don't understand what the workers are thinking. Short term gain? Or is it just the "professional" drivers doing it and not the real casuals? I guess so.

I've had the same thoughts.  I wonder how much taxi companies have invested in passing this act, especially given all the professions that are exempted from it.

[OurFirstFire]

This seems like it could really hurt the drivers.  Can't Uber just limit hours so they don't have to pay full-time benefits?  Also mileage deductions are a slam dunk for independent contractors, but as a W-2 employee they can only be counted if you're itemizing deductions and exceed 2% of AGI.

Now the driver in the article will go from making a bit less than minimum wage after taxes (due to generous IRS mileage rates) to making minimum wage for fewer hours and not being able to deduct mileage.

[Travis]

Now the driver in the article will go from making a bit less than minimum wage after taxes (due to generous IRS mileage rates) to making minimum wage for fewer hours and not being able to deduct mileage.

Or Uber could just fire the drivers who only dabble in the business in order to save on these new labor costs.

[Just Joe]

It seems that Uber will either have to dramatically raise prices or go out of business.  They're still not a profitable company and just announced they're laying off hundreds of support staff.  Their "product" is labor intensive, but this court ruling just made labor even more expensive.

Maybe someone in control assumed they would have self-driving cars by now? Maybe someone over sold that technology maturation timeline?

[Villanelle]

This seems like it could really hurt the drivers.  Can't Uber just limit hours so they don't have to pay full-time benefits?  Also mileage deductions are a slam dunk for independent contractors, but as a W-2 employee they can only be counted if you're itemizing deductions and exceed 2% of AGI.

Now the driver in the article will go from making a bit less than minimum wage after taxes (due to generous IRS mileage rates) to making minimum wage for fewer hours and not being able to deduct mileage.

I wonder how many people are really driving for Uber 40 hours a week.  Even if they count time sitting and waiting for fares, which it seems they'd have to under this system, so that they "clock in" the moment they turn on their device and make themselves available, I'd be surprised if many people are up for 40 hours a week.

I also wonder what is to stop someone from marking themselves available, and then just never accepting any rides.  Someone could get an Uber device and turn it on while they sit at a desk at their real job, and get paid minimum wage, no?  Or will Uber now reserve the right to assign jobs, whether the driver wants them or not?  That would suck for the go-getters who work hard to snag any reasonable ride the moment it appears, and it will mean people can no longer avoid long drives, or sketchy neighborhoods, or drives for people with very low ratings, or whatever other selection criteria them might use.  And if Uber assigns you an hour drive when you planned on clocking out in 30 minutes?

Or maybe a model where, if I ride isn't booked within 5 minutes, then it is assigned?   

Paid lunches?  Making sure that every 2 hours, a driver clocks out for a 15 minute break (IIRC, CA law is that if a workers is working 4 hours or more, then get a 15 minutes break every two hours, and a lunch in every 8 hour shift.)

It seems like they are going to need to entirely overhaul nearly everything about the way Uber works if this stands. 

[LoanShark]

California intervenes in the free markets again. Won’t end well for anyone involved - the shareholders of Uber, the drivers or the consumer.

[marty998]

What I can't get my head around is that people signed up to do thing X, voluntarily.

Now they want thing X to be thing X but with better conditions and protections... but if they get those better protections, many many of those people will no longer be able to do thing X because the economics doesn't work.

What they are basically asking is to become taxi drivers. But they wouldn't be employed (or self employed, or running their own limited company) as taxi drivers because the entry costs are high, and the number needed is much lower when you factor the price (because people will choose to go back to getting the bus/train/taking their own car).

You can't have both things (autonomy, low entry requirements AND guaranteed pay, holiday). The company already loses money. They are basically asking to lose their jobs.

I just don't understand what the workers are thinking. Short term gain? Or is it just the "professional" drivers doing it and not the real casuals? I guess so.

Sometimes you need to save people from themselves. Desperate people, and lets be honest, you'd have to be desperate to sign up to servitude here; desperate people will work at whatever price. It's not good for them, and it's not good for society to allow corporations and people with capital the opportunity to exploit people.

