Squeezing nickels out of your front-line workers so you can give dollars to your top executives has gotten totally out of whack. It's about time employers started thinking of their workers as assets and not expenses.
16
Just as we demand that China level the playing field on trade (and Trump fans seem ok with that), we need to level the field of workers vs gig businesses. The gig business model is not completely bad. It's given work and income to those who may not have a college education, a glossy Linkedin profile, can't maintain the regular schedule, may be aged out of the new workforce or be otherwise discriminated against in one way or another. Whether you're a college student, a senior, an immigrant, or recently laid off gen-xer, driving, making deliveries, or walking pets is fulfilling a need in our economy. And in order to ensure that these workers can provide for their families, have health and work security, gig businesses need to charge more for their services in order to support these employees. And the consumers need to be willing to pay a higher price as well. Maybe if we pay more, they will be incentivized to provide a safe, sustainable, and reliable service that isn't going to disappear in the next recession.
9
For the Lyft and Uber drivers, who are in favor of this bill and want its supposed benefits, the benefits will be illusory. Most of them will be out of work.
7
I drive for Uber and Lyft and do not want government getting in the middle of my relationship with my employers.
Jenny Hatch
Longmont Colorado
8
They are not your employers. You are a contractor not an employee. Do they provide benefits? No. Do they pay FICA? No. Can you claim unemployment if they fire you? Nope. I hope you are making a lot of money working for them, because individual health plans are expensive, and you’re going to need a huge amount of savings if you plan on ever retiring.
15
Hallelujah California!!
The gig economy has disrupted the real economy enough. It was always a bill of goods sold by the ultra greedy to entrap the working poor.
First they get you to be excited that you can make money on the side. Then they get you hooked so you depend on it, but the pay gets slimmer and slimmer as those at the top figure out how to make their piece of the pie bigger.
Governor Newsom and the California legislature did a good thing.
10
Your comment is right, but they don’t care about trapping. Their goal is to make someone else pay the tax. They don’t care, as long as it’s not them.
3
Lyft and Uber should pray for this law. Otherwise their business is based on thousands of independent contractors all conspiring to to set prices for a service. That is absolute, unquestioned antitrust. Any prosecutor who wanted to could totally shut them down.
1
Lyft/uber is a slimy racket whose crooked l founders thought they were above law and regulation and had their silicon valley venture capitalists " influence " politicians and officials to get their illegal way. ( Holder, A. Cuomo, Jerry Brown, Ed Lee, California Public Utilities Commission et al )...a very dirty business that hurt many people.
The so called "gig economy" is the death knell of the American middle class.
6
I spoke with Lyft drivers recently and these companies take advantage of their drivers.
They hike up rates for passengers and don’t pass on the extra profit to the drivers.
If a passenger cancels too late and is charged a $10 cancellation fee, even if the driver shows up, they don’t get paid.
Tips for food deliveries don’t go to the drivers.
Drivers pay for their own gas, maintenance and repairs of the vehicles.
These drivers can work the same amount of hours one day and make half as much the next day.
Lyft drivers no longer work for Uber because of how they treat drivers and now Lyft is implementing the same practices.
Without drivers, there is no Uber. There is no Lyft. They deserve better.
10
Some of the comments here are dismaying.
The “gig economy” jobs are rolling back hard-won worker protections that span decades. It’s incredibly short-sighted to oppose the California legislature’s actions because it will make your Uber ride more expensive.
Instead people ought to reflect on the fact that Uber/Lyft drivers (and Door Dashers and TaskRabbits etc) have been the canaries in the coal mine for the capitalist class.
Sure, at first it was the “part-time taxi driver,” eager to make a few extra bucks (never mind that their take-home is often below minimum wage when gas expenses are taken into account). But the practice of gig-economy jobs has been slowly but surely expanding into other areas: domestic care, media, publishing, tech (of course), even some legal work. What we’ve been seeing is the slow erosion of labor protections..and that erosion is expanding into many other fields. Americans typically haven’t cared too much about this: as long as my job is safe and I get cheap products/services, who cares? But who knows, your job might be next.
How about we stop licking the boots of the ruling class and start showing more solidarity with working folks? Otherwise, as history shows, it won’t be long before the pitchforks come out.
17
When Uber was first getting going - running all black cars to a limited customer base - I had a conversation with one of its founders in which I offered the suggestion that they treat their drivers as employees and pay them benefits. He said, "that would completely destroy our business model." I replied, then get a new business model, because one that doesn't reward such key stakeholders isn't a very good one. I still feel that way, and wish the guy had taken my suggestion.
18
Bravo, California!
8
The flip side of this excellent legislation is that by codifying the ABC test, it also paves the way to better terms for gig workers who truly do fit the independent contractor definition, such as Taskrabbit or Takl. This is skilled labor, and for Taskrabbit you set your own rates, negotiate scope of work with the client, and schedule as you see fit. It's an excellent platform, and the primary complaints from the Tasker side is that the company attempts to control the scope of work and uses metrics that penalize you for not accepting jobs. Fix those aspects, and the company can continue to be profitable while providing convenience & service for customers, and flexible high-paying work for contractors.
With the ABC test validated here, it will give leverage to contractors who want fairer terms and greater control over how they manage clients gained through the Taskrabbit platform. (Yes, I'm a Tasker and there's been a lot of discussion among folks about the potential benefits of this legislation, but pretty broad consensus that our situation is very different than Uber/Lyft drivers.)
4
Although this seems like a good intention, the road to hell is paved with good intentions. Driver fee currently account for almost 80% of ride costs. With this new legislation, either these companies raise prices in California or less people will take rides. Basically, the state government created a tax on ride share.
4
This is one of the best Pro-Trump, Re-Elect Trump in 2020 articles I've read in the NYT.
11
Well, it will be fun watching all the finger pointing come January 01. My prediction: No one is going to win except government.
As an Uber and Lyft driver now for two years,, this will ruin me. I work only on weekend nights and can make $30 an hour for ten hour shifts, that I schedule myself. And I get to write off most of my taxes. Why would I like a bill that will shift me to $12 an hour with 35% taken out for taxes? Any driver who likes that is just a fool and wants to be a wage slave. i will have to move to another state, like Oregon, where they don't want to penalize us drivers with a stupid law like this.
12
I hope the new classification requires drivers to pass reading and language comprehension tests! I have had drivers who drove through "Road CLosed' signs, one way signs, didn't understand the directions to get us back to our hotel, and drivers who were legally deaf, as the company texted me before hand.
While i have also had very positive experiences with Uber and Lyft, the experiences mentioned above were very anxiety producing!
5
The full-time model has already failed -they were called taxis. And now we won't even be able to get bottled water at SFO while we have to wait a few hours for a ride. Great job CA!
6
@LTJ
Taxi drivers are not full-time employees. They are contract workers.
3
Unintended Consequence? This will only accelerate the move to robotics and driverless cars -- and the loss of jobs.
5
Cause they were gonna take their time replacing drivers? Not likely.
5
So let's pause for a moment, and ask ourselves...are CAB DRIVERS classified as employees?
No, of course they are not. They are required to jump through ridiculous regulatory hoops (costing hundreds of dollars) to fight for the (artificially limited) chance to pay a "gate fee" (a hundred dollars per 10 hour shift, or more) to a usurious cab company that controls an inordinant number of "medallions" (a government created, and enforced monopoly.)
Cab drivers pay for their own gas, don't take any breaks, and generally hustle for 8 or 9 hours (of that 10 hour rental period) just to break even.
Yeah, Lyft is the problem.
7
The Gig economy is a dead end for society, and the health of our country. Let's think about living hand to mouth year after year...no health insurance, no sick leave, no stability . The corporations are making serfs of us all. We take all the risks they make all the wealth.
9
Most tech companies now make employees below manager or engineer level work through "staffing agencies," and those agencies take as much as 37% of every dollar the employee makes (I worked through two of them for IBM for 10 years, so I know this is true). The tech company calls them "contractors," but makes sure there's a legal wall to protect them from any employment-related claims. So they are subcontractors and employees of the staffing agencies, typically with NO benefits, not even paid sick time or any vacation. Nobody CHOOSES this other than for survival, and it is exploitation and should be stopped.
6
Don't sue Uber. Immediately arrest all the company officers if they follow their threats to ignore the law.
4
This will be a net negative for the working class in CA. Folks won't be able to hustle for that last little bit to make the rent. And you can bet your sweet bippy that any employee will have a stiff quota to meet lest he get replaced by another.
In the long run, it doesn't matter since soon there will be driverless cars.
18
@swampwiz. "Hustle" or in Uber-speak "Flexibility" will always be available; just in compliance with labor laws.
As far as a "stiff quota", sure companies can demand a much higher rate of piece-work. There is nothing new with quotas, which have been heavily documented in the USA especially in southern plantation operations. Stiff quotas should be meet with the full force of Occupational Laws (OSHA) given the change worker from contractor to employee so that the employer doesn't physically suffer at the hands of the employer. And isn't this what people want? To *not* be treated like a slave.
6
The pitchforks are coming out! People are getting fed up with the 0.1% (including the current president) gathering all the power and wealth for themselves. Things like the criminal tax cut of 2017 that enriched the richest, the spread of binding arbitration, and the freedom of mega corporations to avoid paying any taxes by buying off politicians under Citizens United. The abuse of TIFs to funnel billions of our tax dollars from schools and pensions to already super-rich developers at Hudson Yards in NYC and Lincoln Yards in Chicago. Rich people getting richer by creating deadly opioid addiction. We're fed up!
Either it changes peacefully, with brave acts like this California law and the coming arrest and imprisonment of Donald Trump, or it's going to end horribly violently like the French Revolution.
3
"They have warned that recognizing drivers as employees could destroy their businesses."
A business built on virtual slave labor deserves to be destroyed.
8
Great news! for the modern day slaves and labor exploitated workers. This bill is long overdue, and it will hopefully extend to other proffessions that are still under the thumb of the so-called "gig economy".
The fight has just begun...
2
Uber /Lyft never had contractors who preferred flexibility. Someone should pull some data how many of their drivers work part time (2-4 hours a day) and how many work over 5 hours a day!!!
A flexible part time driver is the one who went shopping, filled his trunk with groceries , and on the way home turns Uber/Lyft on. BUT how can you pick up clients with luggage having a full trunk?!
Everyone knows , the majority that drive for those so called rideshare companies are out with the purpose to drive along hours and make petty money. Time came for Uber/Lyft to pay for their slavery approach
Why so called rideshare?! Because ONLY 1 service offered from 8-10, is a ride share! Rest are PRIVATE RIDES.
It’s getting tighter around Uber/Lyft necks because they could not bring the taxis and limos down for over 7 years. Actually they are losing clients. Drivers are stealing them and creating their own business.
They should be regulated even more! It will come for them, slow by slow!
It’s driver’s fault too to rely on a gig company to earn them enough to live. But their slaves woke up.
1
Go get 'em Californ-i-a! Business has been allowed to destroy employee's futures in so many ways for years - the demise of solid pensions, contractors without benefits of any kind, double and tripling job responsibilities, name your personal (un)favorite. Despite my differences with some of their "achievements", California leads again...
3
Ha! What next? Contingent faculty?
1
I side with the Fruits & Nuts. Many states actually have California's ABC test; "B" is whether you're doing the company's principal line of work, as the "app" drivers are.
As are many 1099s riding federal contracts. You have subcontractors claiming vet/woman-owned, HUBzone, disabled, and other preferences, who then hire the disadvantaged as misclassified ICs. The only contract is their offer letter stating your wage. You might work remote with flex hours, but do the exact same work they do, as they or their client have you do it. THEY estimate job costs, and in some cases, refuse to pay you for any work beyond their low-ball. Often no work even comes in, but they do all this knowing if you could make up the difference elsewhere, you wouldn't be with them in the first place.
Beyond benefits, there are also the tax complications of being misclassified. Pursue it, and you can get back half the FICA paid but lose paying back deductions. And both your state and Social Security can classify you differently than IRS. I'd like to see ABC adopted and enforced nationwide, but 'wishful thinking.
13
1 in 4 app ride cars show malfunctions on their dashboard. the burden of proof should be on the company to show that their operating procedures and benefits are sufficient for their drivers to provide consumers with the requisite safety (for which they itemize a charge)
This decision could be the death knell for Uber and Lyft. Their long-term business plan is based on eliminating employees via autonomous cars. In the meantime, they have been subsidizing the cost of their rides to develop a customer base. Fully autonomous cars are at least five to ten years away. Now that their labor costs have been bumped way up they simply can’t support their cash burn rate. California did the right thing as painful as it might be for some companies.
7
costs get passed on and new equilibrium is found. that's the premise of a lot of loud market advocates, and as a passenger, I want what California passed, to treat the service person as an employee.
1
Sadly, like others have mentioned, this trend is trickling into other sections, not just app-based companies. As a professional with years of experience and a master's degree I am still working temporary and contract positions because countless companies and organizations are only hiring in this capacity. Yes, it is cheaper for these entities but it hurts those who need work. And to be honest, there isn't a great incentive to give work my all anymore when I'm a contract hire.
13
.
"Moonlighting" jobs are not meant to be careers.
These are jobs often performed when extra money is needed or simply to try something different or interesting. People who enter these jobs know this and DO NOT expect "full employment" benefits. The entrepreneurs who organize these companies should be praised, not denigrated.
This is a bad idea from legislators who do not understand the implications of what they are doing.
7
Is there something in the water in California? Something that makes you really stupid?
The California "lawmakers" rarely disappoint, and this absurd ruling is no exception.
This is an absolutely awful decision, aimed primarily at Lyft and Uber drivers. If there were ever an "occupation" that is ideally suited for independent contractors, it would be driving for Uber and Lyft.
There are two possible consequences: Either the Uber/Lyft business model will no longer be viable, or their prices will go up dramatically.
It will, however, be very good news for those who drive conventional taxis.
8
@Mr. Moderate
the Uber/Lyft business model is already not viable. They shift all risk to the worker, and still lose money in buckets.
8
@LJ
"They shift all risk to the worker"
Sure, bud. How much of the billions of dollars invested in Uber did drivers put in? Zero.
2
I for one would have never gotten my business off the ground if it weren't for people willing to work as 1099. 8 years later, we are starting to gain some traction in the market place. I hope to purchase health care again next year as it become too affordable with the individual mandate removal spike this year and coupled with my surgery costs that I am still paying monthly for the next year. I steadily increased hours of my team from 5 or 10 hours a week to a couple more hours increase as we grow. I've posed the question of placing them on W2 PT but they like the flexibility of being a contractor - 1099. Anyway, with all that said, this bill would hurt my business and delay my attempts for getting access to health care.
2
@Michael - Sounds like you probably shouldn't be in business in the first place if the only way you can do so is using IC's.
Thankfully, this bill IS going to pass the CA Assembly and WILL BE SIGNED by Governor Newsom.
3
*it become too un-affordable
I have a primary job and actually drive for the money and fun of it. I consider it a side hustle that I can start and stop whenever I want.
I don't want to be an employee. I like the freedom and ease of making extra money on the side. This bill is similar to all the data protection and anti-trust cases.
I've never heard one person complain about Facebook or Google who uses it. Likewise, I have not heard from anyone who actually drives for these companies complain about Uber or Lyft. The people complain either don't use the services (facebook, google) or don't use Uber or Lyft as a contractor.
6
@Eric Since its "fun" you can do it for free right?
Others dont do it for fun. They do it to make ends meet because the economy is a farce as it has been since Reagan instituted economic feudalism. What used to be viable work has turned into "transition" jobs. Back before him and the confederate... i mean republicans, a job was a job. People who worked minimum wage could afford to buy a small house or raise a family on just 1 minimum wage income. Now you need 2 people to do the same and they get put down for it at the same time... good work republicans.
3
@Eric
We are liberals and we don't care what you want or like.. We will decide that for you!
4
@Marcus You forgot that I mentioned for the "money" also.
I'd like to see a poll of actual uber contract workers on how they feel about being employees and not people who think this is the best decision.
1
This all started back in the 1980's with Reagan and the new tax law. I was entering my economic prime then, and suddenly every business was trying to turn employees into contractors. This was rampant in sales. Salesmen used to be employees, were given benefits and sales bonuses. Suddenly, five attaboys and good luck.
They were saying that now we had unlimited opportunity. Yes, to fail. To work harder for less.
The IRS has very strict guidelines on who can qualify as a contractor. In a nutshell, the contractor has to get a job done. The company contracted with cannot tell them when or how to do the job. Think construction. If a bricklayer wants to work at night and take two hour breaks, that's what he can do as long as he finishes the job on time with adequate quality.
While that might be essentially true for drivers, Uber and Lyft use all kinds of carrots and sticks that are in essence, telling them when and how to work.
That Uber says labor costs will go up 20-30% says it all.
7
Watch Lyft and Uber now only blame higher prices on this instead of how their investors subsidized billions of dollars in fares in order to build ridership. Now that they are public companies, they are actually going to face reality. It's also kind of sad how the taxi industry basically chose helplessness instead of innovation. If we're lucky it will accelerate self driving car technology.
Progress at last. But 49 states to go and the red "right to work" states won't be eager to push this sort of legislation. "Right to work" is really right to be fired at will with no one to represent you (no unions).
5
@Barbara -
"Right to Work" means "Right to Freeload".
People forget - Taxi drivers of San Francisco and many big U.S. cities were slave labor to begin with, and many of them were victims of the brutal and predatory system to begin with. So abusive system existed before Uber and Lyft. U&L replaced them by using technology, and problem simply changed its form and expanded to larger scale.
This society stopped policing the companies from capitalizing on slave masters of taxi company in the name of cost savings. U&L now tries to do the same in ever larger scale. This is problem for many folks who have little access to profitable jobs with limited skills nor assets other than a car and their drivers license.
1
@David
That's not really a fair comparison. Slaves were always smarter, harder working, cleaner, and more conscientious than any San Francisco cabbie who ever drove me.
4
@GMooG Hilarious, and you forgot to say, they probably were kinder also
Well, there go the part time jobs for people who wish a little extra cash on their own schedule. I’ve had students drive for me on weekends when they didn’t have tests or upcoming papers due. They wouldn’t be able to set such flexible schedules as someone’s employee. Some drivers were using Uber to help with unexpected cash needs like a roof leak or broken water heater. Much better than using payday loans. These opportunities will vanish. Beware the unintended consequences of liberal policies.
4
@James - Puh-leeze. Your workers can still stay as IC's. They just have to incorporate and become a true independent. This means you give them a task and tell them how much you are offering to pay when it is completed. Can you business work under this format?
If so, I think it costs about $1000 initially to incorporate in CA. Perhaps you will pay the cost for them?
2
@James I taught the students (computer science and IT stuff) that drove you and all of them have stated outright that they hate uber/lyft. They do it because they have no choice. Thanks a lot conservatives for destroying the economy by voting for Reagan and now Trump.
4
In the Bronx, we have and had "gypsy cabs" You own a car, you need to make extra money so you drove around picking up passengers. In my opinion, drivers who use Uber and Lyft are legal gypsy cabs. Uber and Lyft are just the platform they use to find passengers. If Uber and Lyft are forced to classify them as "employees" doesn't that change the ride sharing companies into actual taxi companies?
8
Gypsy cabs don’t leave an electronic record of who was the customer and who was the driver and where they went. There’s safety in that. Also a modicum of background check.
1
No problem.. They'll just outsource to India.. Way to go liberals!
5
@Aaron
I'm waiting with bated breath to see how you outsource your LA and SF drivers to India.
4
Boo-hoo-hoo.
---------
A New Duplex Penthouse for Travis Kalanick, Uber’s Co-Founder
The $36.5 million apartment at 565 Broome Street comes with a pool and a rooftop deck.
https://www.nytimes.com/2019/08/30/realestate/a-new-duplex-penthouse-for-travis-kalanick-ubers-co-founder.html
4
the UK does not have a "Supreme Court", you could say, instead, its highest appellate court.
oops, strike that, I missed the 2009 reform!
It’s one of the biggest lies in today’s economic world to pretend that the start up industry creates fairer, all horizontal, no hierarchies, all friends new work world - where everyone is sitting together at one endless ping pong table.
...Apart from all the small, under payed, no rights, beyond pressure, hire and fire small workers who enable the VC investors and owners profit only business models.
Seeing every day the cyclists of the countless online delivery services you immediately can tell that they are the lowest in the work chain.
3
If they could just figure out a way to profit from (sell) customer data while using the app and sell ads on the platform, it just might work. Uberbook? Russia, are you listening?
1
If this bill passes (and other States adopt it) Uber and Lyft should be bankrupt and out of business in less than 5 years.
*Uber is far from making money. It reported an operating loss of $3 billion in 2018 after losing more than $4 billion the prior year.
*Even if this bill doesn't pass Uber & Lyft are on life support.
9
@P&L
This doesnt change anything. Or have you missed the part where millions of business have employees and are still in business?
It just means that both companies will raise prices and the playground remains in its same state. They will still lose money at the same rate because they are both fighting for market share, not profit.
1
I'm seeing a lot of comments by people not affected by this Bill.
I am an IC and I work in the travel industry. We collectively fought very hard to get an exemption from AB5. We can all think for ourselves. I don't need the government to tell me what's right or wrong for me. I love what I do and the freedom to do as much or as little as I want without repercussions. My income is the only thing that is affected. I do not have and do not want quotas. Which is what an employer will for sure require.
9
@Mikki
Don't you worry your little head about this. Liberals know what's best for you, even if you don't.
7
@Mikki
The Elite Politicians like Gavin know what you need.
They don't think you are smart enough or wise enough to know what you want and need.
5
The title of this article illustrates the misunderstanding of the issue. These people are not workers. They are contractors and by definition they cannot be employees.
These contractors are able to work whenever and wherever that want. They are self employed and not under the control of a "boss", a timeclock, or a schedule. They can "moonlight" for extra money and still keep their day job. This works.
As anyone who is self employed knows, it is the contractor (not the company), who is responsible for paying their social security and Medicare.
California's reclassification of these contractors to employees is bad for business, is bad for consumers, and may eliminate opportunities for all contractors in the state.
9
@Michael
Unless you have a law degree and specialize in employment law, you had better not make legal assertions because it is NOT THAT SIMPLE
Uber/Lyft drivers can neither select the customers they choose to drive (don't know who until they get there) or set the rates.
