back to article California bigwigs rule Uber, Lyft dial-a-ride drivers are employees, not contractors

The California Public Utilities Commission, which regulates private transport companies including Uber and Lyft, has ruled that the two upstarts' drivers should be recognized as employees instead of contractors. The issue over the status of drivers for ride-hailing companies has been controversial for a while. Cali Governor …

  1. jake Silver badge

    I know many people who work so-called "gig economy" jobs here in California.

    Not a single one of them, to the best of my knowledge, wants to be considered an employee. Somebody might want to clue in the Newsom child before the next election, or he's going to find himself thrown out on his ear. Most of the PUC folks will be gone by 2022 anyway ...

    1. Woodnag

      Re: I know many people who work so-called "gig economy" jobs here in California.

      Why?

      1. jake Silver badge

        Re: I know many people who work so-called "gig economy" jobs here in California.

        What they describe as control of their own lives, primarily. Keep in mind that many of these people work several different "gig" jobs, and some work one or two to supplement their more normal income. They don't need, nor do they want, multiple different "employers".

        1. This post has been deleted by its author

          1. jake Silver badge

            Re: I know many people who work so-called "gig economy" jobs here in California.

            "They" are loggers, produce haulers, photographers, musicians and various other people who own their own equipment and hire out on a per gig basis. What started as an attempt to spank Uber for being run by a bunch of slime-balls (purely because it was politically expedient, mind) has snowballed into a disaster for many people.

            No, it's not an IR35 issue. This is California, not the UK, and IR35 doesn't apply here. But thanks for playing from your armchair across the pond. We'll take your Anonymous Commentardery under advisement.

            Edit: The AC nuked its post. Gee, I wonder why?

            1. Jimmy2Cows Silver badge

              Re: I know many people who work so-called "gig economy" jobs here in California.

              Perhaps some flexibility in the law is required, to recognise there may be two competing classificaitons needed here and both should be accommodated. I know. How unorthodox.

              Those that want to be recognised as employees can choose to be so.

              Those that want the flexibility of being external contractors can choose to be so, with all the personal and finanicial risk that entails.

              Oh and the employer is legally barred from pressuring their workers to choose "contractor".

              Just a thought.

              1. Aristotles slow and dimwitted horse Silver badge

                Re: I know many people who work so-called "gig economy" jobs here in California.

                "Perhaps some flexibility in the law is required"

                How quaint. The IRS isn't here to serve you. Why have multiple definitions when they can have a single one, tar everyone with the same brush, and then prosecute anyone who tries to have a mind of their own.

                1. Jimmy2Cows Silver badge
                  Meh

                  Re: I know many people who work so-called "gig economy" jobs here in California.

                  Yeah well thought-out laws designed to protect all parties while recognising their different needs is clearly an out-moded concept. If there ever even were such a thing.

              2. jake Silver badge

                Re: I know many people who work so-called "gig economy" jobs here in California.

                That flexibility already exists. Look up the difference between 1099 and W2 ... However, most corporations aren't willing to go through the paperwork hassle of allowing two employees, doing identical jobs, and yet having different employment status.

            2. Outski

              Re: I know many people who work so-called "gig economy" jobs here in California.

              "loggers, produce haulers, photographers, musicians and various other people who own their own equipment and hire out on a per gig basis"

              But @jake, these are all jobs that are more appropriately described as freelance. Most session musicians and photographers I've known work on a similar basis: use their own gear & get paid for the gig, with possibly a cut for an agent if they use one. With Uber/Lyft, and delivery firms like UK firms Hermes or Yodel, the drivers are under massive pressure wrt number of fares or deliveries completed, they get charged by the companies for the privilege of working, frequently have to lease the vehicle from the firm or have to take an expensive loan, and are sometimes responsible for finding their own replacement if they take a day sick, at risk of a fine from the company if they can't, not to mention the lost income, on top of the company taking a large cut of the income they do garner.

              These are not similar circumstances. (I was going to say they're not comparable, but they obviously are, I've just compared them.)

              1. jake Silver badge

                Re: I know many people who work so-called "gig economy" jobs here in California.

                This isn't the UK. This is California. Why so many people in this thread seem to think that California has to follow UK law is beyond me ... Yes, I know, Uber and Lyft exist in the UK. I would expect them to follow UK law in that location (just as I do with regard to firearms laws, for example). But TOA, and my comment, was discussing the law in California.

                1. Outski

                  Re: I know many people who work so-called "gig economy" jobs here in California.