Otherwise it becomes normalised, and suddenly you have a permanent underclass working for $2 an hour plus room and board. Do not wish for that on your fellow people.

California intervenes in the free markets again. Won’t end well for anyone involved - the shareholders of Uber, the drivers or the consumer.

Ah but when your Feds jack up tariffs on everything that's ok then. No one says its an intervention in the free market when the other side does it ;)

[FINate]

Ah but when your Feds jack up tariffs on everything that's ok then. No one says its an intervention in the free market when the other side does it ;)

Or like the "libertarian" in my neighborhood who drones on and on about how we need to let the market resolve the housing crisis while at the same time doing everything in his power to stop development of new housing.

[LoanShark]

What I can't get my head around is that people signed up to do thing X, voluntarily.

Now they want thing X to be thing X but with better conditions and protections... but if they get those better protections, many many of those people will no longer be able to do thing X because the economics doesn't work.

What they are basically asking is to become taxi drivers. But they wouldn't be employed (or self employed, or running their own limited company) as taxi drivers because the entry costs are high, and the number needed is much lower when you factor the price (because people will choose to go back to getting the bus/train/taking their own car).

You can't have both things (autonomy, low entry requirements AND guaranteed pay, holiday). The company already loses money. They are basically asking to lose their jobs.

I just don't understand what the workers are thinking. Short term gain? Or is it just the "professional" drivers doing it and not the real casuals? I guess so.

Sometimes you need to save people from themselves. Desperate people, and lets be honest, you'd have to be desperate to sign up to servitude here; desperate people will work at whatever price. It's not good for them, and it's not good for society to allow corporations and people with capital the opportunity to exploit people.

Otherwise it becomes normalised, and suddenly you have a permanent underclass working for $2 an hour plus room and board. Do not wish for that on your fellow people.

California intervenes in the free markets again. Won’t end well for anyone involved - the shareholders of Uber, the drivers or the consumer.

Ah but when your Feds jack up tariffs on everything that's ok then. No one says its an intervention in the free market when the other side does it ;)

Did I say anything about tariffs? Didn’t think so. Whether or not tariffs involve free markets is another discussion entirely.

This is akin to mandating $15/hr minimum wage and wondering why your fast food burger meal costs $12 when it was $6, or worse yet, the restaurant closing entirely and laying off the staff.

[dogboyslim]

While I recognize this is a legislative action and by default somewhat political, can we take the tit for tat my side rules your side sucks what-about-ism to the other forum?

For this change, I suspect drivers will get limited hours, and I suspect they will limit the hours such that drivers get no more than 20 hours.  They start having to provide benefits somewhere around 25 hours, and I suspect they could easily argue that this is reasonable because they need large numbers for short periods and very low numbers for longer periods.  They may take some of the drivers with the most hours and offer them full-time shifts with benefits, but I think you will have to work part-time shifts for a long time.  The whole concept of drive when you want for however much time you want is likely to go away IMO or they can't control their labor costs anymore.  Not sure how surge pricing will work anymore either.  I'm sure it will still exist, but they will have to connect this back to driver salary in a way that is "equitable."  Generally, Lyft/Uber just got an HR mess handed to them.  Good luck!

[Nick_Miller]

I for one would pay more for a better product. I'm not sure if other customers would agree.

I've used Uber about 10 times, only when I really needed to, and I've only had one "good" experience.

The other 9 times featured drivers who spoke little English, drove WAYYYY too fast and aggressively, with most of them bitching about the company. One Uber driver in Boston told me about the 50-so runs he had to make in a weekend to get a bonus. Well, when I did the math, it was SCARY. The whole model encourages drivers to run lights, speed, etc.

I know the old taxi model encouraged them to milk it. That had its obvious disadvantages too.

Can't there be a safer, more responsible "in between?"

[Dicey]

Guess a lot of Uber drivers are going to have to get used to the concept of minimum shifts, hourly pay, insecure rosters and wearing Uber livery. Because those are things that employees do.

Huh?