Uber/Lyft control everything except for paying for the car, gas etc. They rate the drivers and fire them without recourse
9
@AnnS
Just plain wrong. Drivers determine their working days & hours, and also have the discretion to accept or decline rides offered to them.
5
This potentially threatens my business model as sole proprietor. I don't have sub-contractors or employees, but the clients I work with will be even more fearful about working with me now as they think CA will insist that I should be treated as an employee. I do _not_ want that. Now I have to figure out how to shield my business relationships from that threat.
4
Sounds like you can take care of yourself "I'm all right Jack" , so get on it. This bill will take care of the others.
Cheers.
3
I guess I am in the small minority that thinks this legislation is a huge mistake. If this law passes, Transportation Network Companies will be forced to hire a mix of full and part time drivers with the associated benefits. The net result will be a significant increase in the cost of a ride. As ride usage decreases, the need for so many employees will not be there and many current drivers will be unemployed.
I know many part time drivers who simply work on the weekends after there regular career job is over and they tell me the money is good. I make a good salary and I have considered it for myself.
As a side note I like Uber/Lyft because I was never ignored. Taxi cabs on the other hand was hit or miss.
8
@Nicholas Espinoza
Nope. These company do not create jobs. They never did. That is a misconception. What they did was displace who got the money.
The only companies who create work are those that create new products or services that did not exist prior. Thereby creating new demand. Uber and Lyft did not create new demand.
Further, as we all know, their current pricing to get people to use their services, is fake. They are losing money on each ride and they are only doing it to take market share and destroy competitors. Once competitors are gone, prices will go up to what they were before they came about. So once again, the cost you allude to is fake. In time it will go way up regardless of this law.
2
Yet another misleading title, this has nothing to do with apps. It's the relationship two businesses have with each other. This dead horse has been flogged to death so many times it's bones have turned into dust.
The problem is most individuals, due to America's super low bar in regards to education, are completely unprepared to properly manage a business of 1.
And this bill does nothing about that. Just another nanny state action plan where the nannies haven't the slightest idea what the impact will be. Well, other that getting them more votes.
By the time this shakes out many will loose gainful employment, services will become scarce, and prices will go up. In the most expensive place to live in the country. Driving even more of the tax payer base away.
7
Thank you, California! All workers deserve job security and benefits. Flexibility in working hours has nothing to do with that.
These companies are using "flexibility" as an excuse to keep workers underpaid and insecure so they can prop up their profit margins. Their statements about how worker benefits will destroy their industries are alarmist and manipulative. Happy, secure workers will add value to these companies, not take it away. I'm glad the CA legislature and the unions are doing the right thing.
10
It's good for drivers and delivery people to have the option for long term work. Remember they are not obligated to take a full time role if they do not want it. If they can show they only work part of the time they can still do a contract.
This is going to stress Uber/Lyft's business model. In the long run they will be able to provide a better service to their customers by managing capacity. However they will have to increase prices meaning a decrease in growth and possibly revenues.
This is looking more like a really big cab company.
2
That’s what it was all along. “Ride Share” was a phrase to get around regulation by municipalities
This really was the case in California where the
CPUC ended up with jurisdiction thereby paving the way for basically an unregulated business.
3
Good. I’m conflicted, but I absolutely don’t agree that only white collar people like me should be treated as employees with a job. Contractization and tempification are toxic forces in the culture. If someone’s work status, work content and pay are determined by a certain body, that body is their manager and employer. Period. No skirting employment law for everybody except the affluent people like me. That is a poisonous dynamic from which you can expect poisonous results. Hope it rings a bell..
8
This will result in lower salary and fewer hours for discretionary workers, And businesses will minimize their operations in california It will also promote illegal immigrant hiring that do not have paper trails - maybe that was real goal.
3
@sh
Pure conjecture based on nothing. I assert that this new law will result in a new movement to unionize all workers, which will of course lead to a workers paradise.
4
@Mike
I love Canadians!
@sh Nope. This will result in fewer people driving but each one making significantly more than before which will allow them to actually pay their bills without welfare assistance (hopefully).
Your illegal immigrant this was off the deep end. This does not change the dynamic. The problem with illegals is the employers. it always has been, many of which are republicans. Not many tech companies hire illegals but you can be sure as the sun will come up tomorrow that at least half of construction and farm workers are illegals. Even Trumps was hiring illegals and h1b visas for people to mow a lawn... apparently no American can operate a lawn mower.
1
Thank you California. It is about time that government steps up to protect the small guy. Companies like Uber are exploiting the people that perform services thru companies like Uber. Their simple strategy is sign up a zillion drives as contractors. Pay zero overhead for these folks. Then cut the amount to their so called contractors. This strategy will increases the profit. Increased profits increase management salaries and bonuses.
The folks that do all the work get squat in the end.
6
Social welfare benefits such as health insurance and retirement are currently predicated on a system of full-time long term employment that is increasingly at odds with the needs of many sectors of a dynamic and ever changing economy. Rather than stifle the growth of these sectors, benefits such a Medicare for all, a living minimum wage, and a guaranteed national subsistence income could be provided by government programs financed through progressive taxation on individuals and businesses.
Classifying all workers as employees is not enough. Retail businesses, for example, are notorious for the on-demand on-call scheduling of employees, who are awarded irregular part-time hours deliberately kept below the threshold needed to qualify for unemployment, Social Security, and Medicare.
5
Hooray! Finally sanity returns. Flexible work hours always transform into insecurity just as working from transforms into outsourcing. A company hires people to work and they are called employees,
2
I think these job are nice for folks needing a bit of money each month, but I don't see them as ever being a living wage.
It also allows freedom and control to the workers, and best of all NO BOSS.
Seems like California is saying that Uber is cheating workers out of a 9-5 or hourly job.
I wonder what the Uber drivers think?
4
Is Gavin's 3rd cousin on his father's side shorting Uber and Lyft for him?
I could not think of companies that deserved this more than Uber and Lyft, who have sucked the life out of their "gig" drivers, many of which rely on that income to support themselves without any of the benefits of employment status. Thanks again California. I love you!
10
My rich brother from the USA visited me recently in Vancouver Canada, where we have no UBER. He had to stand in line for a taxi (sob!). The cruise ship patrons cannot come to my retail stores in mid-town because there is no uber/lyft, only taxis and busses - sob for me for less business.
The uber/lyft technology is great and from what I have noticed, everybody who uses the service has got lots of money. Just triple your price and boom, you pay your costs, including employee and city licencing costs.
The uber/lyft users have lots of money. Use it for good service (what a concept!)
3
@Maputo88
This is one of the reasons why Canada is the 10th largest economy in the world and not the first.
5
@P&L
Tenth largest economy with a very small population. Economically we’re like a flyweight fighter who competes successfully in the welterweight division; we punch well above our class.
5
Also maybe because Canada has 1/9 the population of U.S.
1
I spent the majority of my work life working as a contractor, I wouldn't recommend the life style. Contractors get nothing beyond a paycheck, no vacation, health benefits, NOTHING.
This movement has to expand across the country ASAP.
11
Personally, I support this legislation worldwide.
The model is under pressure because these companies have betrayed their own vision of a “sharing economy”, where people can share their assets and get some reward for it.
This has become an “exploitation economy” and reminds me of the 1st industrial revolution, where workers have zero rights, have to make investment upfront, where the reward is at a level that many need to work close to 24/24 and 7/7 and have to take unrealistic risk (ex. Contractors working for Amazon).
9
Note to the Left & Gavin Newsom; if you don't like the company's model, don't work for the company.
The USA should not be mistaken for the USSR.
The USA is still a free country.
The Gang of Four & Gavin Newsom are not calling all the shots just yet.
3
Economies may come and go
but workers stay to plant and grow.
In factory or cubicle,
surly or cherubical,
the toiler never seems to get
much more than the chance to sweat.
Laws are passed to give them clout;
still they go the same old route --
drudgery till time of death,
and taxed each time they draw a breath.
4
Glad California has taken the lead on this issue. I have never taken an UBER or Lyft ride. Their business model never felt right to me. One day it's a taxi driver, months or years later it's a model adopted by all corporations. I am not supporting that with my $$$.
8
Silly. They should have continued negotiating a new classification between employee and contractor - why continue relying on outdated classifications
2
@D
What other classification is there. Other than slave.
1
It's official Gavin Newsom is the worst Governor in the USA.
California is Anti-business. Time to move to another state ASAP, unless you are homeless.
3
@P&L - California is the most successful business state in the country.
4
@Joe
Yes, I am fully aware of this, but give Gavin time he only just started.
@P&L
You people have been saying that, literally, since the 80s. Each governor was going to bring about the end of the CA ecoomy... except for Arnold until you realized he wasnt far right enough and then he was terrible too.
1
FINALLY!
2
Employees - but whose...
https://www.nytimes.com/2017/07/30/technology/hot-spot-for-tech-outsourcing-the-united-states.html
1
San Francisco is flooded with these unprofessional drivers who cause problems constantly with their stupid, illegal maneuvers and clogging of the streets. I hope somehow this reduces the ridiculous number of these bad drivers on the street.
8
That should help the new "app" based, billion dollar losing companies emerge into the 21st Century. UBER et. al. have been operating more like share cropping plantations.
8
About time. Don’t forget Fed Ex, which uses a ton of “contractors.”
6
Well, they are not employees, period. And most of them are ok working the way they work. The wage is slavery, apparently, but the drivers accept it, as apparently they have no better choices. Tough call indeed.
It is easy to promulgate bills as this, in all likelihood this will seriously hit the two ride-hailing companies and by implication their drivers, which will either lose jobs or get their income significantly reduced.
What I am trying to say is that it is easy to set things right as far as human and economical treatment of the workers, it is not easy to have the companies survive such actions (based on how they are currently set up), and by implication their workers. Surgery successful, patient dead.
5
Boy is this one nuts.
If more than several hundred thousand folks in CA now work “for” the likes of Uber and Lyft, it stands to reason that the vast majority of them are casual workers, who want flexibility, etc. These companies could not possibly need this many full timers.
So what this does is totally destroy the whole business model, both for the companies and the workers.
Pay benefits to folks who work, say, 10 or 12 hours a week and work only when they want to? What? As I said above, this is nuts.
6
@dick west
Yes. Gavin needs you to explain this to him.
2
If these drivers are now employees, that should give the companies control over the schedules they drive, what they do between trips, and many other facets of the driver's time and behavior. It will be interesting to see just how 'worker friendly' this new law actually is once it is enforced, and how many of the current drivers decide to remove themselves from a tightly scheduled work environment.
5
I'm highly torn on this one. For the Uber drivers that do drive 40-45 hrs a week, the liberal in me thinks those driver's deserve a decent salary and benefits.
However cab companies were notoriously over-regulated in the past.
For instance NYC Taxi cab medallions topped out at over a million a piece, keeping down the supply. As result - most cabs served just Manhattan making it impossible to catch a cab in Brooklyn or Queens. Not to mention the cars themselves were just disgusting inside!
Similarly when we lived just 6 miles away from SF Airport, calling cab companies for a ride - would be told that it's too short of a fair for them to be worth to come out to give us a ride. And yet, we still needed a ride to the airport!
Uber and Lyft filled those gaps. I can easily catch a decently priced Uber/Lyft in suburbs of SF or even Jersey City to Mangattab. Haha.
So yes, fair wages for those who work "full time" for those companies. But not over-regulations that would have Uber and Lyft go down same path as old school can companies.
Also, I can't keep and wonder what about the drivers who work occasional 5-10 hrs a week during peak demand? They serve important purpose to fill needed supply, without really being a full time employee.
2
Pragmatist in me also thinks the bill will give self-driving cars a bigger push forward.
3
The thing is, after going public, people like Uber's Travis Kalanick reap wealth so far beyond their original investment, that the scale -- holding the CEO on one end and the worker on the other -- simply keels over from gross imbalance.
The CEO doesn't feel it topple; the gig workers most assuredly do. Social Security, healthcare benefits and a higher minimum wage would help balance that scale. And that balance is healthier for society as a whole.
8
As someone who has struggled in the gig economy, I have to say, "Congratulations, California Uber and Lyft drivers; and thanks, California legislators!"
6
I see the comments about "Slavery" & "Sweatshop" companies, be sure you include the New York Times in your list of companies. Newspapers have long used 'contract employees' to deliver their papers and they rely on 'freelance writers and photographers' for content for their papers. All of these are core functions of the business and would be regulated by California's AB 5. These contractors and freelancers would have to become employees, with appropriate pay and benefits. Oh and they would also have to join the union, which is the real reason for AB 5. This bill will cost the NYT $ millions.
12
In many cases, "California Bill Makes App Based Compaines Treat Workers as" EX-employees. There would appear to be a trend towards Uber-left supposedly pro worker, anti business legislation that will cause upheaval, higher costs and loss of employment. It will however hasten the day that self driving cars permanently replace humans on the roads and robots further replace people pretty much everywhere.
4
Just what we need. More expensive litigation that is strangles flexible, reasonably paid, desperately needed work opportunities. Our nation has developed a culture of uber-rich "experts" who are playing in social engineering like it is a sand box. We really need to support , not cripple, variety in types of jobs and wage earning opportunities that attract people according to their own skills and interests, by providing the usual societal mix of benefits and risks, Meanwhile, if we would enhance living wage jobs, let's not kill the ones that already help many workers. Instead let's decrease insurance costs of living by joining every other nation in the world (except New Zealand, as of three years ago anyway) by ending Direct-to-Consumer advertising (on which Big Pharma spends and makes trillions whilst inflating the cost of health care across the board ). This would lower families' monthly expenses by more than a third. Let's figure out a way to rein in the violent, runaway trillion dollar vice crime industry that forms an alternative black market economy that is toxic to individuals and community (and causes virtually all the violence in our society ) and employ the decent folks that are caught in its hideous net in legitimate businesses. Above all, we need to find common ground as a nation across partisan "branding" to deal with issues in creative and respectful diverse ways, according to a healthy vital mix of social mobility and freedoms, not prescribed mores.
2
There is a basic trade off here. You will have fewer workers working more restricted hours but those workers that do remain as employees will be better compensated. The question is whether this is a worthwhile trade off. The answer will probably depend on the number of people that lose their jobs and the specific amounts of higher compensation that the remaining drivers will receive.
4
Good. You shouldn't be able to have an entire workforce of "contracted independent contractors". Clearly the people in these comments are not working these backbreaking jobs
6
@Kyle Sitting in a car and driving around is "backbreaking?"
1
Hooray!
3
Just more government fascism.This is as bad as mandated wages(AKA minimum wage laws).Why are liberals interfering in the right of 2 parties to make non forced agreements?They have no moral right to do this.Sad.
7
@jrj90620
Yeah it was really really awful government fascism when laws were past forbidding 8 year olds to work in the mills......
BTW the parties are hardly in an equal bargaining position. 1 is desperate and gullible as to their costs of doing the work and the other holds all the power (supplies the customers and sets the rates)
7
"Every empire was built on the backs of Somebody." - Harari
... including Yours, Uber.
3
Thank you, Sacramento. You really did your job this time.
2
Once again, central planners want to impede on voluntary contracting, which should be illegal as it violates free speech and free association. It suggests all of those adults are not legally allowed to enter into a contract to serve their own best interests.
7
I am certain this law will have unintended consequences that we wish we can undo in the future. Prop 13 nowadays is recognized to highly distort the housing market in California and municipal planning. But I'm sure at the time of passage, it was a reasonable response to out-of-control increases in property tax.
But whereas Prop 13 was an extreme reaction to government inaction, AB5 actually is the state's effort to respond before voters' rage takes over. As a law, AB5 is easier to adjust or even eliminate than Prop 13, which has been written into the state constitution.
So I'm optimistic. Even though AB5 will prove to be imperfect over time, at least the state government is on top of this whole gig-economy thing. (If only we can say the same about the housing crisis in California...)
4
@William Fang, Prop 13 was recognized at the time for its destructiveness, but it passed anyway because it was at the beginning of the right-wing revolt against government. We used to call it Garbage Can instead of Jarvis-Gann. And it has had far-reaching effects of hamstringing local governments nationwide, not just in CA.
I was recently in a minor accident. The first thing the insurance company asked me was if I was driving for Uber, or Lyft. Actually sort of accused me of. Glad I wasn’t. It didn’t sound pretty. I wonder what the additional insurance burden is on these drivers? It can’t be easy to do that legally and safely. Employers should bear/bare that burden. Not some part time driver looking to pick up some rent money.
6
@Bitter Mouse When these drivers convert to employees, the companies must assume the insurance cost, but (1) if they use the car for personal transportation, they can have clauses built into the insurance such that the company does not cover them at non-working hours, and (2) the company can then mandate the installation of monitoring equipment that records HOW the car is driven as well as when so that bad drivers can be immediately fired. The company can also enforce mandatory random drug and alcohol testing or "blow and go" equipment so that intoxicated people can be eliminated as well.
1
My daughter, a graduate of USC, insists upon pursuing a career in the film industry. She and virtually all of her friends have spent years working as contractors for various media firms ranging from small production houses to substantial companies like Netflix. They have actually become accustomed to scheduled terminations of their contracts that are just long enough to break the presumption of regular employment, only to enter a new, substantially identical contract two months later. Great for long excursion vacations.
Last weekend, I asked my daughter and her friends about AB 5. They had heard of it, but did not immediately appreciate its potential impact on their situations. I will be fascinated to learn their perspectives after this bill has been in effect for a while.
The über driver proudly displaying his AB 5 sticker apparently assumes that there is no such thing as the elasticity of demand. Ride-hailing became a successful business because it could avoid the labor costs of traditional livery. It is not clear that these businesses can survive if they must pay fully loaded taxes, benefits and labor regulatory costs. We will see how much business Uber and Lyft lose when an evening of millennial bar-hopping goes from $20 to $50 or whether the $15 home delivery hamburger is as appealing with a $15 delivery fee.
AB 5 assumes that all of these costs will simply come out of inflated executive salaries and returns to greedy shareholders. Good luck with that.
11
@AR Clayboy
So you thought this through and the politicians in Sacramento didn't? Why isn't that a surprise to me?
"They have warned that recognizing drivers as employees could destroy their businesses."
Any business whose model is centered around exploiting their workers *should* be destroyed and their remains used as compost for growing new, strong, sustainable companies based on mutual respect among employers, employees and consumers.
9
Maybe I'm just in a grumpy mood after reading Trump stories today but if I ran Uber I'd take the hit and just say starting tomorrow we cease operations in CA.
5
@Scott
Other states are following suit.
They can run, but they can't hide.
7
@Scott So, you support the exploitation of workers?
7
@Don Clark
Allowing people to work under the conditions they want, and accept, is not exploitation. Paying people what the markets tell us they are worth, and what they are willing to accept in exchange for their labor, is not exploitation. It is reality.
1
Would this apply to AmWay independent sales people??? DeVos family has made alot of $$ by having a sales force that they don't pay any salary or benefits!
9
@Jim Eckert Same question for Avon, Mary Kay, and the rest...
Uber was a great idea, but soon devolved into employee exploitation on a vast scale. When they started out their drivers made good wages, by taxi driver standards, and the customer got a good deal on price and crucially, convenience.
Now look at them. The number of drivers is ridiculous. They're all competing for an ever-smaller piece of the pie, yet prices just keep increasing. Where is the money going? Certainly not to the drivers. Most who have worked for Uber for a few years are seeing their take-home pay declining year-on-year. Is it that maybe these shiny, new corporate offices cost a lot and venture capitalist backers are being repaid? I don't know, but I stopped using Uber after they started surge pricing and never went back, as it's simply price gouging by another name.
10
@Anthony Taylor When these drivers are declared employees, both UBER and LYFT will be required by law to verify their citizenship status because it is illegal to employ undocumented people. You can be certain that UBER and LYFT will aggressively do this because of the highly visible nature of their business. This is certain to have an effect on the number of drivers.
1
When you decide when to show up to work, you are not an employee. Employees are told when and where to work. That is an employee. Should unions be able to organize Uber / Lyft drivers? Sure, I have no problem if Uber created a voluntary union that represented drivers. That is perfectly fair, but calling drivers who chose when and how much to work employees is ridiculous.
I do think that there needs to be a closing of loopholes that allows Amazon and other companies to use "contractors" to deliver packages while Amazon sets all the rules. The NYT did a great piece here. The drivers here are not showing up when they want. They are controlled by Amazon and therefore should be considered employees. https://www.nytimes.com/2019/09/05/us/amazon-delivery-drivers-accidents.html
4
The self-righteous left is out in force praising this horrible idea. It never occurs to them that many people WANT to work as independent contractors because it grants them massive flexibility that you can't get on a regular job. We live in a time when the unemployment rate is bottom low, so the idea people are being "exploited" by this is nonsense. Its time for the government to get out and stay out of the economy. As much as I despise the man, I am being pushed into voting for Trump.
64
@Dave: there is nothing stopping you from negotiating a flexible work schedule with your client/employer.
35
@Dave
So what you are saying is that people enjoy being treated like employees, but without any of the protections that employees have, because they don't want to make at least the minimum wage, get paid sick time or vacations, or healthcare?
I think you might be wrong about that.
The bill essentially says that if a company gives you the responsibilities of an employee, that you should be getting the benefits of employees.
That sounds fair to me.
It sounds to me like you are looking for excuses to vote for a guy you know is wrong.
68
@McGloin But what if they are, in fact, given the responsibilities of a CONTRACTOR, shouldn't they be allowed to contract for their own interests and preferences to be a CONTRACTOR rather than an employee.
No employee is allowed to work for the competitor. Good call in tyranny!
9
This is great news for the social security administration and recipients. Now employers will be responsible for collecting (and matching) their employees' FICA contributions - instead of the "contractors" "neglecting" to pay their fair share.
7
Uber and the like are really a form of modern-day serfdom. This is excellent news.
10
What isn’t talked about for all these things is the environment. An oversupply of cars in motion or waiting spewing carbon so we can be convenient about saving our time or buying an individual item from Amazon. Somehow this contribution to global warning is not apportioned to the individuals using it. Cheap goods and services rule.
5
This will be good for traffic, too many empty rideshare vehicles cruising around.
6
Several of the comments here reflect a major misunderstanding of federal Social Security and Medicare taxes. (These are not State taxes as several commenters have stated.) Companies pay half of Social Security and Medicare taxes and their employees pay the other half. When you are a contractor—i.e. self-employed—you have to pay the entire amount. So The federal government is not losing money on the self-employed. The difference is that the self-employed are shouldering the full burden of these taxes rather than being shared with their employers. This is a major reason why companies want to have contract workers and not employees.