                  I wasn't talking about law either, rather business models of app-based companies and their workers, vs occupations that have traditionally been freelance

        2. Warm Braw Silver badge

          Re: I know many people who work so-called "gig economy" jobs here in California.

          nor do they want, multiple different "employers"

          I'm struggling to understand what the objection might be, particularly if it then involves better terms of employment. Unless, perhaps, under the present arrangements it's left entirely up to the "worker" to declare their income for tax purposes.

          1. jake Silver badge

            Re: I know many people who work so-called "gig economy" jobs here in California.

            "I'm struggling to understand what the objection might be"

            "Better terms of employment' is quite subjective. Quite frankly, the affected like to be independent. The vast majority of the folks affected are law abiding, tax paying, productive members of society. Or were, anyway.

            And again, this doesn't just affect Uber and Lyft workers.

        3. LucreLout Silver badge

          Re: I know many people who work so-called "gig economy" jobs here in California.

          They don't need, nor do they want, multiple different "employers".

          I wonder where the balance is regarding unemployment benefits here in the UK. At some point it may be better to be able to close a failing business making yourself redundant and claim welfare, which may be difficult if you're an employee of many firms.

          I have one employer. Anything happens to my gig there then there's a certain amount of state support that kicks in. I'm just not clear how well structured our welfare state is for modern working practices with potentially limitless employers - its easy to see how this could be extended to a builder, an outsourcer, TV / celebrity employment, so it may readily cause problems beyond this specific case.

          1. jake Silver badge

            Re: I know many people who work so-called "gig economy" jobs here in California.

            Again, what does UK law have to do with what I posted?

        4. James 139

          Re: I know many people who work so-called "gig economy" jobs here in California.

          That's one of the things I've always found confusing over the "gig economy" and the contractor vs employee "debate". This is mostly rhetorical, and I could have entirely misunderstood something about it.

          To me, the two roles are different, and, probably incorrectly, clearly defined in my mind.

          Contractors : Take jobs as they see fit, have to cover themselves in terms of medical coverage etc, can accept or decline jobs on a whim, hence flexible.

          Employees : Get assigned jobs they can not refuse, under normal circumstances, without consequence, employer pays for medical coverage etc, required to work as directed by employer, hence rigid.

          So, where someone wants to do a few hours here and there, why would they not want to be contractors?

          Conversely, those that want to do it as a full time job, why wouldn't they want to be employees?

          And, importantly, why do officials, and possibly the companies, not want to offer both?

          1. jake Silver badge

            Re: I know many people who work so-called "gig economy" jobs here in California.

            "And, importantly, why do officials, and possibly the companies, not want to offer both?"

            Legally, both exist. Most companies prefer one or the other for paperwork reasons. Individuals have been allowed to chose both if working for multiple companies. It has been up to them (and/or their tax preparation person) to make certain all the is are crossed and all the ts dotted to make sure the financial/tax details are kept straight. It has been working nicely for all concerned for decades.

            However, this new law makes it the employer's issue to ensure that the worker is, in fact, an above-board contract ("freelance") worker. Many companies don't want to go through that headache... part of the reason that they employ contractors is because those folks handle the bulk of the paperwork themselves.

            And of course it will be a particularly bad headache for the likes of Uber, which is why the law was written the way it was. Unfortunately, as is often the case when it comes to feel-good legislation that is hurried into place to garner political favo(u)r with the electorate, the law has all kinds of collateral damage and families across the state are hurting because of it.

            1. John Brown (no body) Silver badge

              Re: I know many people who work so-called "gig economy" jobs here in California.

              "part of the reason that they employ contractors is because those folks handle the bulk of the paperwork themselves."

              That point seems to be where the main problems are with regard to the "new disrupter" gig economy style jobs. The traditional contractors and freelancers that have been around for decades will almost always get paid more per hour than an employee because they have extra overheads, such as having to do their own admin, health, unemployment benefits, not get paid when off sick or on holiday. The likes of Uber and Lyft are not paying those comparable rates nor do they buy in the services at a market rate and nor do they do the admin at low cost due to economies of scale. Uber et al set the prices as low as possible and will not negotiate. The fact they have refused to look at their business practices to the extent that they are now in breach of a law on the books tells me that their business model is fundamentally flawed.

          2. MachDiamond Silver badge

            Re: I know many people who work so-called "gig economy" jobs here in California.

            "That's one of the things I've always found confusing over the "gig economy" and the contractor vs employee "debate". This is mostly rhetorical, and I could have entirely misunderstood something about it."