[jtraggie99]

I didn't read every response, and maybe someone already mentioned this, but what most seem to be missing are self-employment taxes.  As a contractor, a driver is responsible for paying 100% of their SS and Medicare withholding's.  As an employee, half is paid by the employer and half is paid by the employee.  If Uber has to start paying that for all of their drivers, that will be a massive blow to them.  To me, this is less about benefits or minimum wage or more about employment taxes that they would have to now begin paying. 

[Villanelle]

While I recognize this is a legislative action and by default somewhat political, can we take the tit for tat my side rules your side sucks what-about-ism to the other forum?

For this change, I suspect drivers will get limited hours, and I suspect they will limit the hours such that drivers get no more than 20 hours.  They start having to provide benefits somewhere around 25 hours, and I suspect they could easily argue that this is reasonable because they need large numbers for short periods and very low numbers for longer periods.  They may take some of the drivers with the most hours and offer them full-time shifts with benefits, but I think you will have to work part-time shifts for a long time.  The whole concept of drive when you want for however much time you want is likely to go away IMO or they can't control their labor costs anymore.  Not sure how surge pricing will work anymore either.  I'm sure it will still exist, but they will have to connect this back to driver salary in a way that is "equitable."  Generally, Lyft/Uber just got an HR mess handed to them.  Good luck!

I don't know that they will have to pay drivers more during surge pricing.  Stores don't pay employees less during sales and more during busy times, generally.  Pay is usually fairly divorced from profit margins.   

[Cassie]

Uber and Lyft are fighting this in court and it will not take affect until the court case is resolved.   WE have taken many rides and only had 2 bad experiences. I know someone that does it full time because due to his physical disability it's one of the few jobs he can physically do. However, he lives in a tourist place so does well financially even with the miles added to his cars.   Most drivers do it part time when they feel like it. Most don't want to be employees.

[jtraggie99]

While I recognize this is a legislative action and by default somewhat political, can we take the tit for tat my side rules your side sucks what-about-ism to the other forum?

For this change, I suspect drivers will get limited hours, and I suspect they will limit the hours such that drivers get no more than 20 hours.  They start having to provide benefits somewhere around 25 hours, and I suspect they could easily argue that this is reasonable because they need large numbers for short periods and very low numbers for longer periods.  They may take some of the drivers with the most hours and offer them full-time shifts with benefits, but I think you will have to work part-time shifts for a long time.  The whole concept of drive when you want for however much time you want is likely to go away IMO or they can't control their labor costs anymore.  Not sure how surge pricing will work anymore either.  I'm sure it will still exist, but they will have to connect this back to driver salary in a way that is "equitable."  Generally, Lyft/Uber just got an HR mess handed to them.  Good luck!

I don't know that they will have to pay drivers more during surge pricing.  Stores don't pay employees less during sales and more during busy times, generally.  Pay is usually fairly divorced from profit margins.

Of course they don't have to pay surge pricing, but that's not the point.  The reason that Uber and Lyft have surge pricing is to get more drivers in areas of high demand so riders don't have to wait as long.  Most riders utilize both services and generally go with some combination of who has the lowest rates and shortest wait times at that given moment in time.  If I am going to have to wait 10 minutes for an Uber or 5 minutes for a Lyft and the prices are fairly close, I am going with Lyft.  I do not see any of that going away anytime soon regardless of worker classification. 

Of course, that's also why Uber and Lyft are going to have a hell of a time ever making a profit.  If either one individually tries to raise fares, riders will just use the other service.  And on the flip-side, not only are they not able to lower drivers wages to save money, drivers are about to start costing them a lot more!

And comparing ride-sharing to retail is apples to oranges. 

[Car Jack]

I wonder how many Uber drivers are actually driving legit.  At least in my state, to be legit, you'd need to carry commercial insurance.  I'm sure someone from Uber would say "we have one MILLION dollars of coverage when you're driving for us".  But wait.  "while you're driving for us".  So you're driving to your regular job and run into a Mercedes E class, hurting the driver.  Your car is badly damaged.  The appraiser comes to write up an estimate to fix the car and notices the U in the window and reports that to the insurance company.

What happens next is the fun (not) part.