13
@J O'Kelly "The difference is that the self-employed are shouldering the full burden of these taxes rather than being shared with their employers."
Actually, you are always shouldering the whole amount. The perception that the business is paying extra is absurd. They reduce your wages to make up for the difference.
3
Don't forget that if they become employees then the employer would be responsible for workers' compensation insurance and health insurance. They may reduce the salary or hourly rate somewhat but they can reduce it only so much.
3
@J O'Kelly - Only partially correct.
As an employee, companies are responsible for not only 1/2 of the SS/Medicare tax but also disability and unemployment insurance payments, vacation time, sick time, health insurance and more.
This will ruin ride-sharing in CA for both drivers and the public. Drivers will make less, the public will pay more and service/quality will plummet. This legislation makes us Uber drivers essentially taxis. It is a return to that terrible taxi system we all so loathed. Drivers making set wages removes all incentive to work efficiently and provide quality service. Expect a revolt in CA once the public sees the increase in prices, the increase in wait times and the decline in service. I will give it a year for this very misconceived legislation to be repealed.
7
@The Voice of Reason - In a few years, driverless cars will replace ALL taxi's and Uber/Lyft drivers.
You will call for a car and one will be routed to you from some central dispatch service. No drivers will be involved.
Uber/Lyft drivers will be relegated to collection bottles and cans from the street garbage cans.
A complex issue. It is my belief that the best approach would be to present a transparent choice to the worker of: contractor vs employee, with pros and cons of each disclosed. Then let the worker choose.
I believe it would be better if the legislation required specific disclosures from the employers and an option for the workers.
4
The 'gig economy"?? Sure looks like the old-time, pre-union economy to me.
No guaranteed hourly rate, no overtime, no SS, no retirement, no vacation, no health insurance/life insurance, disability, etc. etc.
And - on top of all that, the 'contractor' provides the vehicle, including the purchase cost, loan interest, FUEL, insurance, and all maintenance/operational costs (oil changes, radiator/transmission flushes, air filters, brake pads/rotors, shock absorbers, tires, etc.)
Yes, the 'gig economy' is a great deal - for the employers. (Oh, pardon me, the 'cell phone app providers/rideshare-coordinators) (Which is SO very much different from 'taxicab dispatcher' ).
The whole Lyft/Uber business model is a logical extension of the WalMart business model - externalizing as many costs as possible, generally to the employee, but freely applied to the customer and the taxpayer.
At some point in time, the American voter is going to recognize that corporate and government policies that benefit only the owners of an enterprise are not viable over the long term.
Let us pray that this realization arrives before the (hopefully not inevitable) economic disaster. Because right now, I'm not sure which model is more accurate - the USA of today being closer to the USA of 1929, or to France in 1789.
25
Maybe this will be the start of the road to universal basic benefits for everyone. Benefits that are not dependent on having a particular job. So if these companies don't want to "hire" people and provide benefits, we can still tax them to provide the benefits through Medicare, social security etc. But at a much higher rate than those take now - to compensate for the fact the companies don't want to provide them. I would love to have independent medical and pension that is not dependent on one particular employer. The company also saves by not having to administer the program. Everyone has it and employers just pay into it per employee.
10
Never thought I'd agree with Newsom . . .
1
As much as the coverage of this bill focuses on Uber and Lyft, my hope is that its largest effects are felt in Google, Apple, Facebook, and our other major tech companies where entry level and early career positions are routinely misclassified as contractor positions. Even if on the surface this sounds like an issue for low pay non-office jobs, I know software engineers and data analysis who do the same daily work as employees, but who are given the insecurity of an "independent contractor" label.
They sit in the richest companies in the world, fuel those company's success, and have no chance for security, sick time, paid vacation, raises, or promotions. It's a business model built on exploiting hope and it's more than time for it to end.
18
@Stephanie
Did you know the federal government does that in spades? I worked at a nuclear weapons lab. Independent contractors were hired, and they work on site JUST LIKE ordinary employees. They are given an office computer, and expected to work as an employee in all respects. Are you going to add the federal government to your criticism? You should.
7
@Dave
Did you know that once upon a time those workers WERE ordinary employees and that the focus on "shrinking" the government opened the door to this situation? To my dismay, this is largely a legacy of the Clinton/Gore administration and should be corrected as soon as possible. So in answer to your question: Yes, I would definitely add the federal government to my criticism.
2
(1) Uber/Lyft drivers typically end up making LESS per hour than if they worked at Walmart on MacDonalds.
After they pay their costs -gasoline, maintenance, car payment - they are usually make LESS than per hour than at McDs particularly when the time they spend waiting for a customer is calculated as part of their working time.
For ex: you pay that $10 for a 10 minute 4 miles ride. App company grabs 30-40%. Driver gets $6-7 Out of that comes the gasoline, maintenance and car cost. At 58 1/2 cents per mile that is $2.34 in expenses Oops - now the driver gets $3.66 -4.66.
During the 1 hour, the driver makes 3 trips like that - gets $10.98 to $13.98 - but for the other 30 minutes is sitting in the car with the engine running (AC or heat) or driving (uncompensated) to pick up the next passenger putting additional wear & tear on the car. Figure another $2.34 per hour in car costs. Now it is a net of $8.61-$11,34/hr
Out of that $8.61-11.34, the driver has to pay the "employer" share of payroll taxes 7.65% ( as well as the "employee share" - another 7.65%.) Minus the employer share & the driver's pre-tax wage is $7.95 -10.50!!
They only THINK they are making money because as an independent contractor they can deduct their expenses for the car. They are 'living on' the car depreciation.
(2) As employees they have the same car costs but under Federal tax law they can not deduct their expenses & have to pay tax on all income
CA didn't think the tax problem through
8
@AnnS so, if they make less, why to they drive? Why not just work in fast food?
@Joe Rock bottom
Because they do NOT do the math
They 'think' they are making more than they do because oh gee golly .....they can deduct their car payment, insurance, tires etc from their taxes and...yeah know...the car is just sitting there so why not?
They really don't think about how they are burning up their car with all the driving. They 'think' they are 'recouping the cost of buying the car by driving it into the ground for low low wages an hour.
ANd then suddenly their 4 year old car has 100,000 miles (norm would be 45000) and needs $4000 of repairs........ and every penny they got for driving has been spent....and a new car costs $28000.........
Short sighted, unable to see costs they are incurring and definitely not savvy about business expenses --- but desperate for money
Read an article (maybe in Slate? Vox?) by an accountant who wrote that NOT ONE of his clients who drive for Uber/Lyft came out ahead -- they were either losing money or merely breaking even on expenses
One can never go wrong in assuming most people are not too bright
As PT Barnum said "There is a sucker born every minute"
Uber/Lyft play on that and paint such a pretty (but unreal) picture about how much they can make - they have bought the con game sold by Uber/Lyft. Uber/Lyft are conning gullible desperate people into doing the work
5
@AnnS
Lemme guess: You don't drive for Uber. I guess you are just so much smarter than the tens of thousands of people who actually do work for Uber and understand their own numbers. Lucky they have you to pontificate for them.
3
So what if I liked it the way it was?
7
Move to texas - workers rights may come in a few decades....
6
The GIG or Boom economy is probably going to be the way of the future for many workers around the World as regular jobs disappear. States like California recognize that any new business models need to make sure that business operations are fair for both the company and the independent contractor/employee. I think that Airbnb is the closest to what the new Gig economy should be and will be in the future. The homeowner in this case is providing his/her own surplus space for rent and is allowed rental expenses for tax purposes. On the other hand, Uber/Lyft and Skip The Dishes are in a different paradigm. It seems like this business model is similar to the present MLM or Network Marketing businesses. The endgame here is to get more new people to work as Independent distributors not employees. It is well known fact that 90% of these independent distributors never make a profit but are perfect vehicles for tax purposes, because they can write off these losses against their other incomes, if any.
Good. This "gig economy" nonsense is why the job numbers are "good."
7
The gig economy enslaves millions. What is good about that?
7
A complete Lie. Independent Contractors MUST pay their payroll taxes, INCLUDING Social Security Taxes.
I've been independent my entire life. I refuse to join in your socialized/institutionalized world.
I Never have & Never will be Anyone's employee.
And for those smug mindless democrats, TRANSPORTATION IS FREEDOM. You just robbed millions of people and sentenced them to home incarceration.
Especially those who can least afford it.
4
You can keep your driver and food delivery servants. I don't need or want them.
2
Will this have any impact on adjunct teachers at universities?
6
Now THIS is good news.
2
the free market is not broken. Leave it alone. If the commission these workers earn for what they produce is not adequate, then they should look elsewhere. Let uber and lyft die because of economics, not some law written by legislators who have never worked for their pay.
5
@Larry klein Nice comment except for the facts. The legislator who sponsored the bill is the child of a farm worker who got into Stanford and has degrees from three prestigious universities.
And your effort to return to the era when janitors were expected to negotiate one-on-one with multi-billion dollar corporations will, of course, produce the results that led to the New Deal in the 30s.
Cab drivers, dog walkers, house cleaners and food delivery people are not independent contractors and shouldn't be considered on a par with the licensed professionals and trades persons who traditionally hold that mantle.
5
I remember when I took my first Uber ride to the airport. I saved so much money, and there was no obligation to tip! Then the prices got higher, tips snuck in; and surcharges added -not all these add-ons directly or fully benefited the driver.
Once again, the corporation (and the gazillionaires at the top) shifted the burden of paying their “independent contractors” to the consumer, instead of paying the drivers fairly with benefits, from company profits. Another article today reported Uber putting over 800 people out of work; the spokesperson babbling about streamlining, and shares, not that Uber took away the livelihoods of so many people without a second thought.
Whatever happens, Uber execs will protect their bulging pocketbooks. I hope the drivers do benefit, and, along with the riders, aren’t made to suffer to protect the wealth of the share-holders; new “employees” live well enough so anxiety about living a sustainable life- food, shelter, healthcare- is not an issue for them. They have some job security and benefits. However, the reality is corporate non-responsibility at everyone else’s expense is the name of their game.
On a personal responsibility level, in my quest to get bargains and lower prices, I have been complicit, in allowing the .01 to drive the economy, steer our “of the people, by the people, for the people” government, and the greatest crime in my mind: turning our country into a cesspool devoid of soul, placing money before people.
8
I never understood how the SEC allows companies like Lyft and Uber to offer stocks knowing they never made a profit and that they never will since their business model is designed around a loss-leader strategy to destroy legitimate businesses. It's always fun spending other people's money.
5
@Keith
Genuine innovation in a world that has had free markets, computers and lots of talented people working at both for decades is extremely hard. Scams that exploit gray areas of regulation and illusions of scalability are easy.
Maybe the SEC is afraid that without these scams that rely on direct or indirect subsidies there would be far fewer new companies, the economy would appear overly stagnant and there would be public backlash?
3
I have worked in mechanical and electronic technical fields for just over 50 years, usually as an employee, but did some contract work once in a while. Those who hired me for contract work never offered training, as it was not needed, nor did they provide any form of benefits. In order to cover my costs, I simply charged enough to afford to be self-insured. I also charged travel time and mileage. I set my own work hours and locations. If my clients did not like the conditions I set forth, we did not enter into an agreement. At no time in my life, other than when I was laid up for a short while after surgery, did I ever have a period of not working until I got into my mid-60s and no one would hire me. I continued to pick up some contract work now and again, though. If these Uber and Lyft drivers don't like the deal offered by the companies, either renegotiate or don't work for them. If everyone that wants to do this kind of work would demand fair pay, as well as control over work hours and conditions, Uber and Lyft would either comply or go out of business.
1
@Ratwrangler - When someone needs money for rent or food and there are no other local choices to work at that are better than a gig job, then you are forced to take the gig job.
Surely with 50 years of work experience, this should be clear to you?
1
@Ratwrangler "f these Uber and Lyft drivers don't like the deal offered by the companies, either renegotiate or don't work for them." I think they just "renegotiated" with them....
3
It would be much better just to have companies pay the state taxes and the state give decent social security, health care, and pension. Let the workers work as they wish for pay, as contractors. Take time off/vacation whenever you wish. Make sure Uber, Lyft, Doordash, whoever, pays into a state fund for SS/Health/Pension.
This bill here will just add to the confusion.
6
@todd Yep, universal common benefits without direct connection with any particular company is what we need. The company pays into the pool and the "independent contractor" gets the benefits through the government, or independent agency, however it is set up. THAT would allow real freedom to people. So mamy people stay with one company simply for the benefits when they would be happier working elsewhere. Why do we do that?
1
Half of Google's work force are employed by a "independent" company who has temporary 90 day "contract workers." They get no benefits, no vacation time or sick leave. Hopefully, this will convert them to employees as well.
12
@-APR Even if they do convert, temporary or 90 day workers are considered Part-time under IRS rules and employers are under no obligation whatsoever to provide any benefits at all.
I am a native Californian and have driven for Uber before when I needed some extra cash to pay for my adopted foster child's college tuition. As a contractor, driving for Uber allowed me the freedom to work around my full-time job's schedule.
The Gig economy is the poor man's path to being his own boss, its the embodiment of the American Dream of independence and our entrepreneurial spirit.
Follow the money trail of AB5 and you can bet it leads to the ever more powerful monopolies of organized labor. They don't care about the common man, they care about their power. The more workers they control, the more powerful they become.
Organized labor are the modern day mob bosses of California.
10
The gig economy is the poor man’s path to being enslaved by tech companies who calculate - to the penny - how best to exploit your labor without providing you with a livable wage, benefits, health insurance, or job security.
14
@Henry This man described how it was beneficial to him but you are trying to tell him he is being oppressed. The gig economy is best for people who need a supplemental income or second job. Why does every job need to be a career?
3
This is wonderful news! Being employees means they are eligible for all the benefits of being an employee including bonuses, annual raises, social security, and if fired unemployment comp. It also returns more money to local, state and federal treasuries.
Now I wish the Commonwealth of PA and other states would end their contractor employment practices and stop bringing in consultants. Past Republican and Democratic administrations sold the public a bill of goods and false promises when they said that eliminating state and civil service employment would lower taxes and lower the employee compliment of the states thus saving tons of money. What happened instead was that the state civil service employment was lowered as was state employment and the next thing was that consultants were hired as temporary employees and no state, local and federal taxes were collected and also nothing was paid into union funds, pension funds, and other employee benefits funds thus starving them of capital. Worse the Commonwealth found itself always starting from scratch with projects as the institutional knowledge was gutted as full time positions were dissolved. And worse! The contractors were usually paid 2 and 3 times what state employees were paid but legislators bragged about how many state employees were eliminated. Let's end contract employees across the nation and return to full time employment and full time compliment.
3
All great on paper and progressive fantasies, but in reality one of two things are going to happen - most of these people will not have jobs driving for Uber or Lyft anymore, the business models don’t work without contract employees and these companies will focus on automated vehicles rather than human drivers. Or, in the near term, Uber and Lyft will choose to focus their business in states without this legislation (read everywhere but CA), leading again to unemployed Uber and Lyft drivers. Either way, the dream of a good wage, health benefits etc goes down the toilet, and those who appreciate the opportunity to drive as contractors - a great majority or drivers, from what I understand - will no longer have that income either. And of course the rising public will now have to deal with the taxi monopolies, and will no longer have the benefits we’ve enjoyed through Uber and Lyft. So please tell me again, who wins here besides the taxi companies, and the used car dealers who will soon be flooded with ex-Uber leases their drivers can no longer pay for?
7
@LARealist
Talk about fantasy! You obviously have no experience in the real world. And without doubt you have no empathy for people who are struggling to make a living or have health and/or want a job that has certainty and not the threat of being thrown out and treated like a commodity.
This is not a progressive fantasy. We're a long, long way from self driving cars. And if Uber and Lyft go elsewhere, well, too bad. Something else with better working model that appreciates and takes care of its employees will take its place. Contractors are throwaways. People are not throwaways. The business/economic model used by Uber and Lyft needs to take care of employees first. Maybe CA will build a better rail system and eliminate the need for these companies.
3
@Jay Unless there is a valid Union agreement, no employee is "entitled to healthcare, annual raises or bonuses. They are also NOT entitled to pensions, sick leave or vacation leave. All of these benefits are negotiated under Union contracts. Furrthermore, there are only two cases where they cannot be fired at will: One, they live and work in Montana where "for cause" is written into law, or Two, THEY ARRE COVERED BY A UNION whose contract specified "for cause" firing only.
BTW, as a retired Commonwealth of Pennsylvania employee who was once an AFSCME Union Steward, I agree with you about the contractors. Later on in my career, I was a manager in DPW (now, the Department of Health and Human Services) and watched helplessly as the IT function of the Department was farmed out to contractors who not only destroyed the MAMIS, but also had horrendous cost overruns. In the public sector, public employees not only do it better, but CHEAPER.
Great now these "companies" will be forced to act as companies and not just giant pyramid schemes. We will see how long they last.
5
So? Maybe the customer will have to pay the true cost of their ride to provide a decent living for those who provide the service. Everybody makes big bucks except the guy on the front line who drives the car.
6
We should all enjoy this victory, but expect corporate lobbying to undermine it at every step, just like they did for labor laws in the past 40 years.
6
It's about a lot more than gig companies -- this bill more or less outlaws contract work if the type of work is central to the company's business. So, for example, a software companies couldn't hire freelance programmers to staff up for a big project, and newspapers can't work with freelance journalists or photographers (unless the parties involved have lobbied to be exempt from the law).
It doesn't matter if the worker prefers to work on a contract basis -- it won't be allowed. And employers will no longer have the ability to hire for a temporary need, which means that they will do less hiring overall. This bill will reduce employment and labor market flexibility, which is bad for the economy overall.
The question of whether Uber and Lyft drivers should be employees is a valid one. But California's legislators should address such questions in a more targeted manner, rather than ham-fistedly outlawing an entire, and very important, segment of the job market.
8
Exactly. The unintended consequence which will steamroll many who can’t get a carve out without lobbyists. After 20 years doing specialized commission sales and implementation for a small company, they are losing my expertise and representation in a key territory because I’m not allowed to “be in the same business” per the ABC rule. Heartsick for the loss of the intellectual capital caused by my unintentional failure exit.
4
In addition to Trump tariffs, this will significantly raise the cost of living,
2
Uber, Lyft and DoorDash have pledged $90 million to fight this legislation? That’s a lot of extra money that could be used to pay employees more fairly or pick up the costs of healthcare and payroll taxes.
I’m tired of being the one to supplement large companies costs whether I use their services or not. That includes Walmart and McDonalds, as well as Uber, Lyft and Amazon.
12
Ironic how a company like Uber which has yet to make a profit can join other companies to throw $90 million around for litigation.
14
@Bun Mam
I thought the exact same thing.
3
There have been abuses to the "independent contractor" laws for many years. But they have grown in recent years and this bill is a positive step in stopping those abuses. In the past, I worked for the Dept of Labor, and these abuses were well-known. I hope other states jump on-board quickly.
6
This is not an “abuse”. An independent contractor is someone who chooses when to work and provides his own tools. Uber drivers fit that definition quite comfortably.
1
This is a very important piece of legislation. For anyone who has been (or is) a contractor or (especially) a sub-contractor, you know exactly what I am talking about. The IRS clearly describes the definition of who and how someone meets the requirements for this. As a landscape contractor for 3 decades, everyone who worked for me was an employee; especially when changed to a corporation (after 9 years). The exceptions were clear: Anyone who was a sub-contractor provided all the proper certifications: Workers's Compensation insurance, Liability insurance, etc. On the rare occasion I hired someone I did not know, I only did so if it was obvious: with recommendations I knew about beforehand (obtained from other tradesmen). , I required a business certificate and a letterhead, as well. I am grateful for doing this, even though I could have easily "cheated" and called some more independent employees "sub-sontractors", as they almost met all the points the IRS requires, which in my industry was a 20 point description; clearly spelled out. The reason I am grateful is if the IRS or the State found out you were breaking this law, almost all of the penalties went towards the contractor (me). These are criminal felonies. I had a good friend who did this for years and was caught. He was treated very harshly. Besides jailtime, it cost him everything he owned and much more, believe me. I think it was a triple penaltioy (3 times what he owed in withholdings (FICA, SSI, Insurance, etc).
4
Calfornia is a rich state which spawns many new powerful companies (e.g. Apple, Google) through its support for education, stable business climate, etc.
We also have a strong tradition and actual law to insure that our votes count. So it's not so surprising that we passed legislation to give employees a fair share of the wealth created by gigantic, extremely successful companies - like Google and Apple.
This is our effort to slow down the vast disparity of wealth (the upper 0.02% holding something like 90% of the wealth in America. When the lower 10% has no wealth, it leads to unstable government. Helping those without much not only helps them, it helps the rest of us as well.
Still, California could do a lot more.
8
This is the very definition of a Pyrrhic victory. Uber and to a lesser extent Lyft are already wildly unprofitable. Increasing their driver expenses will do one of two things: put them out of business or accelerate their shift to driverless cars. Either one puts these gig workers out of work.
And the reality is, if these drivers had better employment options they would have already taken them. We have far too many immigrants coming here without the skills to compete in a modern economy. The gig economy may be brutal but is there a better option for these people? We have a surplus of unskilled labor at a time when we’re already on the verge of widespread automation that will further reduce the number of jobs these workers can get.
Brace yourselves, the future is going to get ugly.
10
Their pursuit for driverless cars is meaningless until there is legislation to allow them on the road. And such legislations are guaranteed to move at a glacial pace
3
@Jagdeer Haleed And in that case these companies will go out of business, and that will leave drivers where exactly? If they had a career opportunity that was going to pay them 50 a year with benefits wouldn't they already be working there?
In other words, the drivers of the gig economy are not the tech companies but rather a surplus of unskilled workers with no better options due to illegal labor cutting out the bottom of the market, the collapse of unions, and the shift from a goods-based to a services-based economy.
3
@Jon P
If these drivers had no better employment options, it is largely because so many companies like Uber and Lyft have made it so. And as for fears for their efforts at producing a driverless car: boo-hoo-hoo. The technology is so much further away than Elon Musk and other companies would have you believe.
Provide the driverless car first. THEN depend on it. Depending on it now is just brainless.
3
Go to trade school and learn something most people can’t do. After all any one can drive a car, walk a dog or vacuum a rug.
Didn’t you listen to anything your mom told you??!!