            The distinction, which is multi-variable, has to do mostly with how much control the person doing the work has. A contractor is given a goal and they goes about getting to that goal via whatever method they think will work the best using their own tools, setting their own schedule. If a taxi company is dictating too much, the driver has a casual job more than being an independent contractor.

            Big "gig" companies such as Lyft and Uber seem to be focused on ways of setting up a company in a way to absolve themselves of the responsibilities of an employer. They are skating very close to the line between employee and IC. Since they also routinely give the government the finger when it comes to things like commercial licensing and insurance that are required for traditional taxi companies, they aren't making any friends with lawmakers.

            I see these new taxi companies as complete failures. The don't own cars, they don't pay employee costs and taxes yet they still lose massive amounts of money every year. Their headquarters are in expensive buildings in expensive city when by their very nature they could be anywhere. While it's too big a task for a government to protect people that never learned math from being fleeced for every thin, drivers aren't trained about the economics of their "business" and wear out their cars at a faster rate than they are bringing money in to replace it when it's finally kaput. That they are doing this at a grand level is what draws attention. If they were just a local company taking advantage of people, it would fly under the radar.

        5. SImon Hobson Silver badge

          Re: I know many people who work so-called "gig economy" jobs here in California.

          They don't need, nor do they want, multiple different "employers"

          Firstly, there is no problem having multiple employers - unless one of them insists on an exclusivity clause.

          But the main thing is that if someone truly wants to be a contractor and work for Uber, or Lyft, or ... then that is quite possible within the law. All they need to do is to setup their own business - whether as (to use UK terminology) a sole trader or a limited company - and contract with one or more others. Particularly if the one business contracts with more than one of the services, and provides their own equipment, and insurance, and controls it's own employee pay (noting the rules on minimum wage, holiday entitlement, sickness cover, etc, etc, etc), and has the right of substitution (e.g., if one is sick his/her spouse could take over), and ... then it would be clear that it is a service provider subcontracting provision of services. Under UK tax law, contracting with multiple clients (e.g. with both Uber and Lyft) at the same time would be a good indicator against it being disguised employment.

          But what Uber and Lyft and the others offer is not a contract for services that such an arrangement would provide - they offer what is clearly a contract for employment with some weasel words that time and time again have been shown to be just a way to try and wiggle out of their legal obligations.

          So no, from what I read, "not wanting multiple employers" isn't a valid reason to allow thousands to be taken unfair advantage of.

          1. jake Silver badge

            Re: I know many people who work so-called "gig economy" jobs here in California.

            Multiple employers is a problem if three of them want to set your hours to overlapping times.

            Again, UK law doesn't apply here. This is a California issue.

            1. SImon Hobson Silver badge

              Re: I know many people who work so-called "gig economy" jobs here in California.

              Contracting to multiple service providers is a problem if three of them want to set your hours to overlapping times - see there's no difference. If your terms of employment or contracting allow you to pick your own hours (as I believe both Uber and Lyft do), then it matters not whether you are contracting to them or employed by them.

              UK or California law - makes no difference to the fundamental problem (or non-problem) you bring up.

    2. Kevin McMurtrie Silver badge

      Re: I know many people who work so-called "gig economy" jobs here in California.

      Maybe they don't want to be employees, but California is tired of people needing government assistance when they need medical care, can't work, or get tricked with a deceptive contract. It wasn't a big deal until seemingly half of California was driving around in circles and parking in the middle of intersections with Uber/Lyft decals.

      AB5 needs some tuning, of course, but I don't think Uber/Lyft are going to escape it. Those employees are told exactly how to do their work rather than being paid for the outcome. Tech companies had the same issue where they couldn't micromanage employees then claim that they're exempt from overtime.

      1. Nathar Leichoz

        Re: I know many people who work so-called "gig economy" jobs here in California.

        Out of curiosity, are regular taxi drivers considered employees and how do they deal with medical care?

        1. jake Silver badge

          Re: I know many people who work so-called "gig economy" jobs here in California.

          It depends on the taxi company and the jurisdiction, and can vary from state to state, county to county, or even city to city.

      2. jake Silver badge

        Re: I know many people who work so-called "gig economy" jobs here in California.

        "Maybe they don't want to be employees, but California is tired of people needing government assistance when they need medical care, can't work, or get tricked with a deceptive contract."

        Sounds like California has enforcement issues to me. Perhaps they should address that, instead of taking work away from law abiding, independent, entrepreneurial self-employed voters. Especially in this economy.

        Note that I'm no fan of Uber and Lyft ... There are many other people that this affects negatively.