Since you drive for a ride share company without commercial insurance, your insurance coverage now goes to state minimums.  In my state, that's $10k total liability, zero collision.  Even better, since you were not driving for Uber at the time, their insurance doesn't apply.

So the Mercedes is totaled and you're on the hook for $55k for that.  The driver isn't too bad off, and only has $45k in medical bills.  So if they're nice and don't get a lawyer to sue you for everything you'll ever earn, it only cost you $100k.

It's why my son won't be driving for Uber Eats.  I did contact my insurance company and asked rather than blindly going ahead with my head in the sand.  I don't have good luck and my kids have worse luck. 

[WhiteTrashCash]

I'm torn about this, because I want people to make enough money to earn a living but at the same time I like getting good deals on stuff from people who failed their high school Math classes. What to do. What to do.

[Villanelle]

While I recognize this is a legislative action and by default somewhat political, can we take the tit for tat my side rules your side sucks what-about-ism to the other forum?

For this change, I suspect drivers will get limited hours, and I suspect they will limit the hours such that drivers get no more than 20 hours.  They start having to provide benefits somewhere around 25 hours, and I suspect they could easily argue that this is reasonable because they need large numbers for short periods and very low numbers for longer periods.  They may take some of the drivers with the most hours and offer them full-time shifts with benefits, but I think you will have to work part-time shifts for a long time.  The whole concept of drive when you want for however much time you want is likely to go away IMO or they can't control their labor costs anymore.  Not sure how surge pricing will work anymore either.  I'm sure it will still exist, but they will have to connect this back to driver salary in a way that is "equitable."  Generally, Lyft/Uber just got an HR mess handed to them.  Good luck!

I don't know that they will have to pay drivers more during surge pricing.  Stores don't pay employees less during sales and more during busy times, generally.  Pay is usually fairly divorced from profit margins.

Of course they don't have to pay surge pricing, but that's not the point.  The reason that Uber and Lyft have surge pricing is to get more drivers in areas of high demand so riders don't have to wait as long.  Most riders utilize both services and generally go with some combination of who has the lowest rates and shortest wait times at that given moment in time.  If I am going to have to wait 10 minutes for an Uber or 5 minutes for a Lyft and the prices are fairly close, I am going with Lyft.  I do not see any of that going away anytime soon regardless of worker classification. 

Of course, that's also why Uber and Lyft are going to have a hell of a time ever making a profit.  If either one individually tries to raise fares, riders will just use the other service.  And on the flip-side, not only are they not able to lower drivers wages to save money, drivers are about to start costing them a lot more!

And comparing ride-sharing to retail is apples to oranges.

Well I suppose it remains to be seen how this is implemented.  But if Uber writes the schedules (or maybe specific hours available to the first X number who sign up), then people who want to work will sign up for the hours available.  I was assuming that's how they will get drivers to work during surge pricing.  They could also potentially require X numbers of hours they deem most popular in order to allow someone to work more than 10 hours per week, or something along those lines. If you don't work at least 5 hours on Friday and Saturday nights, then on a two week schedule you are limited to only 8 hours of driving during that two week period, total.  If you do work at least 5 of those peak hour, then you can work up to 20 hours. In other words, they can use means other than paying more to push drivers to work the hours Uber wants them to work. 

[afox]

I wonder how many Uber drivers are actually driving legit.  At least in my state, to be legit, you'd need to carry commercial insurance.  I'm sure someone from Uber would say "we have one MILLION dollars of coverage when you're driving for us".  But wait.  "while you're driving for us".  So you're driving to your regular job and run into a Mercedes E class, hurting the driver.  Your car is badly damaged.  The appraiser comes to write up an estimate to fix the car and notices the U in the window and reports that to the insurance company.

What happens next is the fun (not) part.

Since you drive for a ride share company without commercial insurance, your insurance coverage now goes to state minimums.  In my state, that's $10k total liability, zero collision.  Even better, since you were not driving for Uber at the time, their insurance doesn't apply.

So the Mercedes is totaled and you're on the hook for $55k for that.  The driver isn't too bad off, and only has $45k in medical bills.  So if they're nice and don't get a lawyer to sue you for everything you'll ever earn, it only cost you $100k.