3
@Randy Koreman Open the phone book and you can find 100 good lawyers, but, find me one good plumber....
2
Contractors of the World Unite!
1
Uber and Lyft ONLY exist because what they replaced (medallions and yellow cabs) was an overpriced, unresponsive and union-beholden option. The traditional taxi business has mostly disappeared where Uber and Lyft entered, because it is an inferior product that consumers shunned. Everyone in CA who has used Uber or Lyft will vote for the ballot initiative that will rescind this stupid law.
5
@Richard
lol....probably not. Uber and Lyft aren't as pristine as you think. Perhaps the boys at the top could let a little of their wealth trickle down to the people actually making their business a thing.
4
This gig work is just like slavery!!
Except...
- The slaves are not compelled to work
- The slaves earn excellent money regardless of education or pedigree
- People can work whatever hours suit them
- The slaves are free to leave if they aren't happy with the arrangement
Never mind...it really isn't like slavery I guess.
9
I wonder if that includes Airbnb.
There used to be these things called “unions” where workers could use their collective power to force companies to share of their money more with them. They did much to create another now archaic thing, “the middle class.” There actually was a time when an ordinary worker could own a house, put their kids through school, take vacations at their cabin in the woods, then retire in relative comfort. But then governments started competing with each other to offer big employers the right to ignore unions, trade agreements permitted the import of products made by people with no protections at all, and the unions themselves abused their power through corruption and overreach. Now we have the “gig economy,” where the business owners get to keep it all. Pretty soon the entire middle class will be able to squeeze into a phone booth - but, we don’t have those anymore either.
Calling Uber drivers “employees” is a good first step. Now if they set up their own union the balance could really tip on their favor. I’ll pay a couple of bucks more for my ride if I know the driver actually gets the money. Say, for example, at least $50k each rather than $500m to the software programmer who spent a couple of years designing the thing.
6
“California bill makes apps treat workers as employees.”
Your workers are your employees. What a concept!
5
@X
Is your gardener your employee?
Your babysitter?
Your housekeeper?
2
What does it say about a company that, despite NEVER MAKING A LEGAL PROFIT, is willing to spend $90 MILLION to stop a law that guarantees their workers can't be treated like slaves ??????
Is this what we want for the American of our kids and grand kids ???
11
Put a check mark next to this as another reason democrats will lose in 2020.
7
Uber and Lyft will tie this law in the courts for about a decade. Money can do that. Travis Kalanick recently bought a ~$40 mil. condo in NYC, living the high life while taxi drivers commit suicide.
1
The argument, frequently repeated below, that Uber/Lyft put the cost of the car and related insurance and maintenance, on their drivers, is nonsense. By definition car owners who elect to drive for Uber/Lyft, already have sunk costs in a vehicle. Ride sharing allows them to recoup those sunk costs, rather than having their car sit in the driveway or garage 20 hrs out of every day. This is an astoundingly stupid law, that hurts drivers and Uber/Lyft customers, to mollify taxi monopolies and unions. Thankfully this dumb law will be swiftly reversed by ballot initiative. Hopefully the clueless statists that run NY will not follow suit.
8
@Richard
Recoup the costs?
Don't you mean "Drive the vehicle into the ground so it has to be replaced SOONER?"
A car can only go so many miles.
Restrict for your own use -use it for years even decades (my putt-putt mint condition station wagon is 20 years old & going strong & no car payments in over 16 years)
Run the wheels off it for Uber/Lyft and have to replace it in 3-5 years and hope when you sell it to get a new one you can get enough to cover the outstanding car loan despite being high miles for its age
3
@Richard
Recoup the costs?
Don't you mean "Drive the vehicle into the ground so it has to be replaced SOONER?"
A car can only go so many miles.
Restrict for your own use -use it for years even decades (my putt-putt mint condition station wagon is 20 years old & going strong & no car payments in over 16 years)
Run the wheels off it for Uber/Lyft and have to replace it in 3-5 years and hope when you sell it to get a new one you can get enough to cover the outstanding car loan.....
On demand tech companies “disrupted” by exploiting loopholes in labor laws and marketing to hipsters that they were disrupters - not your parents old dumb way of doing things. All this slick branding covered up the realist - it’s a taxi service or a food delivery service etc - the only new thing was treating the workers terribly, calling them contractors and exploiting everyone on whose labor their company’s early investors got incredibly rich. It’s a disgrace. If they can’t afford to pay people then they can’t afford to be in business. Same for a mom and pops same for a VC backed company. Go California!!!!
7
There was a time when contractors were regarded as higher on the totum pole than mere workers.
1
@n1789
No, there was not such a time.
2
I hope they pull out and shut down in California, and expand in the free states
5
California isn’t the only state that doesn’t appreciate Uber’s business model.
Austin, Texas didn’t allow Uber or Lyft to provide their services without fingerprinting drivers, a reasonable requirement. They have a ride share service outside of the profit model that is working in Austin.
1
Well that’s one way to eliminate many thousands of jobs with the stroke of a pen.
7
The social contract no longer exists in the US if it ever did. Nothing binds the wealthy and privileged to the poor and less fortunate. We live in a dog-eat-dog environment and country. In fact, we ought to remove the word "United" from United States of America. Under the republic party which is gaining power, the situation will become worse and worse. The future looks grim IMHO.
2
Good.
Too many businesses depend on exploiting workers.
They are cheating the workers and the stability of the country.
4
The biggest winners will be corrupt officials getting kickbacks for selective enforcement.
1
Corporate profits in the billions and workers need government help for health care and food stamps.
3
This law is VERY short sighted and once again government doing too much and trying to play the Great Overseer. Many people prefer to be IC and not employees because they want the flexibility of being an IC. Instead of acting like you protecting people’s social security benefits that ain’t worth much, teach people
how to profit from the IC money they make. I hope this law doesn’t get signed. A BIG MISTAKE.
6
One of the greatest decisions CA has made in years.
2
This is ridiculously overdue. My company got busted by the State for hiring a sewer who worked by himself with his own equipment in his own location. The State defined him as a statutory employee because he didn't have other employees. If the State defines that guy as an "employee" then CERTAINLY an Uber driver is an employee. That Big Tech gets away with this, while a small business owner cannot, really burns me.
3
Thank you, now if it could become federal law, it would be a big step for workers rights. I am a lyft and uber driver and i support ab5. Human beings are not disposable labor to be used and abused. We might be the laborers, but we help create the wealth, we might not have the ideas, but without us you do not exist and your pockets will not be filled. Time for these two slave drivers to review how they operate and treat their drivers like workers. Last but not least thank you to the politicians for not succumbing to sirens of corporate facism where corporations have unequal access to you through rhe lobbying apparatus that has absolutely corrupted our government.
1
Hopefully, Uber and Lyft put an exemption on the ballot and it passes. This is a terrible bill for the gig economy. The majority of Uber and Lyft drivers have a primary job and this is a second opportunity for an additional income.
The end result will be accelerating the process toward automation. The losers will be the workers this bill feigns to protect.
5
Unions are the last bastions of retirement. Firms used to give a "gold watch" and a yearly stipend to those who worked there for life. Now fifteen minutes is a long-term gig and good luck if you get too old to work. And unions also help manage the workers in return.
But the Uber / Lyft folks have powerful enemies world-wide. EVERY city's City Council makes graft licensing rich "medallion owners" who "employ" folks who live off tips and dive the beat up car toward a hand waved at the curb. Now in California, government wants to stick their nose in to kick out self-employed -- and stick their hand out to be paid for their inference.
Once again the NYT and every large media outlet focused in the Giants - Uber and Lyft. But they didn't read the bill.It will have a shattering affect on small businesses including media outlets that rely on freelance writers to provide content to keep their doors open. Many are small papers in rural areas of California that either can't afford full time or PT employees or need expertise only available outside their region. Thousands of writers, photographers and artists will now be out of work. This was nothing but a Democratic political scheme to increase Union dues to keep the money flowing into their re-election campaigns. When all the PT Uber and Lyft drivers are fired and the cost of a ride doubles you have Elena Gonzales to thank.
11
The problem with this article is its failure to say what changes in the law were made so as to include these workers
2
As usual, California leads the way and does the right thing.
Congratulations.
2
"..a future where companies don’t pay Social Security or Medicare,” said State Senator Maria Elena Durazo, a Democrat
aaaand the truth comes out. this is about government protecting government's interests NOT the workers. it's always government acting in its own self interest.
2
@Alex
So you don't intend to file for Social Security when you reach retirement age? Or are you one of those who won't need it? Because surely Social Security has never benefited a worker, right?
Well, right?
3
No, it will not reshape the gig economy, it will destroy it.
The left lives in a fairy tale world in which the laws of economics can be wished away. Turning "employees" into walking entitlements and future plaintiffs is a recipe guaranteed to produce many fewer jobs. Indeed, consider the assertion that "the legislation will affect at least one million workers", but "workers" is the pre-legislation status. Post legislation, many of them will no longer be "workers". These "worker protections" will "protect" many "workers" right out of their jobs.
Which is rather the point. OF COURSE "a coalition of labor groups" pushes such policies; they don't like the competition.
Not one of these people is a slave' none were forced to enroll in the "gig workforce".
Consider the breathtaking stupidity of a statement that a voluntary contract constitutes "... underpaying someone for their (sic) labor.”
The left really, truly, passionately hates freedom. As a result of these policies, lots of people once called "workers" are going to have a lot more free time on their hands.
5
No mention of those in the long-haul trucking industry - at least 5 million folks being (under) paid by the mile irrespective of costs.
3
Great! Maybe when these companies finally stop being the abusive scofflaws they are, I will find myself ethically able to use their services -- assuming they can remain in business at all without the crutch of bad behavior.
5
This legislation should include the "final mile" contract drivers for Amazon.
4
I have worked for 5 years at a TV network which had long-term contract workers, who were actually regular employees, offering no benefits. At one point they reduced my hours from 40-60 a wk to under 40 to comply with new rules but this slavery business model is much older and more wide spread that the NYT is giving credit for.
4
I was in an Uber in Cleveland this week, a Mercedes. The driver says he used to be a software engineer but “this is better.” At the end of the ride he handed me is card and invited me to call him directly and not go through Uber next time. Why? Because he is not an employee of Uber. He has a limo business and the app is a tool to funnel customers to him. Why is that not obvious? You, dear readers, might want him to make more money (pro tip: tip), but this driver has made a free choice.
Here is an exactly parallel analogy. Are restaurant owners employees of Open Table, the reservation app? Maybe in California.
5
@Art
This is inevitable, because shady private taxis plus phone app equals Uber.
While I can say I once got some excellent poker advice as a novice from a Las Vegas cab driver, many will claim to be professional gamblers of one stripe or another. My favorite fast food Chinese place at college was run by someone who claimed to have several master's degrees. l would not put much faith in such claims. Some are likely true, but most are not.
2
I'm sorely disappointed in the New York Times. The title that you are listing for this article and some of the language in your first paragraph is wrong. Its misleading. The bill doesnt make the choice for any company. It gives them a choice of a or b, dependent on answers from the abc test. Having read the actual bill, it forces them to make that decision.
So at this point, uber and lyft and other companies have a choice to make changes so that we continue to be contractors, or they make the other changes that put us as employees.
Still it is thier choice. Why does everyone not see that?
1
A question. Whenever I get into an Uber car it’s clear they also are plugged into Lyft. If it’s Uber Black, they typically are affiliated with one of the old-line limo companies as well. That’s three “employers.” Who do they work for? Who pays their hourly wage? Benefits? It’s seems that those drivers ARE independent contractors. I can imagine a headline like “Uber bans it’s employees from driving for Lyft” with the attendant shrieks of indignation.
4
This is what happens when you have the GOP cheat, force a justice onto the court, force inept judges throughout our justice system, put lobbyists with big-business motives in the corrupt Cabinet: a Democratic powerhouse steps up and tries to limit employee abuse, tries to limit greenhouse gases, etc. It's interesting to me because it's really starting to look like two governments at work. Trump"s inept-ocracy, denying global warming, enriching the already rich, etc., and California's for-the-people government. Until we can make it official and boot Trump and every loser he brings along, this is a start.
3
@Andy California is certainly not for the people.
2
Independent contractors get a say in how much they charge. We do not. Independent contractors get to negotiate their contracts. We do not. This law ends this abuse of this status by greedy corporations. And yes charges for rides will go up as they never should have been this low. We were not independent contractors we were quasi slave labor.
7
I sure hope this extends to contractor doctors and nurses as well. Having been subjected to months of 19 hour days and travel requirements that I travel 320 miles in ten minutes by dispatchers 2500 miles away, I was discharged, blacklisted, and required to pay my own employment taxes after I dared complain. This so called locum tenens “gig” by a major insurance company demonstrating its “compliance” with Medicare regulations for being cited for poor management of its Medicare Advantage patients who were under-treated and over-medicated by its employee doctors and admin clerks helped me understand quite intimately how corrupt and inept privatized Medicare actually is. Of course no one wants to hear why doctors are throwing themselves off buildings or walking away from their profession but I can report this is one of the reasons. These gig employers are little more than slave holders and their “not employees” work force little more than indentured servants with medical school student debt pushing half a million or more. California is taking a good first step but caution is warranted: the Assembly has sunk previously passed by the Senate legislation before after insurance company lobbying and bribery —err— campaign contributions. It’s not law until it’s law. Keep your eye on this bill, please NYT.
5
This will shrink the gig economy, decrease the number of jobs, decrease service levels and reduce the flexibility some folks want.
Winners? Unions and self-congratulating politicians.
Losers? Those who want gig type jobs and the consumers that want the lower cost and better performance that the gig service model provides. That is, just a about everyone else.
5
We'd all be better off if we just put California in charge.
4
@Patriot Missile
The states are the laboratories of democracy,but too often they are run by the human equivalent of Dr. Bunen Honeydew.
In many situations, we can all learn from new policies without all of us having to play Beaker.
Uber and Lyft are the tail end of the labor market. What's good about it is that a driver with a good car, and reasonable people skills, can easily jump aboard. That is a very unusual situation in any labor market. I believe contract labor should be preserved, not because it's great labor law, but it because it works for many people just as it is.
3
I often shop at Trader Joe because of the cheese selection. At the check out counter, the employee is always helpful and greets you with a smile. I asked, " Why are you guys so delightful and happy here ? ". She replied, " The company treats us well here and some of us have a college degree ".
Two weeks later, I read a article from US News. Trader Joe is ranked number ONE among all the US corporations that the employee would like to work for. The company provides retirement pension, healthcare insurance and good wages up to $100,000.00 for managerial level.
I wish there would be more companies model Trader Joe for its successful business enterprise.
6
TJ's brand is owned by a European company called Aldi, an affordable supermarket chain. Extremely successful on both continents.
3
@SK
Also, TJ's employees are required to smile and act happy. https://www.nytimes.com/2016/11/04/business/at-trader-joes-good-cheer-may-hide-complaints.html
@Dr
No, that is not correct. TJ's is an American company headquartered in California. It is owned by a German family that also owns the Aldi chain.
1
The "great accomplishment" of these companies was to break an existing system (that yes, was not perfect), where people could make an actual living, to squeeze every last drop of "reasonable compensation" out of the system and into their centralized company coffers, leaving the workers out at the fringes of profit, more or less just cashing in the deteriorating worth of their own cars to "pay" them. This is the "gig" economy. Gig is the number of throwaway workers, and the number of dollars that flow to the very few at the top. More or less pyramid schemes.
It is also an absolute laugh that these uber and lyft cars are allowed to drive in the "carpool" lanes. What a joke. They are the opposite of a carpool, still out on the roadways even when passengerless. And a taxi driver is not a carpool partner. Jeeez.
@Bruce
Not true. There is nothing special about uber that lets them drive in the HOV lane. To drive in that lane, ubers, like every other car, must meet the requirements: have either 2 or more people in the car, or have an authorized electric or hybrid vehicle with a sticker.
@GMooG
My point is a driver with a passenger is NOT a carpool. It is worse for traffic and the environment than one person in a car that is parked at work (or wherever).
Not sure about this. On the one hand, it would clearly benefit those that are being taken advantage of (although some would say it's just a function of basic economics, supply and demand, etc.)
On the other hand, the implications don't seem to be very well thought out. Does this apply to all contracts on short term contracts where the employer does control what they do and they are doing it to support company business (think of computer programmers or temporary help) where the current pay is not unreasonable or has an egregious workload.
Sounds very good as a sound bite, but I'm not sure of the reality of its implementation.
Exploitation is rife in Silicon Valleys everywhere no matter how seductively packaged - it's all about the top making off like bandits (as in most every other industry).
In my brief tenure as an employment adjudicator, I came across a case of a young IT professional. On the face of it, she was earning an enviable living - $100,000/annum - but in reality she was earning less than your average barista. When she calculated the long hours (including weekends) spent on the job, including the 'voluntary' socialising so de rigueur for IT staffers, she realised she was getting the short end of the stick and left the industry.
My point - exploitation is rife in this new economy as it has always been in almost every human endeavour. And, as always, those at the very top reap the spoils . . .
4
Employers need to be concerned about this sort of legislation as it is enacted throughout the country, it is a slippery slope. As a small business owner in a service business, I used to periodically bring in experienced contract labor for short periods of time for very specific projects. These contract workers should never be confused with an employee of my company, they work on a specific project under contract and are well compensated for their time. They paid the taxes and any benefits were on them. New York State several years ago classified this sort worker and an employee and expects you to pay benefits and handle withholding taxes during their work period. It is hogwash I no longer hire contract labor in New York State for this reason. New York misses out on taxes from those workers I might have otherwise hired. I know people in the entertainment business who have had to fight New York Ste in court to thousands of dollars of legal fees in this same situation. The employers get tangles in this mess when people in the entertainment business who are journeymen/women workers who go from project to project and file for unemployment when they are not working. If they put you down as one of the last places they worked, even if as contract labor, woe be to you. New York State will come knocking with a bill and potentially ask to see you books for all the other contract employees you may have hired over a period of time. These laws are just a grab.
3
Thank you, California.
The business of internalizing profits and externalizing costs (like labor, the environment and taxes) must stop.
That isn't free enterprise. It's exploitation.
285
@Bob Burns How is it exploitation if its voluntary? Are you saying these people are voluntarily exploiting themselves? Its like comparing the holding areas for illegal immigrants to the gulags. Its voluntary, gulags are not voluntary. It high time we start holding people accountable for their own actions, and expect personal responsibility , in all areas.
14
@Bob Burns Not your concern.Take care of your own life and let others take care of theirs.If they need your help,then they can ask you.Live and let live.If you think someone needs more income,give them some of yours.
8
@troy you don't build a business model on indentured servitude. Period. And no human being can validly consent to being indentured. That's been outlawed many moons ago, for good reason!
13
"have built their businesses on inexpensive, independent labor. " that's just double speak for saying that the contractors have to work endless hours to make ends meet, without any protection there should be a minimum hour Claire in there, though.
for instance, we run a small school, only Saturdays. the teachers with 3 hours a week. yet, because of a similar statute in Massachusetts we need to test them as employees. that significantly increases cost without giving the teachers benefits like unemployment.
3
As the article said, there is nothing innovative by underpaying labor and not covering workers and as an previous comment also said, if a company can only survive by being a sweatshop, then it’s a not a viable business model. But my point/question is that none of these platforms/company are profitable today! And their path to profitability is even murkier! So they exploit workers and can’t even turn a profit ?! What’s the point of these companies even existing?
If they didn’t have constant and huge cash infusion of so called tech investors these companies would be long gone.
7
UBER and LYFT are, in the end, businesses and they will do what they must to survive and satisfy shareholders. These drivers are dreaming if they believe that simply turning into employees will entitle them to healthcare, paid vacation leave, paid sick leave, and pensions. NOPE! Employers are not legally bound to provide any of those benefits. Those benefits are only negotiated as part of Union contracts, and even if the employees unionize, UBER and LYFT are not compelled to agree. But even if they are forced to agree, management still retains the right to manage, and there's the rub. Management's "right to manage" means that the companies are free to make whatever changes they must to satisfy their shareholders and stay alive.
Both companies retain the right to cut staff and lay people off. For example, to save money people working in small-town or low revenue areas will be the first to go. Monitoring devices will be required to be installed in cars to eliminate bad drivers. I expect that drivers will be limited to no more than 30 hours per week making them part-time. The Fair Labor Standards Act does not mandate any benefits for part-time workers and with the contentious nature of the whole issue, I doubt that these companies will choose to be generous to the drivers.
As Mr. Spock once said these drivers will learn that "HAVING is not so pleasing a thing as WANTING."
@Elizabeth Moore
FLSA doesn't mandate benefits for ANY WORKER
It is merely a wage rate (minimum wage) & overtime payment law (and a little about child labor restrictions)
Try getting a law degree before saying silly things
Gig work is a way to shift the risks and costs of doing business from the owners of capital to workers. The California law sounds like a good thing. If being transported by car becomes more expensive, so be it. The world still turned when there were only taxis and friends.
481
@Svrwmrs Every gig driver is free to establish themselves as their own competing service. They just have to find the customers like all businesses do.
3
@Svrwmrs As a handicapped person, I was treated horribly by most cab drivers, and buses were even worse. With Lyft/Uber, I was able to go to work and home, and to other places safely and comfortably. I hope the next step for the CA Assembly is to kick out the bad taxi companies, and make them have safe, clean taxis with drivers who do not try to cheat you or put you in harm's way.
3
And it is also why not for profit directors shift the cost of doing business onto licensed mental health professionals, which is why there is such a shortage of mental health providers in this country. We need to start paying what we value. Trying and failing (over and over) to do things cheaply hurts people. We should not exalt the people who invented Uber and Lyft. They should be vilified, for modern day feudalism and borderline slavery. Making people do work that other people pay for. Immoral!
1
The gig economy is a brutally toxic effect of winner take all capitalism. People in these jobs have lost basic quality of life benefits -- no health insurance, no profit sharing, no retirement, no wage standards, not even a strong likelihood that you will even get paid after performing the requested work! They will push off their liability insurance on you, ask you to revise invoices and take off work items, fail to pay in a timely manner, ask you to carry their office expenses for them, ask you to attend meetings for their business that they will then not pay for, etc. It truly has degenerated into an overlord and serf relationship, but it is instead marketed as a great thing, offering you lots of freedom and flexibility. It is a crime for a so called civilized, first world country to behave this way.