    3. GeekyDee

      Re: I know many people who work so-called "gig economy" jobs here in California.

      they just need to sharpen the teeth of tax evasion and insurance fraud. I know of 2 people that love driving and don't pay their employer taxes or other required paperwork. One still drives, the other totaled his car and the insurer wouldn't cover any part of the vehicular damage due to the insured's saying he didn't drive for others. Too bad for him he committed fraud. Too many want to get rich quick and avoid taxes; maybe someone should create a service that takes their pay and takes their taxes out for the proper agencies?

      1. jake Silver badge

        Re: I know many people who work so-called "gig economy" jobs here in California.

        We have laws to cover that already. Enforce them. The answer is not to force people who are doing it legally out of business ... not even if that is the easy way out for the dunderheads on Capitol Hill (which isn't actually a hill, it's more of a flood-plain).

        1. disgruntled yank Silver badge

          Re: I know many people who work so-called "gig economy" jobs here in California.

          Does Sacramento have a Capitol Hill?

          1. jake Silver badge

            Re: I know many people who work so-called "gig economy" jobs here in California.

            Not really, it's more of a flood plain (as I pointed out earlier).

        2. John Brown (no body) Silver badge

          Re: I know many people who work so-called "gig economy" jobs here in California.

          "We have laws to cover that already. Enforce them."

          Sounds like you are voting for a state income tax increase to cover all the extra law enforcement to cope with checking on these many 1000's of "gig" workers.

          "The answer is not to force people who are doing it legally out of business "

          Without the enforcement, those doing it legally will be priced out by the 1000's not paying their own medical bill and not paying for the correct insurance.

    4. Anonymous Coward
      Anonymous Coward

      Re: I know many people who work so-called "gig economy" jobs here in California.

      Jake you're not some devout pilgrim of Truth. Not everything you see is proof of something absolute, even ignoring your usual tired IR35 agenda you seem to have transplanted to this unrelated tale.

      Give it a rest. You come off as pious. As if your anecdotal evidence is somehow different, somehow transcends being anecdotal evidence. The sheer arrogance of posting this!

      1. jake Silver badge

        Re: I know many people who work so-called "gig economy" jobs here in California.

        "even ignoring your usual tired IR35 agenda"

        My what? I have never, not once, even mentioned IR35 here on ElReg (until now) for the very simple reason that it doesn't apply to anybody living and working here in California. I wouldn't have mentioned it in that last post, but the deleted post (yours, I presume, given the similarity of content) suggested that it somehow applied to what I was talking about. The rest of your post is equally nonsensical.

        1. Anonymous Coward
          Anonymous Coward

          Re: I know many people who work so-called "gig economy" jobs here in California.

          Insult me all you want pal but I'm one person and didn't do all those down votes.

          I really don't believe you re: not understanding my post there either - maybe you honestly don't know what anecdotal evidence is (it would explain a lot to be fair) but you're online. Look up the word "anecdotal".

          You come across as arrogant.

          1. jake Silver badge

            Re: I know many people who work so-called "gig economy" jobs here in California.

            Down votes? What down votes? I blocked that crap years ago :-)

            If you want insults, I'll insult you. To date I have done no such thing.

            I know what anecdotal evidence is. I'm not in a court of law here, all I'm doing is recounting what I have personally seen. It's called a "testimonial". Many people across California have similar misgivings. Do a little reading on the subject.

            I'd rather be arrogant than an ignorant off-topic prat without an actual bitch about the subject at hand.

  2. Anonymous Coward
    Anonymous Coward

    America

    Home of immoral employment conditions

    C-

    Must improve

    1. jake Silver badge

      Re: America

      Whose morals, Kemosabe?

      1. Anonymous Coward
        Anonymous Coward

        Re: America

        Jesus Christ Jake, can't you keep your beak out? Your morals are fucked enough!

        1. jake Silver badge

          Re: America

          My morals are fucked? Can you please show me where? Or are you just putting your beak in for the sake of putting your beak in?

      2. CrazyOldCatMan Silver badge

        Re: America

        Whose morals

        Well - since the US proclaims itself to be a "Christian" state (a claim which is pretty laughable if you know anything at all about the original Christianity before it got twisted into something unrecognisable) then that might be a good place to start..

        But then that would mean discarding rampant soul-less capitalism so I'm not holding my breath.

  3. General Purpose

    Some UK reasoning may also apply in CA

    The UK Employment Tribunal had a lot of reasons for saying that drivers work for Uber and not the other way round, including:

    (1) The contradiction in the Rider Terms between the fact that ULL purports to be the drivers' agent and its assertion of "sole and absolute discretion" to accept or decline bookings.