It's why my son won't be driving for Uber Eats.  I did contact my insurance company and asked rather than blindly going ahead with my head in the sand.  I don't have good luck and my kids have worse luck.

Yep, passing the liability and other costs to the "independent contractor" is the backbone of the gig economy. That and crushing the competition by using investor capital to lower prices below what people would actually pay. How many AirBnB hosts tell their HO insurance company they are running a hotel out of their house? For example, door dash has limited liability insurance for drivers only once the product has been picked up and en route to the delivered location.

[Cassie]

If the ride sharing companies lose the lawsuit it wouldn't pay for them to operate so really this whole discussion is a moot point.

[afox]

If the ride sharing companies lose the lawsuit it wouldn't pay for them to operate so really this whole discussion is a moot point.

Actually, I dont think the ride sharing companies have ever turned a profit, their existence so far is due to optimism by investors/large amounts of capital available to them...the real fear is that these lawsuits would make the companies less attractive to investors. Maybe these lawsuits provide a long term path to viability for these companies though, it was just a matter of time before the govt or the courts started defending the "independent contractor". Now that the competition (traditional taxi companies) is largely gone prices could rise to market rates and employees could have a better future.

[EngagedToFIRE]

Guess a lot of Uber drivers are going to have to get used to the concept of minimum shifts, hourly pay, insecure rosters and wearing Uber livery. Because those are things that employees do.

I've been an employee my whole working career and never had a uniform, have never had minimum shifts/insecure rosters, and have always been paid on salary.  The things you're listing aren't necessary (in any way) to be an employee.

So you think Uber will pay drivers and provide benefits even if the driver never logs in, never takes rides, and spends more time driving for Lyft and GrubHub?  OF COURSE there will be minimum shifts and work requirements if they have to pay these people like employees.  The days of logging in whenever you wanted as a side hustle were just destroyed by politicians.  They pretty much eliminated a legit side hustle that a lot of people benefit from.  The drivers want to be employees?  Well, buckle up!  Here's your work schedule, here's when and where you will be working, and if you don't like it, fired.  Welcome to the real world.  Guy just wants to earn some extra cash to take his kids to Disney?  Sorry, not hiring at the moment.  Gotta love California....  Not.

[EngagedToFIRE]

While I recognize this is a legislative action and by default somewhat political, can we take the tit for tat my side rules your side sucks what-about-ism to the other forum?

For this change, I suspect drivers will get limited hours, and I suspect they will limit the hours such that drivers get no more than 20 hours.  They start having to provide benefits somewhere around 25 hours, and I suspect they could easily argue that this is reasonable because they need large numbers for short periods and very low numbers for longer periods.  They may take some of the drivers with the most hours and offer them full-time shifts with benefits, but I think you will have to work part-time shifts for a long time.  The whole concept of drive when you want for however much time you want is likely to go away IMO or they can't control their labor costs anymore.  Not sure how surge pricing will work anymore either.  I'm sure it will still exist, but they will have to connect this back to driver salary in a way that is "equitable."  Generally, Lyft/Uber just got an HR mess handed to them.  Good luck!

I don't know that they will have to pay drivers more during surge pricing.  Stores don't pay employees less during sales and more during busy times, generally.  Pay is usually fairly divorced from profit margins.

Right.  And if the drivers are now employees... well... Uber can treat them like employees and just make them go where they are needed.

[EngagedToFIRE]

I wonder how many Uber drivers are actually driving legit.  At least in my state, to be legit, you'd need to carry commercial insurance.  I'm sure someone from Uber would say "we have one MILLION dollars of coverage when you're driving for us".  But wait.  "while you're driving for us".  So you're driving to your regular job and run into a Mercedes E class, hurting the driver.  Your car is badly damaged.  The appraiser comes to write up an estimate to fix the car and notices the U in the window and reports that to the insurance company.

What happens next is the fun (not) part.

Since you drive for a ride share company without commercial insurance, your insurance coverage now goes to state minimums.  In my state, that's $10k total liability, zero collision.  Even better, since you were not driving for Uber at the time, their insurance doesn't apply.