184
@GMR In a competitive market there is no winner who takes all. Only government created monopolies and government itself is such a monopoly, where our liberty and choice and tastes are rejected in the name of some centrally planned life. No thanks, I'll remain a free adult and not a servile child.
@GMR
Uh, yeah... Nobody working Uber or Lyft is getting paid...that's why they keep doing it.
What is your theory, again, about why these services have no problem whatsoever attracting more than enough independent contractors?
Oh yeah, I forgot...it's a free market.
If only we could all emulate the (failed and former) East Germany...
State Senator Maria Elena Durazo:
“Let’s be clear: there is nothing innovative about underpaying someone for their labor.”
That's right, Corporate America and Silicon Valley and Tech, Inc.
The gilded class has tried slavery and feudalism already; it's an inhumane scam and an insult to human dignity.
If you can't afford to pay your employees a living wage with minor benefits, then your 'business model' is not much of a business model.
Welcome back to humanity, modern Robber Barons.
So long, modern feudalism.
378
@Socrates I delivered newspapers for decades, yet they never made me an employee. Class action lawsuit against the evil newspaper industry who took advantage of a literal child, not these faux adult-children?
3
@Socrates
Adam Smith actually explained that slaves are more expensive than paid labor, because slaves are an investment that must be maintained. If you fail to adequately feed, clothe, and house your slaves, then your investment dies, but if you pay less than subsistence wages, when one employee dies, another can be hired.
The owners of capital have teams of lobbyists, marketers, lawyers, economists, all trying to get government to let them drive down the price of labor below subsistence levels.(Wal-Mart was even training employees on how to get public assistance to survive on Wal-Mart pay until the Left caught them.)
Labor actually far outnumbers the owners of capital (wage workers are 60% of the population), so democracy should be protecting workers from this. But centrist Democrats keep taking the side of capital against workers, then complain that the workers and those that protest for worker rights don't vote for them.
The party of workers has a huge numerical advantage over the party of the rich, but centrist Democrats lose, by trying to be the other party of the rich.
Tax cuts for global billionaires and their global corporations is "pie in the Sky" and "unicorn dust." It has never worked as advertised.
Taxing the rich to invest in workers created the middle class from the 1940s to the 1970s, and we've been living off of those achievements since 1980, but growth and productivity growth are both down since 1980, because we stopped investing in workers.
7
@Socrates
.
Moonlighting work is not meant to be a career.
Consider kids selling lemonade on the corner. Or teenagers mowing lawns. Or getting a second job waiting tables or working as an independent operator for a pedicab company. These non-career opportunities are win-win-win for the owner, the customer and the labor-provider. Why would you want to interfere with that (or have government interfere)?
2
The trend of companies that are taking no responsibility for wages, benefits, working conditions, and no liability for the safety of consumers, while dictating the supply of workers, the rates, and the terms of the job is simply not good for the economy.
Companies are liable for worker safety, liable for consumer safety, and need to assure that the cost of compensation reasonably covers the work and the cost of maintaining the assets used to produce it.
Work that does not cover the cost of the assets used to produce it is sweatshop labor.
All of the companies moving to independent contractors to do work such a rides, deliveries have created an environment in which they can add more labor supply than demand, creating a high level of convenience that the worker, not the consumer pays for, and the company, not the worker, profits from.
Why are we do hellbent on returning to some kind of feudal system economy?
180
@Cathy
People constantly call Bernie a Socialist, and somehow the word is tainted so we have these long discussions on the meaning. Berie, Warren know the corporate game is rigged for the CEO's and the Shareholders, look at Uber, people working hours for no pay is that American, no it isn't that is China.
The middle class has just about disappeared, Wall Street, slogans and the GOP want to take this country back to the turn of the 1900s where the rich lived in their separate and unequal kingdoms with everyone else. The reason why unions were destroyed was so that corporate America could destroy the average worker.
The GOP and corporate America sent the jobs overseas where you dont have to pay a living wage, no need to pay for health care, no need to cut into the shareholder profits.
California has passed a bill that stands up for workers and the rest of us need to get into the fight. Vote democrat and you will be voting for your lives and democracy that ist driven by Wall Street.
8
@Cathy
The mega rich have teams of lobbyists, lawyers, advertisers, and politicians all advancing their interests 24/7/365.
The workers have centrist Democrats telling them healthcare and education and infrastructure are "pie in the sky and unicorn dust," so they should just "compromise" with Republicans getting noting in return.
The richest .01% plus the 20% they have protecting their interests are outnumbered 3:1 by the 60% of the population that works for a wage.
If the Democrats actually fought for the things workers need, it would be difficult to lose elections. But by constantly calling worker advocates extreme, while trying to "understand" the proponents of hate, greed, and violence, most workers see no difference between the two parties. They know that lesser evil is still evil, so they aren't taking time off from their Uber shift to vote for sellouts.
If the Left doesn't take over the Democratic Party and make it work for workers again, like it did for the 60 years they controlled Congress, the Party will be irrelevant, while Trump makes himself "president for life" by lying about "unicorn dust and pie in the sky" for everyone.
Let the Republicans tell voters "there is no money" for their children. The job of Democrats is to tax the uber-rich to get the money to invest in productivity, which is mostly determined by education, healthcare, and infrastructure!
The Chinese invest in themselves, while Republicans invest in the Chinese, then blame it on Democrats.
7
Look no further than University Settlement Society of New York for a good example of this.
As an engineer, that has done contract work, this is a much needed bill. I have spent the last 10 months looking for a job, only to have 90% of what I see be contract, 6+ month positions. This includes senior engineering, project management, program management, etc. These come from the top medical device companies, software development companies, etc. from around the country. It requires that you spend that time in a hotel, flying home on weekends. It doesn't make sense to move or buy a house. You are constantly looking for your next "gig". It is unstable, since you can have your contract ended at any time, but can not end it yourself. I have done this once. I was put in a position I did not apply for once I got there. I was berated, with even the supervisor saying I was discriminated against, but with no HR to turn to. I was paying for a house I spent every other weekend in. This is not how employment should be. And it does create any level of accountability from the employee or employer. You are not part of the company or team, so I can't imagine the discontinuity as time goes on. Good for you California. I hope other state follow.
206
@JillE
You will not be affected by this law. Big tech and other industries will continue as usual.
2
According to who? Technology companies are the WORST offenders of this scenario, and that’s been going on for 40 years now. If ever there was an industry that needed correction, IT is the primary candidate. 40 years ago, technology was considered engineering science and its personnel were revered as such. It’s employees and contractors brought you Internet, eCommerce, wireless telecommunications, digital publishing, etc. Over that same duration, technology employees became politicians, and contractors became their grunt engineering and management labor.
Lyft and Uber were only able to create a market due to these advances, not in spite of them. If the labor laws hadn’t been summarily dismissed by the federal government and subsequently abused by technology firms for the last 40 years, there would be no precedent to build this type of business model. The fact that companies believe this is a ‘right’ vs. a incentive is where things went wrong. That’s because the people making up these schemes are the politicians of the technology business world, not the workers. Capitalism doesn’t work if your citizens are broke.
Big Tech will be next, and as someone who has had to endure my entire career in IT under these conditions, I will happily dance on Big Tech’s grave when it happens.
31
@Chris H.
This law will never ever affect big tech. As you also stated big tech has been doing this for decades and despite complaints nothing was ever done. I hate to tell you this but they will still be exempt.
2
Excellent! Thank you, California!
I worked as an independent contractor for a dog walking app-based gig company and ended up branching out on my own. There were so many issues related to not being an employee, including no training given (due to legal issues when someone is an independent contractor), no health insurance, huge percentages taken from walkers’ pay and, above all, a lack of regard for the clients, walkers and dogs, resulting in lost dogs, injured workers and robbed apartments. Like the car hailing apps, it felt as though it was all about bringing in as many workers as possible, underpaying them and over-saturating areas so that nobody could survive.
100
Yes, I’ve had problems with Wag. Their walkers don’t seem to know much about dogs. And when I found one of their walkers that I liked, they made it really hard to schedule her on a regular basis. Everything is optimized so you have no control over who you are letting take care of your dog. That plus the fact I’ve heard about dogs getting lost (!!!) made me realize that an app-based walker is not for me.
13
@Annie B A great story - you were not satisfied with working for the app-based company - so, you chose something different. I believe that same choice is available to all app-based workers, yes?
2
@ublome, Um, yes, driving records for someone working as a driver are a good idea. Also, the issue with gig companies is that most of them create a slick looking website and then grab as many people as they can to work with them, with no regard for the safety of their clients and workers. Across the boards, problems have happened. No regulations, no proper training, minimal oversight and pathetic pay. So yes, it’s worth paying more for responsible companies that care.
7
“Some of the companies are not done fighting the bill. Uber, Lyft and DoorDash have pledged to spend $90 million to support a ballot initiative that would essentially exempt them from the legislation.” Why don’t they use that $90 billion and pay their workers a living wage?
10
You can expect more money to go into self driving cars as a result of this bill. Uber and Lift will quickly become a too big to fail cab company, a failed unionized industry that kept many from getting a job freely. This is bad for all parties involved including consumers
3
What an outstanding development! The journalism on this issue probably had a lot to do with the understanding of people and politicians of the cruelty of this kind of work.
2
The idea that there is a difference between the employer and the employee paying payroll taxes is something something the average kindergarten should be able see through.
The employer is willing to pay a certain amount for an employee’s work. The amount includes all of the costs, from health care to taxes (both the ones paid by the employer and the ones paid by the employee) to take-home pay.
If the tax slice is bigger, there is less pie in the other slices. This isn’t some evil plot, it’s just math.
3
@Olaf Trygvasson
But Uber, Lyft, etc., aren’t willing to pay drivers anything. They make enormous profit by taking a percentage of what the driver earns. They set the price, send the driver, keep track of the route and drivers’ locations— that is, act just like a taxi company but refuse to pay Social Security and Medicare taxes. The driver must do all the accounting work and pay the employer ‘s share of those taxes, which come to one dollar in every six.
1
Correct; I agree completely. It is really simple: If they (a person you hire) are under you're supervision, follow your directions, work when and where you tell them to on a regular (ie: daily) basis, they are clearly an employee. For example, they arrive at the worksite or your base of operations (or office) daily at say 8am, you (or an employee) tell them where to go, what to do, etc. you are supervising them, and they are an employee. On the other hand, if this person (or company) is hired to "do a particular thing", you have a contract which spells out what the "thing" is, when and how they will do this work, then you do not need to do any of the former. All you would typically do is check up on their work, their progress, their schedule, etc. they are sub-contractors. It's really just common sense, truly. As I mentioned in another post, in my field (landscaping), and in others,the IRS clearly describes the difference between an "employee" and a "sub-contractor". FYI, this is on the IRS website and relatively easy to find. There are many, many violations of this policy in the construction field.
I feel like most people are missing the point of this hugely important bill. This will affect virtually all contractors in California, not just Uber/Lyft drivers and other “app gig workers”. The ABC test applies to all companies and they will have to evaluate whether their contractors pass this test (most won’t). The test is so restrictive that it will result in many people with their contracts cut or companies deciding not to operate in California. It’s doubtful that companies will suddenly decide to employ all of these people. We are missing the bigger picture—this isn’t just an Uber/Lyft issue.
2
@Lauren N.
Hopefully this bill will cover people who are in the food delivery business and other "contractors" as well. Having been a contractor, myself, once upon at time I can tell you there is no advantage in it for the worker.
It will be hard for most businesses to refuse to work in such a large market as California.
This is a bill that is saying all workers must be treated as human beings. What can be wrong with that?
5
@Lauren N.
You are right it is not just lyft and uber problem. It is a general problem of exploitation of the working class to accommodate the greedyness of corporations and consumer who wants to pay nothing and expects the best service.
1
@Lauren N.
The companies are making 8.125% right off the bat by not paying employer share of SS and Medicare taxes, plus whatever percentage they would pay into the unemployment insurance fund. Social security and Medicare are being underfunded by this scheme, which is not Uber ‘s or Lyft’s problem as long as the scheme runs, and definitely not the company owners’ problem.
Now if only they would make all entities who list more than one AirBnB subject to the laws and regulations imposed on the hospitality industry at large, we might be getting somewhere.
8
Every job in America should be unionized. It is the only way for workers to establish and defend their rights.
Globalization, free trade, automation, robots, AI, Gig Economy are all forces that can generate overall economic efficiency and lower cost for consumers, but those economic benefits and profit maximization must be balanced with workers rights and benefits to have a healthy, just and economically long-term viable society - not a society that benefits only the top 1% or top 10% while the overwhelming majority of are abandoned economically and politically, a society that is open to political exploitation, demagoguery, hate/fear mongering and con artists. Unions, with 21st century reforms (look to Nordic countries as best in class templates), are the path to restoring a middle class, a path for the poor to reach the middle class.
Automation/AI/robots are a particular challenge in that they eliminate workers - Uber/Lyft moving to autonomous vehicles eventually, so there are no drivers/workers (autonomous vehicles have many huge technical, regulatory, safety/security hurdle still to overcome, but eventually those will be solved. Also exploiting workers and shifting all expenses including capital outlays to drivers/workers is cheaper than owning and operating a fleet of self-driving vehicles). So all forms of automation need to include a tax that funds basic income for all citizens - an income that I would couple to some form of national service/jobs.
11
@MC:"not a society that benefits only the top 1% or top 10% "
I won't be long before the top 20% are in the sights of forward thinking individuals like you.
I've seen the death spiral of manufacturing that started in 1973, up close and personal. In the early 1980s all the moves that are hailed today as a progression to the global economy (automation, out-sourcing and off-shorting) were labeled as "heartless" and "Republican".
Fast forward to today, do you hear forward thinking progressive worker from or supporter of Tesla arguing for unionization?
CNBC is now reporting that UBER and Lyft are talking about ballot measures to counteract the effects of this law.
You'll get lip service on this board about unionization but just like public school desegregation, it's something that applies to someone else - with a vengeance of course.
Welcome to the service economy.
Forever the government has been touting the "American Dream" and pushing entrepreneurship/being in business for yourself, and yet this decision goes directly against that. Seems like now they want to have everyone be an employee.
3
The government has always wanted everyone to be an employee. If you doubt it, look at the tax code. Self employment and entrepreneurship is penalized at almost every phase in small businesses. It’s only when one becomes a large corporation that we see any benefit in the code. The idea that we should all be “self reliant” is a lie perpetrated on individuals by large corporations to maximize profits.
7
This will no doubt benefit a small percentage of workers. I suspect that most gig-economy jobs are simply going to disappear.
1
I am so torn about these APPs. On the one hand they offer people a chance to work for themselves without a capital outlay (like a cab or cab license would require) and are incredibly convenient for customers. On the other hand, the workers are paid poorly and put themselves at great physical and financial risk with little compensation. I think we also really need to consider the environmenal aspect as well. All of these extra cars running people around has an impact on carbon emissions, traffic, quality of life. And what about all of the plastic being used in these foods that are delivered to people ever more chained to their desks? Surely the worker and environmental costs need to be added into the model, and then see if people really think they are worth the convenience.
4
@MJ
At certain major airports, you have to budget an extra half hour to enter the airport because there are so many Uber drivers that traffic jams occur. I am speaking from personal experience.
2
Drivers should have the ability to set their own wages and bid for riders if they weren't real employees. Exactly what value does Uber and Grub Hub give to workers and consumers? Their apps are pretty simplistic. A High School student could make one. Marketing? A cooperative could do that. Standards? Don't make me laugh.
7
“Today, our state’s political leadership missed an important opportunity to support the overwhelming majority of rideshare drivers who want a thoughtful solution that balances flexibility with an earnings standard and benefits,” said Adrian Durbin, a Lyft spokesman.
Lyft is complaining that the government didn't fix their mess well enough? Hold on while I find an app for the world's smallest violin.
11
The US Government began outsourcing in the 1960s. Guards at a US Navy facility were RIFed and a contractor hired. Disaster ensued as the contractor followed the rules to a "T". Each of the thousands of employees had to matched to their photo on the badge. Some people never made it to work as they gave up after hours of waiting in line in their cars.
2
As per usual, both the article and the comments leave out the fact that many contractors don’t want to be employees, myself included. Freedom to set your own hours is important to a lot of us.
7
@Mercury S
No one is saying you still can't set your own hours. "Employee" doesn't mean 9 to 5, punch-in and punch-out.
2
@Mercury S: Nothing is stopping you from negotiating your hours with your client.
1
Three cheers for a pro-labor victory!
And we need to wise up on these "gig" economy schemes that are labor-exploitative and do not improve the environment and human condition.
Someone said this on a blog somewhere that I think it most apropos: "Labor is the source of all wealth. To make a profit, a capitalist must sell a product for more than what it cost to pay the laborers that produced the product. The laborers do not get paid the full value of their labor. Profit is unpaid labor."
"If profit is not directly derived from unpaid labor, then why do capitalists outsource jobs to the cheapest possible labor source?"
Thank labor unions for the 5-day work week, medical benefits, the eradication of child labor, family and medical leave. Who was against all of these, for the most part? The capitalists and their apologists.
There is no "right" to exploit people of their life energy to make you rich. If you were really interested in improving society, you'd start cooperative businesses whose sole purpose is a pro-social model.
16
Years ago I was hired by a law firm suing ride share companies in federal court to write an expert witness report on the role of such companies in the economy. Employer/employee relationship was my position. The suit was dismissed; unsurprising since this is Texas. Nevertheless, the test the IRS, as well as the Department of Labor’s state adjunct — the Texas Workforce Commission —applied to determine worker status was “direction and control. “ Like it or not, if the one holding the purse strings maintains direction and control, he/she/it is an employer. Take the bitter with the sweet.
8
If your business model only works when you pay your employees less than minimum wage, then you don't really have a business.
22
A third category that was neither contractor nor employee made the most sense. Hopefully the federal government will respond with national legislation creating a third category of worker.
3
This is great news. The US courts used to rule that unions were unconstitutional because having representation limited workers "freedom" to contract when the reality was that the workers were only free to be treated like virtual slave labor with poor wages and few rights.These workers are clearly employees and need to be treated as such.
13
What else is there to say other than an enthusiastic and emphatic "GOOD!" ? The gig economy only further hollows out the middle class and enriches the owners of the companies employing "contractors." The sooner it's regulated out of existence, the better for the American middle class.
17
@Sam Unless it puts the ride sharing companies out of business. Which is the big worry.
@GP
When the ride sharing companies go out of business, there will still be taxis for those who need a ride.
3
@pajaritomt yes. Incredibly expensive taxis that most people who take Uber or Lift won't be able to afford.
What appears as a good move by many will have untold consequences on the whole. Lumping all contract workers into the 50 hour a week Uber bucket is a mistake. Millions of people enjoy their freedom and flexibility that being an independent contractor affords. And once again, CA has ignored the bigger picture in favor of a headline grabbing law that undermines people's wishes and their freedoms. Working for Uber is a choice, one that didnt exist a decade ago and one that may not exist in another few years.
5
@Adam Working for Uber is a choice
Not so. It is a last resort or necessity for many unskilled that deprives them of needed benefits. The flexibility issue is a manipulative tool used to further a greedy profit motive similar to the New York City Medallion taxi drivers abused by the system. It can still be implemented even being an employee if Uber works with it..
7
@Rodrian Roadeye On the other hand, Uber doesn't make a profit on selling rides. Increasing its costs may put it out of business.
If that happens, then Uber/Lyft never had a true business model from the beginning. Flexible hours is just a canard foisted on the debate by these businesses.
3
If the drivers find this line of work unprofitable they wouldn't do it. Anything unsustainable won't continue. Drivers come and go and that's the very nature of the business model. This bill will put Uber and Lyft out of business, at least until self driving cars become available, which is the end game of these companies. Don't count on the courts to overturn this new law, they will defer to the politicians.
4
Drivers come and go because they believe the hype Uber sells them and then leave the next year when they do their taxes and they see how little they actually make. Uber exploits them until then.
What's wrong with having Uber take on traditional employee costs? Driving a taxi on flexible hours has been around for many decades. What does Uber give us? A simple app? No, it gives us the ability to exploit someone.
5
If self driving cars are the end game of this business, and always have been, then why should these companies be allowed to exploit the workers they have currently?
These drivers deserve a bigger slice of the profit pie.
2
@Nick taxis are incredibly expensive. If they take on the same rates as taxis, they will lose a lot of riders who cannot afford those rates.
I hope this gets these gig businesses to realize how important single-payer healthcare is. Paying for healthcare would be crushing for these businesses (like many other businesses). We need to be like the rest of the world and shift healthcare costs from businesses to our government. REAL capitalists are for Medicare for all
15
@Susan Kim In the single-payer model, government does not "pay for" health care. Taxpayers do. Government manages the system instead of allowing private entities to do it, and profit from it.
2
@Susan Kim The rest of the world doesn't have a block busting Defense budget that grows and grows. Cut that and make countries defend themselves more by stopping our insane Policing of the world.
I've always thought that cities ruined the taxi business with the medallion laws, which were passed as sort of a tax for the cities to make money. Taxi drivers had to have a medallion to operate a taxi, and prices on them rose to ridiculous heights--over a million dollars in New York, and hundreds of thousand of dollars in other cities. The loans the drivers or companies took out to buy these medallions drove up the taxi fares so the ride service companies could easily come in and take the ridership. It' s been a tragedy for the taxi drivers who went deeply into debt to buy these medallions and a number committed suicide.
6
@Mary Leonhardt
Here is a really good podcast from the NYT explaining how this came to be in NYC.
https://www.nytimes.com/2019/05/28/podcasts/the-daily/what-actually-happened-to-new-yorks-taxi-drivers.html
1
All of you applauding this California law, I would love to talk to you after January 1st next year when all of a sudden your same BigMac's price goes up by a dollar or your same Domino's pizza costs few bucks more or you have to pay few extra dollars for your hair cut or $6 bucks for favorite coffee for Starbucks. l am all for improving workers compensation but for California legislature to lump all small businesses together and force them to start treating contract workers as full time employees and paying minimum wages is going to be a real bad news both for workers and the customers. Most small businesses make very little profit and for them to stay operational due to this added labor cost would force them to either cut down on number of employees or raise the prices of their services or both. And all of you Uber and Lyft folks applauding this as win, hold your horses as Uber and Lyft just may get an exception from this law and the only winners will be Uber and Lyft executives and rest of us will be sure losers. This bill needs to retooled to ensure most small businesses operating on small profits can still keep contract employees or you may have to pack your bags and move North or South of the border or wherever else things are going to be more affordable.