    (2) The fact that Uber interviews and recruits drivers.

    (3) The fact that Uber controls the key information (in particular the passenger's surname, contact details and intended destination) and excludes the driver from it.

    (4) The fact that Uber requires drivers to accept trips and/or not to cancel trips, and enforces the requirement by logging off drivers who breach those requirements.

    (5) The fact that Uber sets the (default) route and the driver departs from it at his peril.

    (6) The fact that UBV fixes the fare and the driver cannot agree a higher sum with the passenger. (The supposed freedom to agree a lower fare is obviously nugatory.)

    (7) The fact that Uber imposes numerous conditions on drivers (such as the limited choice of acceptable vehicles), instructs drivers as to how to do their work and, in numerous ways, controls them in the performance of their duties.

    (8) The fact that Uber subjects drivers through the rating system to what amounts to a performance management/disciplinary procedure.

    (9) The fact that Uber determines issues about rebates, sometimes without even involving the driver whose remuneration is liable to be affected.

    (10) The guaranteed earnings schemes (albeit now discontinued).

    (11) The fact that Uber accepts the risk of loss which, if the drivers were genuinely in business on their own account, would fall upon them.

    (12) The fact that Uber handles complaints by passengers, including complaints about the driver.

    (13) The fact that Uber reserves the power to amend the drivers' terms unilaterally.

    1. Yet Another Anonymous coward Silver badge

      Re: Some UK reasoning may also apply in CA

      All those could also describe a movie actor. Are all those now going to be studio employees?

      1. General Purpose

        Re: Some UK reasoning may also apply in CA

        See Jensen v Cultural Infusion (Int) Pty Ltd [2020] FCA 358 for the fine line between the relationship being considered one of contractor-principal or employee-employer. One factor was that actors were chosen for their particular acting skills and experience (indeed, there might be other personal factors), which precluded delegation. The comparatively generic skills required of drivers could put them the other side of that particular line.

      2. General Purpose

        Re: Some UK reasoning may also apply in CA

        Also consider that the movie actor doesn't have a direct and one-to-one interaction with the audience member. They're contracted to deliver a performance to a film company. Uber claim to be mere facilitators of a driver doing business with a passenger. Items 3, 4, 6, 8, 9 and 13 are most obviously pertinent for drivers but not movie actors, and several others don't carry over either.

    2. jake Silver badge

      Re: Some UK reasoning may also apply in CA

      Again, no. That is the UK, not California. Different systems entirely. Really.

  4. c1ue

    As if Uber and Lyft don't have enough challenges to become (or maybe will never become) viable businesses.

    Nor am I the least bit sympathetic.

    The medallion system is not perfect by any means, but it was created specifically to address conditions of fair pricing to consumers balanced against fair pay for drivers. The primary outcome of the "gig" economy in pickup transportation is the end-around made around existing regulations since these companies have yet to demonstrate that they achieve even the tiniest amount of increased income for drivers or efficiency for operations. In fact, data I've been following is clearly showing that ride share should be *more* expensive than taxi because of the drive-to-pickup time.

    And given that ride-share companies are losing 35 cents on the dollar, their present slight discount vs. taxis is transparently a false economy - one which their present status at billions of dollars of revenue make clear that increased scale won't change.

    1. Hugh McIntyre

      If I order a minicab taxi by phone, there's a drive-to-pickup time in that case as well.

      For both the minicabs and Uber/Lyft, presumably they can try to optimize to choose drivers who are already close to the ride where possible to reduce drive-to-ride costs. And for airport pickups the ride share drivers are presumably already heading to the airport.

      The fact that Uber/Lyft are losing large amounts of money despite not paying employee benefits does seem like an issue for them ...

  5. Falmari

    I don't understand

    I do not understand why Uber and Lyft are being sued by the State Attorney General?

    A new law has come onto the books in California Uber and Lyft are breaking that law.

    So why are they not taken to court for breaking that law and if found guilty punished (presumably fined) under said law.

    Why the hell are they being sued?

    On a second point this line from the article “The law came into force in January this year”, though Uber and Lyft have resisted the change” really does show how these so-called disruptive companies operate.

    Their business model is to be cheaper than incumbent businesses by not saying the rules do not apply to us.

    1. jake Silver badge

      Re: I don't understand

      "I do not understand why Uber and Lyft are being sued by the State Attorney General?"

      Because that's part of the AG's job description in cases like this.

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