So the Mercedes is totaled and you're on the hook for $55k for that.  The driver isn't too bad off, and only has $45k in medical bills.  So if they're nice and don't get a lawyer to sue you for everything you'll ever earn, it only cost you $100k.

It's why my son won't be driving for Uber Eats.  I did contact my insurance company and asked rather than blindly going ahead with my head in the sand.  I don't have good luck and my kids have worse luck.

You have clearly done literally zero research in to this.  Most of the auto insurers have a ride share option to add on now.  It costs anywhere from $1.50 - $20/mo extra.   It's incredibly inexpensive and the insurers have everything pretty well sorted at this point.  Are you sure you actually called your insurer?

[Bloop Bloop]

Guess a lot of Uber drivers are going to have to get used to the concept of minimum shifts, hourly pay, insecure rosters and wearing Uber livery. Because those are things that employees do.

Huh?

Just like McDonald's makes its employees wear uniforms, and courier companies (that employ people as opposed to using contractors) make delivery drivers wear livery, so can Uber, if it's forced to classify workers and employees.

I understand that most of us, if we're employees, aren't wearing a MegaCorp branded polo shirt, but most of us don't work in low-skilled, minimum wage jobs.

Want to have your employee rights as an Uber driver? Sure, but also be prepared to be barred from working for Lyft, be prepared to work set shifts, wear a uniform, say bye-bye to surge pricing, etc etc

[dogboyslim]

I wonder how many Uber drivers are actually driving legit.  At least in my state, to be legit, you'd need to carry commercial insurance.  I'm sure someone from Uber would say "we have one MILLION dollars of coverage when you're driving for us".  But wait.  "while you're driving for us".  So you're driving to your regular job and run into a Mercedes E class, hurting the driver.  Your car is badly damaged.  The appraiser comes to write up an estimate to fix the car and notices the U in the window and reports that to the insurance company.

What happens next is the fun (not) part.

Since you drive for a ride share company without commercial insurance, your insurance coverage now goes to state minimums.  In my state, that's $10k total liability, zero collision.  Even better, since you were not driving for Uber at the time, their insurance doesn't apply.

So the Mercedes is totaled and you're on the hook for $55k for that.  The driver isn't too bad off, and only has $45k in medical bills.  So if they're nice and don't get a lawyer to sue you for everything you'll ever earn, it only cost you $100k.

It's why my son won't be driving for Uber Eats.  I did contact my insurance company and asked rather than blindly going ahead with my head in the sand.  I don't have good luck and my kids have worse luck.

I'm not sure what state you are in, but that's not the case in most of the US.  The adjuster sees the U, and then asks to see app activity, which can be provided by the TNC (Uber in this case).  If the app was off, you are covered.  If the app was on, you have a coverage gap.

There are 3 periods to driving for a TNC:  Period 1 when you log in and start requesting a passenger but have not accepted a ride.  Period 2 where you've accepted a ride but have not yet picked up a passenger, and Period 3, you've picked up the passenger and are driving to the destination.

With no endorsements, the TNC usually provides coverage for Period 3.  Periods 1 & 2 vary by insurer.  If you do this, your best bet is to get a ridesharing endorsement from your carrier.  If it is your primary job, go with a full on ride-sharing policy.  Geico and Allstate have them (as do others).

In this case, we are talking about CA.  In CA, there is a state law that requires the TNC coverage as soon as the app is turned on, and the TNC coverage must be primary.  State laws vary.

[jtraggie99]

Some of you guys are really over thinking this.  Uniforms?  Set schedules?  No way man.  Uber (and lyft) are not about to become traditional taxi services, which is what you are describing essentially.  They would have to blow up their entire current business model.  They are going to dictate when and how much people drive?  No way.  The resources it would take across all the areas they service would just not be financially feasible.  They can't even turn a profit right now as it is.  So lets add more overhead?  And once again, when it comes to surge, that is not something these companies plan ahead of time.  It's spontaneous.  When demand reaches a certain threshold in a certain area, surge pricing goes into affect until the demand decreases.  They don't plan for this.  It happens automatically.  So, how are they going to dictate when drivers drive and where?  How are they going to know where they need to be ahead of time?  Like I said, they'd have to completely change how they operate. 