3
@Disgusted with USA Free enterprise will create losers and winners. Those who can balance fair wages and costs will win. Those who raise costs too high will lose. The KIOSKS and other tech innovations (such as robotics) are already cutting labor and increasing future profits so the benefit-pay issue is a no-brainer go for already because of those lost jobs anyway.
2
@Disgusted with USA You've hit the nail on the head. The current form of capitalism favors the moneyed corporations and businesses at the expense of workers and small businesses. Don't blame the folks trying to right the wrongs. Uber, Lyft and small businesses are in business to exploit workers (make the biggest profit possible) and the results are often "employees" having to count on government benefits that all of us pay. If small businesses fail it is often because large corporations (think Amazon) drive them out of business.
2
@Disgusted with USA
So you think it it is a win when the person who delivers your pizza or drives makes less than minimum wage and does not have the work place protections that you have. You don't mind paying for social services for these people when they don't earn enough for food and rent. But the important thing is that you have your cheap lunch or ride. Also - this does not affect "most small businesses" - the rules on independent contractors are fairly strict. This affects giant companies like Uber and Lyft who have created a model where they get around wage laws and rules by pretending that they don't have employees, putting them in unfair competition with businesses that do things right.
6
This is TERRIFIC news.
Now I am waiting to see what on-line applications like the ‘seller’ sites like Amazon, Etsy, Poshmark, eBay, Facebook, etc. do in lowering the fees they charge it’s ‘sellers’ for the ‘convenience’ of using their sites.
All the Internet sites need to be regulated so that they STOP taking advantage of others for their own selfish GREED and ill begotten GAINS. The ‘playing field’ requires leveling out so that their is WAY LESS disparity between those who ‘have’ and those who ‘have not’.
5
Dear Readers,
I simply don’t understand why someone says that this is good policy. I totally agree that if a person accepts a schedule from an employer that should be guaranteed some minimum wage. That is a fair trade. But, if I can come and go as I please, work when I want etc, why should I be guaranteed anything other than the opportunity to work in a safe and respectful environment. The article fails to mention that the companies impacted will now have to pay taxes. This is about revenue, and now your cost for these services will go up. This article didn’t get written last night. Come on NYT, do the work, explain the full picture, and you can do better.
5
@Paul How is this different from employing someone as an hourly? The employee chooses how many hours to work but shares payroll taxes with the employer.
4
Because an hourly employee accepts the offered schedule by the employer. That is the trade - -please work for me when I need you and in turn I will pay you this minimum wage. Gig work says you can work whenever you feel like it, you generate the revenue and I provide your infrastructure for a cut of whatever revenue you generate. Every one is acting freely. Seems in principle pretty reasonable.
3
@Paul I think you are missing the fact that both Uber and Lyft allow a virtually unlimited number of drivers in each market. This significantly dilutes the crush of demand, benefiting Uber and Lyft greatly and making it extremely difficult on drivers to have any kind of consistency in their work (income). I think this law will help offer parity in that realm, forcing U and L to actually manage the driver to demand ratio thereby increasing drivers pay at the same time by actually keeping them busy, rather than having them sitting around losing money under the guise of flexibility.
1
The bill may well be unconstitutional because it prevents voluntary contracts. I agree that the kind of contracts which Uber or Lyft enter into are exploitative.
But still, there is a distinction between an employee and an independent contractor and I do not know that CA can erase it. Someone who works for Uber works at a time of their own choosing and nothing prevents them from having another job as their primary work.
Indeed just yesterday an Uber driver told me that he already has another job which is his main source of income and he uses Uber to make a few extra bucks.
I really wonder if the CA bill will pass constitutional muster.
In New York, there is now a fee charged for each ride. I suspect that the city puts that money into its own pocket and does not return it to the driver.
6
So you are OK with exploitative contracts?
Uber, Lyft, and other gig companies have a business model that depends on paying drivers less in order to increase profits. This is capitalism at its core. The twist is by classifying them as contractors, costs that are normally incurred by an employer are pushed onto the driver, increasing the profits to these companies. How is this innovative? Why would we want this model to spread?
Thank goodness that labor unions are very strong in California. Many legislators know that workers have a voice through the unions. Makes me think increasing union membership around the country would be helpful to all workers.
14
Worse, these companies have no profits. Uber and Lift plow the money into developing driverless cars. Their business model requires they eliminate drivers after they have exploited them.
2
The gig economy uses information technology to enable corporations to have much more power over their workers and to transfer every day business costs and risks to those workers. Its a great deal for the corporations.
7
Addressing only Uber and Lyft, classifying drivers as employees highlights tech's shifting of costs to people who are truly employees. These businesses, now losing massive amounts of money, are not viable if they have to incur normal employee costs for their drivers.
They also shift the enormous costs of maintaining a fleet of cars onto the individual drivers including purchase of a car, depreciation, gas and maintenance.
Let's see how they do now that they have some of the costs that all other employers incur.
12
@DJohn They won't do very well. Already, Uber loses money on each ride. Either user costs will go up to the level of yellow cabs, which will force down ridership, or the companies will simply fold.
@DJohn, you are correct, except that what it truly means is that the ride share companies are not picking up the employee’s cost of doing business, they are picking up their OWN business costs that employees and the public have been shouldering for the last several years.
Yet California goes out of its way and has filed numerous lawsuits to protect illegal immigrants working off the books without any benefits or job protections and the companies that hire them.
No one with any common sense believes this is about helping gig workers. This is a targeted hit on Uber and Lyft being done in major cities to protect the taxi industry.
6
@Hellen
This is incorrect. It is not a bill to protect the taxi industry. The bill came from many longtime ride share drivers who essentially worked full-time for these companies without a guaranteed minimum income or benefits. I take ride shares frequently and have not met a single driver that did not support this bill.
6
@Laura Stein
Well I hope you are prepared to say bye bye to your ride share driver friends and make new friends with taxi drivers. That's the goal of this law.
@Hellen
Yes, but that's easily countered by wrapping aluminum foil around one's head.
The worker as employee opens the next big can of worms for Uber and Lyft, because in this case, the employee is providing all the working capital and all the operating expenses for the ride sharing service. I'd like to know how it can be legal for an employer to take all that from an employee and only compensate them for their time?
7
@AgentG It's just like when you hire a cleaning person to clean your house. You don't pay benefits, etc., because the cleaning person is a contractor.
This business model currently in use grows out of the nonsense dating to the Reagan days of how we will all be entrepreneurs owning a piece of the great unregulated capitalist economy and will no longer need pensions or unions or job protections. Hopefully this California law signals the end of pretend and we can get back to what real workers need...job security, pensions and the ability to retire at 55 or 60 in some level of modest comfort.
9
The independent worker trope is bogus. Uber and Lyft demonstrated that the controlled scarcity model for taxis reduced demand, and cities drove up prices to make up for lack of business. Yes, drivers should make more too - no reason that founders need to make billions while workers can barely get by.
11
Uber and Lyft have not “built their businesses on inexpensive and independent labor “.
They have built them on cheap, powerless, dependent labor.
Time to make some changes.
33
"The ride-hailing firms — along with app-based services that offer food delivery, home repairs and dog-walking services — have built their businesses on inexpensive, independent labor." In fact, those companies have built their businesses on the backs of underpaid, unprotected workers who have to pay more in taxes (including "self-employment tax" which is terribly misnamed) than the businesses they work for.
22
Finally, legislators woke up and paying attention to "independent contractor" loophole. Bike Delivery folks in NY not only endure cold and hot weather, but they also face financial uncertainty when rush seasons are over ( hard time paying rent and other expenses during summer). Plus, they depend on charity ( tips) for more than half of their income. Because, app services like caviar, door-dash, etc. draw a straight line between distances, and never bother to count time as a source of earnings. Frequently delivery folks have to wait for 20-30-40 mints for an order to be ready but do not get paid for the wait time. Apps sent folks in the restaurants too early ( 10-15 mints before the food is ready to pick up), restaurants told them to wait outside in cold/extreme weather, and they do not get compensated for the time they spend waiting for a single delivery during rush hours.
There is also a lack of solidarity from a group of customers. Customers living in a building without an elevator want "door to door" delivery service, which added climbing stairs without compensation.
And please do not forget about paid vacation, overtime, health insurance, and other things people need to live a quality life.
It's not only the app services, but the whole society must take this into account when they get used to convenience like "one-day delivery" or " food on-demand from anywhere." Peoples efforts and time are not " cheap marketing rhetoric" advertised by app services.
23
Big Tech's goal is to "disrupt" existing business models, which they accomplish by converting labor to independent contractors from employees. So much for the genius in that: lower expenses lead to higher profits, duh! Although Uber and Lyft may not be profitable -- yet -- they have been busily collecting tons of data from the rides themselves, and, possibly, from unsuspecting riders' cell phones to use later when they can replace drivers with self-driving cars. I also suspect that they are already selling that data to third parties. The California law is one small step for one segment labor. But to make one giant leap for all workers, we're going to have to figure out how to get ahead of Big Tech and Big Data.
14
"Some company officials have expressed cautious optimism in recent days about striking a deal with labor after the bill’s passage."
Yeah. If they had been willing to negotiate with unions before this bill, it would not have been necessary.
Making money off the sweat of someone else's brow is OK as long as you respect them and pay them fairly, two qualities absent from American capitalism for a long time.
13
I wouldn't get too excited, the Supreme Court has a tendency to favor corporate contract law and dismiss any corresponding anti-trust issues. This will probably be overruled.
4
CA’s original same-sex marriage law was voided too, but years later the SC passed same-sex marriage nationwide. My pt is: how CA goes, so goes the US. Our passing of this bill makes a huge statement, other states and even countries take notice, and the rest of the country is made aware. Even if it’s struck down by the SC, it’s still a worthy exercise in democracy and expression of doing what’s right. You seem to have forgotten the principles upon which the United States of America were founded. Historically, the SC has made decisions re social justice that were overturned decades later. This could be one of those issues. None of what CA does legislatively is a waste. Most of our laws passed have become federal laws eventually. The arc of history bends toward justice, according to Dr. MLK Jr.
3
What if you don’t want to be their employee? Part of the attraction of a job like Uber is that it’s a contracting gig.
8
@Gabrielle Rose
I'm guessing that you do not work for either companies. If you drive full time, you want this. If you are a sunday driver, time to find another gig.
2
@Gabrielle Rose
Lol, start your own company.
Out the door goes Freedom and Innovation, in the door comes the heavy hand of Big Government.
11
@Marty O'Toole I would say, just the opposite. These large corporations force these contracts onto people without regard to anti-trust law. Corporate America is now writing our laws.
6
@Marty O'Toole
Out the door goes the exploitation of workers by companies and by users of their services. In the door comes increased wages and security for workers, but with increased costs for users.
13
@Marty O'Toole, you seem to believe in an 'open borders' style of corporate power. The utopia of the company town has been disproved over and over.
If you really hate the heavy hand of government, how do you feel about trump seizing private property for his government wall? That's probably totally different? Or trump subsidizing failing coal plants who won't even PAY their employees as they go bankrupt and give the CEO huge severance bonuses.
trump supporters are hypocrites of the highest order. Sad.
1
People should take a look at what happens to Americans who spend their lives working off the books when they get too old to work. People can work every day from 15 to 70 yet find that they have nothing in social security. Maybe they spent a lifetime working in someone's home as a maid or nanny, on job sites or landscaping jobs as a day laborer, in sweatshops... The people who hired them and benefited from their labor are long gone, but just like Uber, they profited handsomely by avoiding any contribution to social security and medicare.
Most readers of the Times will not often interact with people in this demographic (well, except for the ones with maids and nannies, I guess). I often do. It means the most desperate, desperate poverty in old age.
In 40 years, the people who got rich off Uber will still be rich. The people who drove for them will be frozen to death on a park bench at seventy four.
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@Glen
If they spend their lives working off the books then they don't deserve social security. Every person I know who is self employed has to pay thousands out of their earnings to be covered and those who retired rightly received social security. They work /worked and pay /paid nto the system. Why should people who refused to pay into the system get benefits. They knew every year they owed taxes.
8
@Concerned Citizen
If you choose to work off the books then it is your responsibility to put money on the side and provide for your own retirement. I am tired of people who choose not to contribute to social security and then whine about not having social security. Your choice and you deal with the consequences.
1
@Hellen I agree. For several years, my husband and I were the Sole Proprietors of a small trucking company that transported foods and liquors across the country. I was the company bookkeeper and I made certain that all appropriate taxes were paid out of the profits, including Medicare Tax and Social Security. We also set up IRAs. Of course, that meant less for us to spend, but it was well worth it. Now we are in our sixties (I am 65 and my husband is not far behind) and our Social Security and retirement looks GOOD. A self-employed person CAN and SHOULD pay all appropriate taxes at all times. They should also be setting something aside in an IRA. There is no excuse for spending all of the profits and then looking for a handout later. If people refuse to pay into the system they should suffer for it later. Period.
1
It’s about time. Imagine that an internet app is actually a part of society. Just imagine some spoiled tech kids have to share in the profits . Individuals actually want a livable wage. Shocking.
16
This is just politicians passing the buck on their responsibilities. We are the only industrialized nation without universal healthcare which would make such a law unnecessary. In stead this gets pushed through and will hurt both gig workers and those helped by their services. It will help companies who have longed greased politicians palms to establish monopolies now hurt by independent gig work.
7
this is not politicians passing the buck.
steps have to be taken to rebalance the wealth in this country, and ridding our society of "gig economies" is one step, just one, in the right direction.
14
@john clagett
Gig work is not new and it has always been supplemental part time work. If we had universal healthcare they would already be covered instead of this obvious targeted legislation. I guarantee you there will be selective enforcement based on which companies CA are trying to protect or break.
3
@Hellen
No, gig work is not limited to supplemental and/or part-time work. As of 2015, more than 50 million workers in the U.S. worked as "freelancers," only half by choice. In my industry, multiple classifications of workers have been pushed into contract positions. Many of the people I used to see in the office are now doing the same work, but from home as freelancers, with no access to regular office support (like IT or supplies) and no benefits. At my kids' school, custodial jobs have been outsourced to a firm that hires contract laborers. School custodians were all previously full-time, in-house positions that carried decent salaries and full benefits. None of these folks are doing their jobs as a side gig.
Just a few examples from people I come into contact with in my own day-to-day. Read any of the Times's recent reporting on gig work, such as this article about Google's reliance on temp workers, and you'll see it's gone far beyond "supplemental part time work." https://www.nytimes.com/2019/05/28/technology/google-temp-workers.html?searchResultPosition=2&module=inline
5
The best Uber and Lyft can hope for is that the driver is on the clock only when the passenger is in the vehicle. They still would be using the driver’s time and money the rest of the time. This is a necessary change so that driver’s FICA is paid for sure, and the fees better reflect the costs of driving.
1
@ThePB Actually because both UBER and LYFT have the absolute right to manage their own companies, they can hope for a whole lot more. Of course, they have to pay the payroll and Social Security Taxes, BUT THE EMPLOYEE ALSO MUST PAY THEIR SHARE. And, they can absolutely limit the driver's time to when they actually have a passenger, up to 30 hours per week. They can limit their time, just the same as any other employer. And if they are part time, all other benefits are eliminated.
Enjoy finding a cab in Los Angles in the suburbs. For non driving elderly getting to the doctor will be less convenient. Earning a little cash on the side is gone for a lot of people.
10
@James
This is about protecting the monopoly once held by taxis. It has nothing to do with helping people.
6
@James
Not really . There have always been small operators throughout the country. Only difference is that a few that control Uber and Lyft are not as wealthy as yesterday.
5
@Hellen, so what's the solution for a company like Uber that avoids paying it's workers a wage so they can earn Social Security?
Why would you accept corporations' loophole for employment, to maximize profits without investing in labor?
Sorry, Hellen. We've heard the 'taxi monopoly' argument, but it's weak. Uber has been around for some years now; this is between Uber and America's labor laws. It's a discussion about workers' rights.
4
"They have warned that recognizing drivers as employees could destroy their businesses."
Well, if you have to exploit your workers to save your business, we've got a President who would gladly support you. Since when did mere workers get to be treated with the same respect as the pampered CEO's of the companies they work for? Not in the good old USA, for God's sake!
22
@teach:"Well, if you have to exploit your workers to save your business, we've got a President who would gladly support you."
This "exploit" has been occurring for some years now. It's driven a large part of the recovery - the gig economy. There's been surprisingly little criticism of it on the NYT OP-ED pages, at least until the end of 2016.
This is the miracle of service economy and how it works. Enjoy.
6
Dear @Jp:
But wasn't Savior Trump supposed to have the backs of workers? Has HE ever questioned the oh-so-cutely called "gig economy"? Has he ever questioned the terms of any such "deal," whether or not blessed as a "contract"?
The absence of robust criticism in the past does not mean current criticism is groundless. It just means it's long overdue.
The "miracle" of the "gig economy": oh how George Orwell would love that obscurantist language!
@Jp
And one where manufacturing abroad exploits cheap labor and impacts the environment in other countries. So the well to do in the USA can wallow in cheap services and goods.
1
This, I presume, would require these companies to ensure the employees have a legal right to live and work in the United States.
5
@johnlo:"would require these companies to ensure the employees have a legal right to live and work in the United States."
Many posters on this board have blamed employers for hiring illegal immigrants - until those employers are raided by ICE. Then ICE becomes the bad guys who are separating families, hurting children, hurting the economy, creating concentrating camps, deporting people to horrid living conditions etc... etc ... etc...
And around and around it goes.
2
@johnlo Yes. If the drivers convert to employees, E-Verify would be mandated by law. Employees would all be required to be citizens or green card holders with valid Social Security Numbers.
@Jp The problem most people have is that THE EMPLOYER is never punished. Do you know that employers are supposed to be fined $3000 for every undocumented person that is working for them? Instead of enforcing that law, the workers are rounded up. That is what angers some people more.
It was a good thing before the government got involved.
Costs will go up now. You'll see it will hurt the drivers too. Why would you pay them during slow times. Less drivers on the road, just hurts the business model.
Hope it stays in California only where big government ruins everything.
5
I use Uber and Lyft because their service is better than what I've gotten from taxis... by a lot. If the cost up by 20 or 30 percent, I will still use them. I've never understood why Uber and Lyft have struggled to make a profit. Why not just charge more? They have the taxi companies over the barrel.
8
These jobs were meant to be part time supplemental income. Not jobs for life or to feed a family of eight. This is just another feel good legislation from California that will backfire. Yet they wonder why even liberal Americans are fleeing these states and even more of us are making future plans to exist.
7
@Hellen
And yet the population of California keeps growing.
Perhaps you don't think that working for Uber is "meant" to be a full time job, but for many people it is.
20
@Hellen
"These jobs were meant to be part time supplemental income." Yes, because if there's one thing we can all agree on, it's that we're not busy enough and need more work to occupy our time.
The companies do not care whether their "contractors" are working one part-time job, or working overtime to make ends meet with a full-time job and a part-time job, or with three part-time jobs. Increasing shareholder profit is their only concern. When workers are classified as employees, they are much more likely to achieve decent pay and benefits so that they don't need to supplement their income.
10
@DWes
It isn't growing with tax paying American citizens. If Uber is your full time permanent job then you have bigger issues.
1
Uber/Lyft have had no issue burning cash for years in the interest of a higher valuation, ignoring the reliance on an entirely disenfranchised workforce with an expiring shelf life. Why not throw some more on the fire and let the silly humans have a few good years before replacing them with the evermore attractive (and obedient) robotic fleet?
11
Everybody wants an exemption.
These jobs as well as many other should come with benefits, in particular employer match into portable health insurance. Soc Sec funding could be a model with both employer and employee contributing to a health insurance account that belongs to the employee. Employees could have the option of sign up for some Medicare type program. Little to no paperwork for the employer... certainly nothing as intensive as employer provided h.i.
Our current all or nothing approach with binary classifications of full time and part time employment is outdated. Perhaps benefits could be pro rated. ThT way people who are cobbling together several gigs would still see the sum of the efforts add up to affordable health insurance.
Better yet, for working couples benefits could be shared/pooled, letting each partner spend a bit more quality time w family and making space for younger workers in the workforce. These ideas were explored a decade or more ago explored in detail in the much ignored "Graceful Simplicity" by Jerome Segal.
10
Independent contractors are a business within a business; taxes must be paid, retirement and health insurance must be considered, and sound fiscal practices should be followed.
Why not provide in-house entities to help these independent businesses within make more responsible choices and give them an opportunities to better plan their careers?
A healthy company wishing to keep their workforce healthy and competitive needs fresh healthy people that see what they do as a carreer; disgruntled workers in dire financial straits actually sour and bring harm to an entity's profitability and future prospects.
Credit unions, retirement counseling, affordable health insurance, and financial advice in general are but a few things that an independent contractor needs to know and have in order to do business.
Why can't a company doing business with independents at least provide a toolbox and education for those that make them all that money?
Not every Lyft driver that I've talked to, for instance, needs to be told how they should conduct their own profitable business, but many are simply grinding their gears from one day to the next, without a clue as to what is beyond and ahead.
A GPS and Google maps shouldn't be the only guidance these drivers have.
11
@Erich Hayner
There is already a model for this, and it is the union hiring hall. Construction workers worked this way for decades, until union busting came into fashion. Iron workers, electricians, plumbers, brick layers, carpenters you name it. Health insurance and retirement funding came from the unions, not the employers.
But unless forced to, corporations will not deal with unions because, yes, wages have to get raised, and union dues must get paid, to fund these benefits.
The same stupid people who think Trump was going to save their jobs voted for 'right to work' laws that not only killed unions but also opened the doors for construction to hire undocumented workers. They now have the 'right to work' for less pay, for no benefits, with no job security, and with no training. Kind of like Uber drivers.
Note toward the end of this story how the companies are now willing to talk to the unions. This could be the best thing to happen to the drivers and eventually to customers, who could end up with better happier drivers.
@Erich Hayner When a person decides to go into business for themselves, the training and education they need are on their own shoulders. If one does not know how to conduct business, there are plenty of accountants and business consulting agencies ready to assist for a fee. The company that you are contracting with is not legally or even morally obligated to "guide" you. My husband and I owned a small trucking company. WE DID ALL OF THE RESEARCH and consulted with a CPA before we got started. This is part and parcel of even getting into business, and if a person does not realize this they should not be in business. Clueless people should not be in business.
This law is going to put a number of California newspapers out of business. Most freelance writers will now be considered employees as well as delivery people. Many small papers are having enough trouble getting enough freelancers, but this will make it even harder. Expect a large number of smaller newspapers to shut down because of this law.
6
@TomKo44
Freelancing isn't part of this legislation. If a company (contractor) works with multiple other companies, they're not subject to this rule. So free lancers, physicians, etc. are not threatened, nor are the companies with whom they do business
13
@TomKo44One can make the case that these small papers are exploiting freelancers as many of them pay very little for articles, certainly not enough to make a living. However, according to the SF Chronicle, freelance writers may eventually be exempted from this law.
3
@Wally Greenwell Nearly every Lyft driver I speak to works for both Lyft and Uber. They run both apps and choose the rides they want, then shut off the opposing app. Do you suppose that makes this driver a "legitimate" contractor under this law?
1
This is a huge victory for the tens of thousands of victims of the "gig economy," who have been denied or thrown out of jobs with benefits and forced to fend for themselves without paid holidays, paid vacations, salary raises, promotions, recognition, pensions, transfers, mentors, colleagues, and in many cases health insurance. I chose to be self-employed so I could work at home while my children were small, but I never thought I'd still be doing it 28 years later. However, given that I shared in my spouse's employee benefits, saved for retirement on my own, and feel my children and I both gained from the experience, I'm not complaining (much). My heart goes out, however, to young people who lack these accustomed benefits of the corporate world at a time when our government is being actively prevented from helping them make up for the loss with a humane and compassionate safety net. It is nothing short of a crime.
26
@EA The only reason why many employers provide paid holidays, paid vacations, salary raises, promotions, recognition, pensions, transfers, mentors, colleagues, and health insurance is because competition with UNIONIZED workers forced them to do it. There is no such thing as "Accustomed Benefits." With the collapse of Unions, there are more and more employees who do not get those benefits because NONE OF THEM ARE REQUIRED OR MANDATED BY ANY LAWS. The biggest myth going is that people somehow believe that their bosses MUST give them benefits. NOPE! Those benefits can disappear from every workplace in America overnight and there is nothing that workers can do about it.
2
@Elizabeth Moore You are right, of course. These benefits should be mandated by law, as they are in the rest of the industrialized world. But as I said, our government is currently being prevented from protecting us. I didn't used to think he could win, but Bernie Sanders is starting to look awfully good to me.
1
There's a great deal of innovation in this sector, and much to be thankful for increasing convenience and goosing civic reforms of a corrupt taxi industry, but the "independent contractor" sham to evade employment standards is old as the hills and twice as dusty. Na na na na, goodbye.
22
@J111111 I remember fondly the San Antonio taxi unions vehemently opposed Uber and Lyft. They were heard at City Hall, but CoSA allowed Uber and Lyft tooperate. Made the taxi unions furious as they cut into the taxis' gravy train.
On this rate occasion I heartily applaud California.
As an aside, maybe companies having the valuation of small countries isn't intended if these entities are expected to treat employees fairly with pensions and similar - rather than company 1st and people 2nd.
10
What are the impacts on non-app businesses?
1
@Carolyn C It will probably be worse for many non-app businesses as they dumped a lot of rules for small businesses in there as well. My sister-in-law runs a newspaper in SF and she expects that this could shut her down as all of her freelancers and contractors would now all be deemed employees.
2
@Carolyn C The article seems to have missed enough to make me go back and skim though again. You are right... nothing about non-app so I assume freelancers and independent contractors are still just that. App based is different and becoming more and more the norm for so many people that I can see why CA jumped in. There is a fine line for who is an employee and working a 40 hour week for Uber should give you employee rights. Also, other articles explain more about how ALL these types of companies have lobbyists and are pushing to not recognize their workers this way. Even Texas (of course) got other states to all band together to keep people from getting benefits, social security, etc. Bottom line is the companies get huge and simply look for way to not pay a dime more than they have to. Worker aren't employees to them... just cogs.
5
I heard the editor and chief of the SF Chronicle on NPR the other day. For her industry, which is fighting for survival, this is a major disruption to a decades-old model where couriers are private, independent businesses who contract with multiple papers and concerns. It grew and evolved that way for a reason. But some smarter person in Sacramento knows better!
1
Good for California. It's about time gig economy workers are employees receiving benefits not serfs. If that means the higher ups get less, let 'em squawk.
12
@GAEL GIBNEY
I’m pretty sure they won’t take the hit
Does anyone out there feel like this is government overreach? The consequences on economics across these industries and people’s chosen lifestyles is way beyond the influence of a few state senators and their ability to save us. If something needed fixing, like access to health benefits, then do that.
6
@Alberto Abrizzi
No, it's really refusing to exempt a particular industry from laws that apply to every other business.
Since when is equal treatment under the law over-reaching? If a business model depends on avoiding equal treatment under the law, that business model cannot be respected.
24
@Alberto Abrizzi It is often the 'lifestyle' of last resort, piecing together inconsistent 'odd jobs' that don't pay much, are not guaranteed, have no job security or benefits. The 'gigs' are taken to supplement low income from a low paying job, to try to stretch retirement funds, or to try to just keep a roof over your head. As costs of living rise, these small boats are being tossed by the waves and are one car accident or serious illness away from homelessness and bankruptcy
6
@Alberto Abrizzi Just the opposite. It's ensuring that all businesses are subject to an equal and level playing field. Currently companies like Uber are destroying the livery business because they're not subject to the same rules and regulations that everyone else in the business are subject to. This moves towards changing that
11
Let’s make America great again as in those good-old Leave It to Beaver days under Ike... when people had actual jobs, actual paychecks, actual benefits, could live and raise families in one place, use their employment income to get a mortgage, and all those other old timely things that now seem as quaint as buggy whips and dial telephones. There are always those who move from gig to gig, such as musicians and actors, but to impose that abusive model on more and more people to wring more money out of work for those not actually working only pushes us further to the rapidly evolving model of the future: serfdom. Let’s go back to the 1250s again!
17
I don’t understand. This was a model disrupting organized labor. The idea was freelancing. That a lot of people who drove exploited that idea and were driving similar to taxi drivers was a bit unsettling. Now it’s a union of folks who demand cake and want frosting on it too. It only remains to see what will be left of these innovative ideas, which Cali has turned into good old taxi companies. For folks demanding benefits, why work in this industry? Because it does not have the same requirement for vetting as other company employees. Well as a consumer, my wallet is going to feel slimmer but I sure hope Uber and Lyft now can exhaustively vet people and employ only those that are safe and reliable. I don’t want to be a passenger with a person who is driving for 11 hours as many proudly advertise. I hope both companies change their car stickers and let consumers know which cars are currently safe employees or not....by Jan of course.
Cali is losing the Blue votes rapidly. I am genuinely alarmed. The arrogance with which folks think Cali will remain blue.....All this jubilation coming from folks who are rightly concerned with benefits for workers best look at their resumes. Exactly what have they worked towards? Are they worthy of being employed by Uber and Lyft? Our democrats have pushed our country backwards. They should have fought for a cap on how much the ride share companies could squeeze from drivers to enable the latter to live better. Unions..... less said the better.
3
Sorry for your loss in stock value.....not.
@Meena Is there a point in your comment somewhere? You seem to be arguing with yourself.
2
Let's face facts here. The gushing success of gig economy "apps" such as Uber, Lyft and others is entirely based on the post-Reagan business model of exploiting workers to overcompensate giddy ceos, directors and shareholders.
It's been a great gig for nearly forty years, just ask the .01%.
This gig needs to be over.
64
Attire is the only thing robber barons change from one generation to another, and gig work today was called piecework 120 years ago. The underground economy hobbles small business, and I'm glad the CA Supreme Court ruled the legislature shall codify the distinction between independent contractors who can competitively bid for their income and those who are told what they'll earn. Having the freedom to choose assignments doesn’t necessarily make someone an independent contractor. Independent contractors have a business license and fictitious business name, or they’re being set up by unscrupulous owners who developed a loss-leader business plan like Uber and Lyft.
My wife and I are California small business owners, a successful mom and pop shop since 1995. The salient feature of an independent contractor is setting our price not the other way around. Independent contractors hope our competitive bids earn us enough for an honorable life with adequate income to cover sick days, vacations, slow days, and health insurance including the full cost of Medicare/Social Security. I’m grateful the CA Legislature will protect workers that robber barons unscrupulously classify as independent contractors who have no say in how much they make other than piecework.
50
Yet California will not go after the big tech companies which routinely hire Americans as contract workers to train or fix the mistakes of their cheap visa workforce.
Uber and Lyft have served underserved communities. Black people who couldn't get a cab, people living in remote areas and the elderly or disabled have benefited from their service. They also made it easier for people from various communities to make extra money while also serving people in their communities.
This is about protecting the monopoly and exclusiveness of cab companies that were openly allowed to discriminate. Remind me again how Democrats are suppose to be for the people and different from Republicans. All I see is corruption and indifference.
8
@Hellen LOL..yeah, no. Not everything is about race. Sometimes a cigar is just a cigar
@Hellen
If Uber and Lyfft serve black communities, why are so many blacks complaining those companies refuse to serve them?
How are the Campaign workers for Bernie , Warren , Mayor Pete . Harris , classified ? Volunteers or do they get or receive
1) Minimum wage
2) OT
3) Any benefits
4) severance
5) unemployment when they loose
this would be a good article
5
Yes, you're on the right track. The majority are volunteers. That means they're doing this out of the goodness of their hearts in order to better society, just as they might be volunteering for a hospital, the Sierra Club or the local zoo for similar reasons. They're not trying to make a living at it, as Uber and Lyft drivers are.
12
“Drivers are the centerpiece of our business model, but if we are forced to hire drivers, it will destroy our business.” — Uber/Lyft
Nice business model.
33
Maybe we are being infiltrated by communists? The drivers aren’t being forced into anything. As a frequent business traveler, I’ve only heard praise for the business model from drivers, the freedom and flexibility it affords them balancing other life demands and interests. Sure, the model needs tweaks, everything does. I’d take technology, innovation and entrepreneurship over Hugo Chavez any day.
3
@Alberto Abrizzi
I'm sure these app developers could figure out scheduling flexibility even if they were forced to pay FICA on the money the drivers bring in.
2
@Alberto Abrizzi
So that's what people who demand an end to base exploitation by corporations are, communists?
And to you it's a binary (false) choice between the gig economy and Chavez's corrupt, socialist dystopia?
I might remind you that no one forced people in this country to work 14 hours a day, 6 days a week in factories in the 19th century, and that no one forced people to send their young children to work similar hours under similar conditions.
Well, maybe need and hunger might've prodded them to do it, but I wouldn't call that "forced," would you?
Is that how you want us to live again?
4
Of course the Trump administration (aka Scrooge Central) saw this coming so they launched the "homeless camps" initiative to gin up the base that California is a "socialist nightmare".
It is about time this country restores basic worker protections.
16
We don't need more loopholes so that workers can be exploited. If making Uber drivers employees will destroy their business, then it is best for everyone (except for a few uber rich share holders) if Uber disappears.
19
@Casey Here's a great idea: let's have an app that is accessible by all these independent drivers. They could choose what they wanted. No Uber, no Lyft. What do they do anyway? Not vet their "contractors" for sure; they are always being sued for crimes committed by their drivers against their clients. All these companies are is middle men, sucking money from the drivers and providing no service or work whatsoever. Let'em go!
1
Once again I’m proud of my home state, on the forefront to redress this fashionable corporate swindle. May it spread to all the other states.
22
The dog finally catches the car.
Virtue signaling liberals will finally find out what unions and increased labor costs means: they'll be paying a lot more. Here comes the "that is ok. I have so much money I can support everyone" high soceity readership.
Endless VC funds were paying for the rides before. Now that 20 buck ride from downtown SF to SFO will be 40 dollars to pay min wage, benefits, etc. Companies that expense uber will be paying.
The other winner is airport parking. And traditional taxi cabs. The consumer does not win with this ruling.
It will be interesting to see how plays out. Not often to we get to see such a ruling.
4
@Scott
I'll be glad to pay more if it means my neighbors are earning a decent wage and their employer is paying into our social security pool.
41
@Scott BART fare to SFO from downtown San Francisco is $9.45, and a greener choice than any private vehicle.
I am fine with paying a fare wage for services and so are many others. The consumer and society at large wins with this ruling.
19
@mint man I agree. and while we're at it, why not make public transportation a feasible alternative to these voracious ride-sharing companies?
11
In many ways, this strikes me as a mixed bag.
Undoubtedly gig companies do little to help vulnerable peoples. However, I am equally disappointed that the state's solution is to "privatize" healthcare/social welfare rights. A real win would be decoupling unemployment, healthcare and other social securities from capital entirely. Instead, now gig workers are forced to cede their most valuable asset (time) to get these rights.
These drivers can look forward to a world where they are forced to be driving at specific hours and will be punished if they do not comply. Uber is essentially a old-school taxi company now, and while I am sure a subset of drivers want that, it is not what I wanted when I drove (I drove at non-peak hours when there was already too much supply).
I am disappointed that our only political solutions are to further tie individuals to corporations. This is not a win, but a deflection. True freedom is a world where one can work for a company, but not have their health and livelihood be contingent on that employment.
This bill will reduce the total number of Uber drivers and those remaining will have low-level jobs (akin to fast-food workers). A real win would have been a law that forced these companies to put a % of profits in a "Gig-worker" fund - that would be used to fund healthcare, etc all while maintaining a drivers ability to work on their own terms.
This is just a retreat into Capital's arms and an unimaginative solution by Ms. Gonzalez.
10
@Jan
Maybe, but there's no perfect answer. Classifying an employee as independent contractor has been a easy way for corporate entities to avoid paying payroll taxes, social security, etc., being held liability for employee acts, and or having to comply with health and safety, minimum wage, pay, and hour requirements.
11
a generation ago, large companies who wanted to grow profits on the backs of workers began calling people contractors instead of employees, and perma-temps sat next to staff and did the same jobs for less pay and no benefits. many large metro newspapers attemtped this, along with other businesses. digital piecework is the next step in capital's continuing war on labor. end it.
23
This has a very real potential of killing every gig economy company. It will raise pricing in every industry that uses contractors. It will take away the opportunity and flexibility for people to earn extra money as a contractor or a part-time worker. Last week I had 3 Uber drivers that were also entrepreneurs starting a business and another 2 drivers were freelance designers earning income as drivers and designers, and all loved the flexibility...this will end. Scheduling will HAVE TO BE USED to ensure that demand always exceeds supply...this will end flexibility, reduce the number of drivers working for Uber by 30-50% and reduce the quality of the service by increasing wait times for riders. The reduced quality is what will kill the business for ride-sharing companies and many gig economy businesses.
5
On January 1, the new law changes gig economy workers' status from "independent contractors" to "unemployees." Used-car salesmen are salivating already at the tens of thousands of cars that will soon be repossessed thanks to these far-sighted worker protections.
2
"We can't afford it! We'll go out of business!" as they pledge yet another $90 million to continue fighting it. As it's mainly more affluent people in cities who use these services, the market will once again decide what lives and what dies, as it always has. I think they're safe and they know it.
11
This would have never happened if Uber had treated its drivers fairly. They cut their share of the fees, used tips to replace wages and who knows what else. I will be sorry if this bill destroys the business - taxi vs ride share - Uber or Lyft hands down - clean safe cars, seat belts that work, a phone charger - easy payment methods.
8
“…drivers to make their own scheduling decisions”
Let’s see, if drivers make their own schedules, then they’re actually performing management functions. That alone is worth a pay raise and some benefits. Oh, they also provide their own cars. That makes them investors. Shouldn’t they get dividends? Finally, they are self-insured, a personnel department responsibility. So, really they are more like executives/investors/ operators. It seems like they should also get stock options and bathrooms, too.
19
There is a huge tax issue here that I do not see addressed in any of the reporting. Under the new Trump tax law, the expenses employees incur in doing their jobs are no longer deductible. For Uber and Lyft drivers now classified as employees, this would mean that the cost of operating their car would not be a tax deduction. No write-off for gas, maintenance, tires or the interest on a car loan. On an after-tax basis, the drivers will most likely be worse off.
@Tim Good CPA
The employer will simply reimburse the drivers for these expenses and take the tax deduction for the expenses. The drivers are typically low paid and would not benefit as much from the tax deductions as would the employers.
12
Traditionally, some of the factors the CA Franchise Tax Board used to determine whether or not a workers was an employee or a contractor had to do with the location the work was performed, whether the worker set his own schedule, if the worker had to provide his own tools and supplies, if the worker took specific direction on how and when a task was accomplished, if the worker had to provided his own insurance or was covered under the employer’s worker’s comp policy, etc. Where do today’s gig workers, such as on call drivers using really cool apps, fall on this spectrum? They do not work inside Uber’s physical location, the do not get told how to drive (AFAIK), they may have their hours set, and they do provide their own equipment, supplies, and insurance. It seems to me that only by somehow ignoring the employee costs (what you call deductibles) could gig drivers be said to be making money. With a smarty like you compounding their money costs and depreciation, I’ll bet it would be easy to file the whole thing as a tax loss. Meanwhile, if you had a client who owned an apartment house, would you advise renting to anyone with such a tenuous, at-will income?
3
If only this legislation would protect the abuse of the gig status applied to thousands of part-time teachers and subs. Having worked in the CA system and successfully sued and won my lawsuit against a community college district, our educational system continues to suffer with teaching gigs that go nowhere and don't help students.
17
@zighi For many years I worked as a sub teacher. I was an employee of the county school district, but considered part time though I worked every day. I was included in their retirement plan and was on a list of subs they had to call in order. This worked out well for me.
Then they changed it. Subs had to apply to a secretarial temp agency and could only be hired through that. The school district payed the temp agency and they paid the subs whatever they felt like paying, which was next to nothing. They performed no service, did no work and were, as far as I could ever find out, completely unnecessary. All they did was suck money from the subs. They paid so little many of us could barely afford the gas to make it to our work. I and hundreds of other subs quit. Now we have a huge shortage of subs and I see editorials in our papers complaining about it, as if they have a right to our work for nothing. Du-u-u-h!
2
The only thing this changes in the day to day lives of contract workers is that now they become "seasonal employees". Meaning they pay more in taxes and lose the ability to deduct the cost of the tools required to even be considered for the job. This doesn't actually make workers more secure, it just means the government is getting a bigger cut.
3
On another note it just shows how inept our local governments are when dealing with tech. The Taxi industry was completely regulated by Cities and then comes Uber and nobody in local government thinks to limit the amount of cars they can have on the streets and soon after the industry they regulate is decimated and in NYC Taxi medallions worth a million $ plus are reduced down to value of $100k. Is this good governance, selling a regulated license that decreases in value by nine fold because the government has their heads in the sand?
7
I think the one big mistake is that some of the drivers, day laborers, were not asked about this.
I use Uber & Uber eats quote a bit and see a wide range of drivers old and young from small inexpensive cars to the bmw that rolled up in my driveway to deliver dinner the other night, all races as well.
The model as is works for many people as the entrance to the business is simple a car and a desire to make some money on the side for whatever reason, drive when you want for however long you want. It fills a gap for those who would prefer this to working retail or fast food, and those jobs are disappearing anyway.
Also for those who are illegal it is much more comfortable than picking crops or changing the diapers of the elderly or nanny work.
The guys who only drive also usually have their own private car service and add uber/lyft to get business when they need it.
Also not sure how this works for landscape workers maids etc who have been making major money under the table and not paying taxes.
Most workers in other states are probably breathing a sigh of relief as they are not looking for the red tape and paperwork that the CA law would entail.
I think for many workers they would rather remain anonymous in the gig economy so to speak and the CA change will be a huge fail for those working in California.
4
@marie
Well I know a few of these kinds of workers and they would rather be able to make a living wage and receive the benefits other workers who are traditionally employed receive. The one Uber/Lyft driver I know who is drowning under the rigged car lease she got through Uber is really happy about this. She feels that she can never quite catch up even though she drives twelve hours a day sometimes.
Why should those for whom this is their only job and are desperately trying to make ends meet with it sacrifice their security for those who are clearly doing well enough to only need the same job simply to “make some money on the side”? Since when should the needs of the least needy drive policy that increasingly devastates the most needy? Since when did we suspend labor protection laws for all because millions of parttimers had primary jobs and were only working for extra cash?
And who needs or deserves a billion dollar salary in this day and age of yawning inequality? The CEOs, venture capitalists, and hedge fund managers who sit on their islands raking in the cash on the backs of these workers can pay them more and live on a little less like the rest of us.
7
@left coast finch
the rigged lease was not mentioned in the article, and is actually a separate issue, and may have also been bad decision making on the part of that women.
I have used Uber all over the United States and most people take it for what it is an easy way to make money.
Those who choose it as a career do it at their own peril, as do fast food workers and those in retail at this point. So actually why should the neediest ruin it for those who are using these jobs for what they are meant for some easy money with little red tape.
I would venture a guess that the women has failed at a regular job or was released in some economic downturn and does not have much business acumen to make a decision to lease the car as a business model, she and others might have legal recourse, but it should not ruin it for others who just want a simple side gig.
Also whether a CEO should have a million dollars is a different question, and one that I have no issue with.
What people forget is that the billionaire or the 1% or whoever is the financial bad guy of the day so to speak spends that money somewhere, on food maids, drivers, owning a boat with crew, clothes, travel, that money gets spread to other small pockets.
Now they may not all be in the United States, but the money also ends up in someone else's pocket.
It's a global marketplace that we are in and people have to get used to that.
@Concerned Citizen
The people who created uber lyft doordash etc started out somewhere and took their tech knowledge and did something creative with it.
The average american no matter what race who complains that they are part of the serfs so too speak probably spent their time having kids too young, or too many, getting drunk or high too often thinking that the world is some 1950's ideal when that is only an illusion, and did not even exist for everyone in the 1950's. If someone has a health issue that is different as you cannot plan for that.
But otherwise we are all competing with everyone else, try talking to someone in the United States who came here first generation from India or China and they will tell you they are competing against the people who chose to stay there and did not come here.
This is the real world, and smart people in the United States realize this and are making the adjustment. Millenials who decide to have fewer or no kids or just not get married, not owning a car or a home are thinking ahead
Those who get retrained and realize that not even Trump can save them will thrive. Like an article that was in the NYTimes about coal miners who who became male nurses, as an example.