The biggest thing that will dramatically change and affect both companies is they will have to start paying their half of payroll taxes.   For some drivers that drive a lot, they may have to provide some benefits, but that will have no impact on the vast majority of their employees. 

[TheContinentalOp]

Some of you guys are really over thinking this.  Uniforms?  Set schedules?  No way man.  Uber (and lyft) are not about to become traditional taxi services, which is what you are describing essentially. They would have to blow up their entire current business model. They are going to dictate when and how much people drive?  No way.  The resources it would take across all the areas they service would just not be financially feasible.  They can't even turn a profit right now as it is.  So lets add more overhead?  And once again, when it comes to surge, that is not something these companies plan ahead of time.  It's spontaneous.  When demand reaches a certain threshold in a certain area, surge pricing goes into affect until the demand decreases.  They don't plan for this.  It happens automatically.  So, how are they going to dictate when drivers drive and where?  How are they going to know where they need to be ahead of time?  Like I said, they'd have to completely change how they operate. 

The biggest thing that will dramatically change and affect both companies is they will have to start paying their half of payroll taxes.   For some drivers that drive a lot, they may have to provide some benefits, but that will have no impact on the vast majority of their employees.

Exactly!

Right now Uber/Lyft don't care one whit about productivity. You can log into the app and park in Death Valley and wait for a ping; they don't care. But as soon as you're an employee, and they're paying you a wage, you can be plenty sure hat productivity is going to matter. And that means the driver will be driving when, where, and how long Uber/Lyft tell them to

[Nick_Miller]

Some of you guys are really over thinking this.  Uniforms?  Set schedules?  No way man.  Uber (and lyft) are not about to become traditional taxi services, which is what you are describing essentially.  They would have to blow up their entire current business model.  They are going to dictate when and how much people drive?  No way.  The resources it would take across all the areas they service would just not be financially feasible.  They can't even turn a profit right now as it is.  So lets add more overhead?  And once again, when it comes to surge, that is not something these companies plan ahead of time.  It's spontaneous.  When demand reaches a certain threshold in a certain area, surge pricing goes into affect until the demand decreases.  They don't plan for this.  It happens automatically.  So, how are they going to dictate when drivers drive and where?  How are they going to know where they need to be ahead of time?  Like I said, they'd have to completely change how they operate. 

The biggest thing that will dramatically change and affect both companies is they will have to start paying their half of payroll taxes.   For some drivers that drive a lot, they may have to provide some benefits, but that will have no impact on the vast majority of their employees.

I'm not familiar with California workers' compensation law, but I would assume that would be another enormous change, based on a finding that the drivers are "employees."

In most states, work comp benefits are due even if the accident is the employee's own fault, and with an entire "workforce" of drivers, there are going to be a lot of claims, especially when the drivers are encouraged by the pay model to speed, run lights, etc. I'd assume that Uber and Lyft would have to pay work comp benefits, including medicals and lost wages. More serious injuries could also include settlements for impairment to earn.

[Dragonswan]

I for one would pay more for a better product. I'm not sure if other customers would agree.

I've used Uber about 10 times, only when I really needed to, and I've only had one "good" experience.

The other 9 times featured drivers who spoke little English, drove WAYYYY too fast and aggressively, with most of them bitching about the company. One Uber driver in Boston told me about the 50-so runs he had to make in a weekend to get a bonus. Well, when I did the math, it was SCARY. The whole model encourages drivers to run lights, speed, etc.

I know the old taxi model encouraged them to milk it. That had its obvious disadvantages too.

Can't there be a safer, more responsible "in between?"

Yes.  I have long thought that a Chauffeur's license should be required of all Lyft and Uber drivers.  That's the main reason why I will not use those services.  Taxi drivers may be crazy, but at least they have the license that says they were trained and passed a driving test beyond beginner level.  This would weed out quite a few of the casual and really bad drivers.

On a side note, I've find it much easier to get a taxi now.  With so much competition, the wait times have gone down and the service is better.  That's a win in my book.