Get the younger generation excited about science and tech, because soon even menial jobs will require it. Green technology will only happen when people get real about retraining.
You can continue to keep your head in the ground or see the world as it really is.
A Pyrrhic victory. So now independent contractors have "employee protections"? In an at-will state? Big deal. All the companies have to do is cap the hours any "employee" can work, or churn them right before they become eligible for unemployment insurance, or or or...
4
Good. Clawing back some of the 19th century power that corporations once again have gained over the worker and consumer is long overdue.
16
Federal law preempts anything CA or any other state does in the area of labor and employment. This law will be very short lived.
2
@HEJ - Actually it’s the opposite. Federal law is the minimum standard all states must meet. Each state can make laws more restrictive or strengthened - which is why California has stronger environmental and labor protections than other states. It may be challenged in court but it will not be reversed (thank goodness).
15
Not true. States set their own minimum wage, set mandatory sick days, etc.
13
The state with some of the highest unemployment in the Country makes it more difficult for people to work. What could possibly go wrong here? There will likely be fewer Uber and Lyft drivers. The service will get worse. This will also have an adverse impact of contract workers throughout California. Only the union bosses will benefit.
5
@William: What union bosses? Uber/Lyft drivers are not unionized Jothus the legislation passed.
Excellent!
Now lets get all these people into Unions!
15
Finally, a start. Somehow we have come to regard anyone doing quantifiable labor - driving a taxi, stocking a warehouse, fixing plumbing, landscaping our gardens, repairing our homes and appliances - anything that is "less" than pushing paper at a desk in a business suit as less worthy of being a solid citizen.
The slick persons dreaming up these gig businesses are no better than slave owners - and the "stockholders" who actually purchase fictive shares in these businesses are fools to think that there is anything proper or solid in such posession.
This is a start in a direction to compensate those who actrually do the work in a manner that allows a family to live in a modest dwelling with enough food, clothing and utilities to not always worry about tomorrow.
30
@Sara These gig models exist only because of the price points and service levels the model can provide that are consumed by the end consumer. 100 Door Dash part timers can make 300 deliveries in a much quicker timeframe than 20 full time door dash workers can. Same analogy for Uber and Lyft with rides.
Laws like this this reduce the number drivers, which will impact service levels and cost, and you may actually see a huge drop in the number of people using such services. In effect, destroying jobs, not creating any.
And from an employee point of view, many are going to bail. My daughters BF works for Door Dash when he is home from college for some supplemental money, on his schedule, as much as he wants to work. You lose him and many others as they are not looking be, in any way shape or form, employees.
2
@Marvin In the case of Door Dash, one wonders about the "service" at all. Since when are we too lazy to get off the couch and get our takeout, eat in a restaurant or even cook at home?
What this model also covers is people like my nephew, a nice young man with a medical condition - and employers use this "gig" approach to restrict his employment (he has a BA and accounting experience) to less than benefit level along with no fixed schedule. He is NOT at all satisfied or well served this way - he works as hard as anyone else, but without adequate pay or respect.
6
@Sara No better than slave owners? This is a voluntary agreement. What a ridiculous thing to say.
Hooray for California! While that sweet state has some flaws, it faithfully performs as the heavyweight champ in the brawl for workers' rights. (And the environment.)
When we are surrounded by friends and peers who are fearful about retirement, any job that doesn't contribute to Social Security is a workforce abomination. Worker exploitation is the original sin of capitalism.
Go California!
18
We can pull up stories from around the nation where sweat shop owners fought child labor laws. And the owners of production vowed there'd never be laws limiting working hours. And no such thing as minimum pay. Where the tycoons and bosses raged against clean and safe working environments. Now, it's the gig economy. Why do we think it will ever end?
16
@Rea Tarr thank you for those reminders of what we have overcome. Let's keep it up.
5
Under these criteria every regular family babysitter, house cleaner, and yard kid is an employee.
5
I think they already are, at least according to the IRA.
3
The comments section of this article perfectly encapsulates the politics of this issue. Every single commenter who supports it does not work in the gig economy. The only people opposed to this law are actual gig economy workers like me who know what they are talking about. The flexibility and high earning ability it provides me has allowed me to live in the most expensive city in New York in some of the most desirable neighborhoods (East Village, Greenpoint, Prospect Heights).
As a bike courier, I have made about $30-35/hr by hustling and learning what works. If a similar law goes into effect in NYC, it will completely destroy the entire business model that facilitates my living in New York. Conveniently, my wife is 36 weeks pregnant, so now is great time for state politicians to decide they know what is best for me and my family. She will be on leave for 3 months from the small business she owns, so we will be relying even more heavily on my ability to work at odd hours.
The more labor lawyers attempt to line their pockets by rewriting state laws to make the gig economy unsustainable, the more average workers will realize that politicians who seek to micromanage every aspect of the economy are not helpful and do not even have the requisite knowledge they would need to mandate by law how every worker in America should be classified.
Please just lower my taxes and leave me to my own devices. I don't want or need your protection from Caviar or Postmates.
24
Agreed. For me access to health insurance, which I have through the Affordable Care Act, has given my husband and myself an independent life. No need for the corporation.
@Gary Spot on. This law drive up prices and lower delilvery/service times, which will crush the price/service model that drives folks to use these services. Some will go out of business, some will be servery restricted.
Take DoorDash. Folks use it because it is cheap and quick and the only way to support that model is via the gig model.
@Gary 35 dollars, big money. your attorney will cost 300, when you try to get some money from being doored, on a run. pride in your youth and ability can turn to poverty in an instant. And then the capitalists will want to move your homeless camp( that you built by hustling)and you,ll be gone.
14
If they become employees, would drivers then also become more beholden to their employer? Could the employer now determine their work hours, routes covered etc?
6
I agree that independent workers should be allowed access to healthcare and I applaud California for taking the necessary steps to do so as a temporary solution for our crazy patchwork of types of employment (freelance, contract workers, part-time, full-time, etc).
However, there is a much greater workforce problem that this article does not even mention that will have much larger consequences for workers. Artificial Intelligence and robotics are displacing many jobs currently being done by humans. In the case of Uber and Lyft - self driving cars are coming that will eventually make human drivers obsolete. The impact of technology will eliminate many more types of occupations that are currently being performed by humans.
6
Many part-time workers, such as fully-credentialed teachers who do specialized [reading, math] individual tutoring in a school, have been forced to work as independent contractors with just few enough hours to avoid paying them benefits. You wouldn't ordinarily think of teaching as a "gig economy" or school districts as corporations, but will this bill help these teachers and other part-time workers as well? Hopefully yes, but it remains to be seen.
9
@Refugio Enriquez When schools need a long term sub, or specialist, they have the person work 19 days, then have a sub for the sub for 1 day, then back to the 19 day sub. This keeps the school district from having to pay for any benefits for the sub. This can go on for the entire school year, sometimes years. The sub is generally paid only $15 an hour, and for only 6 hours. A tremendous bargain for the school district. A disaster for the teacher and her students. Notice (HER), I've never seen a male teacher treated in this way.
2
As workers in the Gig Economy deservedly receive attention, aren't domestic workers--maids, housekeepers, and others on whom people rely--still unprotected by labor laws? Subject to the widely varying standards of their employers, the vast majority cannot even aspire to the American Dream. When we discuss fair labor standards, may we lift the lamp of equality for the large and voiceless contingent of household workers.
3
Taxis were typically a regulated monopoly, often supplemented by both legal (usually limousines etc.) and illegal for-hire cars.
Then someone decided the illegal for-hire cars could eventually be made to appear legitimate and would attract money from investors, and the result is backlash because such an enterprise loses money, increases traffic and much of the time the drivers cannot be paid enough (not to mention the occasional assault).
Maybe the better model is the taxi monopoly supplemented in peak periods by contractors, as the problems may be less classification than poorly-managed oversupply. If this makes the likes of Uber and Lyft even more unprofitable, I will play my tiny violin for them.
5
Uber's model: "We know of people who need to get from point A to point B, and are willing to pay someone $X to drive them. Are you interested? If so, we'll connect you to them so you drive them, using your own vehicle. You will not receive benefits, vacation, or support from us - we just make the connection, take the money, and pay you what we agreed to pay you. It is 100% your decision to join our system and conduct your own business under these terms."
Thousands of people who originally said "yes" are now saying they don't agree with what they agreed to, and the state supports their change of heart. Freedom, indeed.
8
@Kparker It is unacceptable in a society to let people present exploitative opportunities when there is a lack of non-exploitative options. In this case there is not enough work to go around. Of course desperate people make the best available choice available. I find it offensive that someone would believe that exploitation is fair if you are in a position to exploit.
Not to mention these "ride share" companies lose money like crazy. Their's and their masters goal is to prevent the growth of mass transit, destroy the cab industry, and to get us out of our personal vehicles and into paying them for services. Once we are out of options they will jack up their prices so high our heads spin but there won't be another mode of transportation to choose from.
People are already forgetting that we got along just fine before this.
6
Now go after Amazon and their contract drivers. The company should be paying their drivers a living wage and provide insurance, both health and vehicle.
15
@Karen M living wage ... 😂😂😂 Are these people chained to the wheel? You realize everywhere is hiring right? Maybe not in the almost 3rd world of California, well actually in Mission Beach everywhere is hiring... If you don't like your pay go somewhere else..and in California the taxes are so high to support the consumer class and the untouchable illigals business owners can't pay more in some areas.. it's economics, Marxist don't understand that however
The gig economy is a farce. Many people for instance, teachers, are Uber or Lyft drivers due to not being paid a living wage. Would anyone like to put miles on their cars which lowers the value and be responsible for maintenance while corporate assumes at times half for the ride using an app? What does it cost companies to maintain the app? The profits the corporations accrue using a disposable work force is astounding. Those who criticize laws put in force to protect exploitation have not experienced working in the gig economy.
12
As always California did right thing.
Gig economy eat lunches for a long time free.
If this is a new economy, the dignity of work should be protected, gig economy so far didn't regulate itself voluntarily and relied on the enslavement of people. Some things doesnt change.
4
I am so conflicted on this. The gig economy is scary, and yet if done will could give individuals so much more freedom. I’ve known people who were able to supplement their income to make it over rough patches driving Uber or Lyft. Maybe some people liked the taxicab system, but I for one hated it. Cab drivers are more often than not rude. I’ve had them take longer than needed routes driving up the fare. I’ve had my credit card double charged. Just recently, the same taxi ride from hotel to airport cost 1/3 more on the way to the hotel as back. The regulation of taxis and the sale and limits on medallions turned in to a municipal, money making scam. Maybe we just need Medicare for All, a public pension system on top of Social Security, and a guaranteed basic income.
6
@Todd What about a nationalized, standard fare transpiration system consisting of trains for longest distance, street cars for intermediate, and vans for short distance. All drivers to be paid a standard rate based on time. All passengers to pay a standard fare based on distance. No exploitation needed.
2
@Todd
Medicare for all, or lets just say a national health care program that covered most people, would at least transfer that benefit burden to all workers, and entities which pay taxes, away from individual employers, which would lessen the cost of hiring people. And simple, inexpensive, transferable, 401K/IRA type retirement savings vehicles would also cut the costs for smaller businesses ( who now struggle with the costs and complications of setting up employee retirement plans).
Uber/Lyft are not small businesses: they are more like aggregators, only ones which take the biggest cut of payments.
( And while the businesses may not have turned a profit, the income of their CEOS seems to "adequately"compensate them in a way that seems incompatible with the lack of profit.)
Defense against the violence of capitalism is long overdue.
10
@nestor potkine Socialism (Stalin; Mao et al) has capitalism beat when it comes to violence.
1
Fact is, companies like FedEx, WalMart and others have exploited the contractor loophole for a generation to "have" employees but not "employ" them in the traditional sense. It is high time this was eliminated. Contractors should have employment for a limited duration (less than 90 days) and non-renewable terms. Employ people, pay them and provide benefits.
If CEO's are no longer about "shareholder value" it is time their actions reflected this.
12
Something has to be done to protect workers and small businesses. I grew up in the midwest and watched Walmart undercut pricing and drive all small businesses into closure in every small town within a hundred miles of my birthplace. We are seeing it again with the likes of these driver servces, which I use and enjoy. This law is a critical step in the right direction. If everyone in this country is a contract employee with no benefits and/or makes $9 an hour then the golden goose that was once America's middle class is gone. No one will be left to afford goods and services. The current paradigm isn't sustainable.
13
California again leads the way
7
Uber and Lyft are using the John D Rockefeller approach of flooding the market and absorbing losses until the competition dies. Then prices will go way up.
100 years after the original, Uber and Lyft have improved the model by making their product a little sexy and getting a lot of good pr as "upstarts" and a "revolutionaries" when, in fact, they are giants crushing large numbers of small and mid sized businesses.
This legislation is justifiable in any context but in the context of Uber, Lyft, etc., it is not merely justified, it is essential to create a bit of equality between these giants and the thousands of small businesses they seek to crush.
7
@Paul’52 "...they are giants crushing large numbers of small and mid sized businesses".
Which businesses? The dirty, cramped, capricious medallion cabs, who drive right past me during rush hour and charge me based on their ability to navigate the city? The shady black car services who agree to one price and then extort more money once you reach your destination?
Spare me the sympathy for "large numbers of small and mid sized businesses" who treated their customers like dirt and then cried "foul" when someone offered a better service at a set price.
6
@Kparker If that's the way local cab companies run in Atlanta then Uber and Lyft have nothing to worry about when competing with them in Atlanta.
And, they don't need to undercut those companies, and they don't need to foist the cost of unemployment, disability, FICA, gas and maintenance off on the drivers.
1
@Paul’52 Actually, that has been my experience during more than 100 business & personal trips to NYC over the past two decades. They're worse in Atlanta.
1
We’re so broken by plutocrats that we can’t look at the oceans of cash held by the owners of Amazon, Walmart, or Uber and put two and two together about why their employees live in misery.
32
Mostly I just don’t understand the progressives’ obsession over Uber. With so much else going on, its unhealthy and just strange.
2
The law is most likely driven by unions trying to collect more dues. Sort of like unionizing in-home workers who help family members. All for the SEIU's benefit. Good news is it will drive these businesses out of existence and we will go back to waiting for a heavily regulated, dirty cab. Progress.....
Last I checked Uber positions itself as a flexible, part time gig. That's not a job. But in California when the unions speak, the politicians jump. Wait till the tech firms move to Tennessee or Texas. They have few assets other than people and if enough of them move the people will be forced to go as well. And discover what freedom is really like..low taxes, government that works, and good schools.
6
@Bill Tech locates in the most expensive areas of the country -- SF, NY, Boston, Seattle -- for a reason.
That's where the talent is.
Apple, Google, Facebook, Microsoft and yes, Amazon, are all expanding in Manhattan as you predict its doom.
1
Thank you! The majority of drivers do NOT want this.
3
@Bill By "Texas", I take it you mean the land of mass shootings, correct ?
Gig workers of today don't give enough thought to the Social Security benefits they will lose out on. The Gig people are mostly young and they don't appreciate what a great benefit the monthly social security check is, also medicare. So if all CA did was require companies to pay into SS, the law would be worth it.
14
@farhorizons
I agree on "pay into SS". What a shock the contractors will have when they choose to retire and, surprise, do not qualify for Medicare at the same time they face market rates for medical, dental, and vision insurance for seniors.
3
@William Havey well all you need is 40 quarters in your life.. and guess what contractors pay self employment tax which is the SS and Medicare so you qualify..
"They have warned that recognizing drivers as employees could destroy their businesses." If this is not an admission of taking advantage of the workers, now employees, I don't know what is. The needs of the many are far more important than the needs of the few at the top. Thank you, California for being a model again.
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“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.” —
Folks, this has been federal law for decades for determining a worker’s status for IRS and Social Security purposes. Both IRS and SSA have authority to decide whether a worker is an employee or self-employed.
From the IRS website: “Workers who believe they have been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages to figure and report the employee’s share of uncollected Social Security and Medicare taxes due on their compensation.”
As a (now retired) career SSA employee I made many such determinations in the face of an employer’s blatant disregard of straightforward rule of law. Except for the negligence and anti-labor bias of our national political institutions it should never have become necessary for states to pass duplicative legislation like this.
Presumably, most people involved in business are responsible and law abiding. But when our national leaders turn a blind eye to large scofflaw corporations like Uber and Lyft they send a message to everyone else that workers can be exploited.
19
Good. In 40 years we've gone from "The Corporate Man" who was taken care of by the Company, shared in the success of the joint enterprise, and could rely on a retirement if they followed the plan, to the gig economy, which is good for a high school kid cutting lawns, but is not "opportunity" in any conventional sense. Working for an App is even worse as your boss is removed, never sees you, and has no incentive to do anything but race to the bottom as quickly as possible. Thank you California for doing what Congress would do, if it was still allowed to do anything by the GOP.
27
And consumers lose. It will also hurt drivers if costs increase twenty to thirty percent. A great deal of the point initially was they were less expensive than taxis.
5
They are less expensive than taxis because the drivers don’t get paid a fair wage.
19
@Mary A The lack of understanding of basic economics in this response is staggering.
4
@Frunobulax: Would you have also argued that consumers "lost" when the 13th amendment to the constitution of the US passed, the passage of which arguably increased labor costs?
7
The unions totally control the democrats in California - The unions demanded this bill be passed and their little lapdog politicians said "yes sir" - This bill will hurt a lot more Californians than it helps, but hey the unions have more folks to try to unionize
3
@Jim Smith - union bashing aside, how exactly is this going to hurt more people than it helps?
16
@Jim Smith Why is it okay for companies like Uber and Lyft to spend millions lobbying against a bill like this, but it's not okay for unions to lobby for it?
As far as your conclusions go, what basis do you have for them.
18
There will be fewer drivers for Uber and Lyft
Californians will pay more to use Uber and Lyft
I call it the battle of the freelancers vs the freeloaders.
5
@Charles Focht: Who are the freeloaders? Why are they freeloaders?
2
Consider Uber, a company built on the model of extremely cheap labor that hasn’t made a dime since its inception. Is this considered a successful business? Of course the CEO and a few top executives are making a killing, so for them it’s a success.
If your business model is predicated on slave labor, it shouldn’t have gotten any financing.
The “contractor” labor is the same way farmers and developers get away with screaming about “illegal migrants” while employing them. A business should be responsible for the people doing their work. Period.
32
The ‘gig economy’ is just a shiny huckster term for labor abuse and corporate profiteering. People are beginning to understand why they should care. Growth based upon corporate risk transference isn’t a viable long-term business model. Unions, Pensions and Social Security programs are all vitally important worker protections that are required for balanced growth. The Federal government has seen all of these worker protections eliminated or reduced. Take this measure one step further and eliminate At-Will employment by allowing contingent staff to join labor unions. There is no place for Feudalism in modern society. Companies that can’t make this work will adjust, they just won’t do it until they have to.
25
The gig economy jobs have always been nothing more than a way to circumvent providing basic safety and security to the workers. Those workers are not only ineligible for unemployment, benefits, and paid time off, but they're exempted from the state's workers compensation laws and driving is one of the more dangerous job classifications there is. Make no mistake, this isn't about flexibility for workers, it's about having them do a job that could cause them to be permanently unable to do any job without any recourse.
21
While this is great news for those many "independent contractors" who should really be classified as employees, my freelance performer friends in California are terrified of the chilling effect of unintended consequences of this bill.
For some of us, the independent contractor option works well. In exchange for the freedom to manage our own work lives, we CHOOSE to pay for our own health coverage (until universal coverage comes along), Social Security and Medicare Taxes, the odious Self-Employment Tax and all the other expenses that come with being truly independent. This life is certainly not for everyone, but it's definitely the choice of many people.
This bill will complicate those workers' lives, costing them work and pushing what's now a large shadow economy even further underground. It's a good basic idea, but from what I'm hearing it hasn't been well thought-through.
2
Look at the text of the bill. True freelancers who work independently, provide supplemental skills/services not core to the business of the hirer and have an independent entity providing that skill/service to others will be able to pass the ABC test to be classified as an Independent Contractor.
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5
5
@Margaret The definition of contract worker means that the worker decides what hours to work. If a contract worker must adhere to a work schedule, showing up to work at specified times, then he/she is an employee not a contract worker. Wheel chair attendants in many airports are contract workers yet must work specified hours. The owner of this company that hires these workers is out of compliance. These wheel chair attendants must pay double social security on their wages. This abuse of workers is now rampant and government is doing nothing to enforce the laws.
7
@Margaret: Isn't the Self-Employment Tax what pays for the Social Security and Medicare payroll taxes that would otherwise be deducted from an employee's paycheck? It's not in addition to Social Security and Medicare taxes, right?
2
Over-reach on a massive scale.
No one is forced to work for Uber, Lyft, or anyone else. If they want to work for a unionized company they should go find one of those jobs.
Forcing current companies to switch their relationship models with their service providers will actually undermine the number and quality of jobs that are available. This change will make the politicians feel good, but ultimately they'll have a lot of dissatisfied constituents.
@Robit17 No one was "forced" to work in coal mines in the u.s. as the Industrial Revloution rushed forward, and yet the u.s. government still stepped in and changed the, umm, relationship model the miners had with the mining companies: e.g., that one could only work in the mines so long in a day and that miners had certain rights. What a shocker.
24
Uber, Lyft etc, are absolute bottom feeding slime and its about time these companies are regulated properly.
All of them are spending tens of millions on hyper aggressive lobbying. Why? They want near slave labor. Uber and Lyft drivers often after all is accounted for make less than minimum wage and can't receive unemployment benefits in many cases.
They've managed effective "disruption" of industries by lobbying to fight basic labor laws. Now, finally governments are fighting back.
Uber is losing billions yet their CEO makes 45 million a year. When you factor in other top manager salaries its hundreds of millions of dollars being paid to a few people every year. How these companies justify paying people while they're spending tens of millions annually to fight basic labor laws and they're losing money is beyond me.
I don't necessarily think the world shouldn't have these app companies. However, they need to behave responsibly.
13
The biggest issue here is that Uber and Lyft haven't figured out how to turn a profit yet- mostly because they have paid out huge amounts in stock options once the IPOs happened to upper management and investors.
The end result of this bill may be that the entire "tech" industry sky high valuation all falls apart- once they are made to look like any normal taxi company the scam will be exposed. It may have happened anyway without this, it may just trigger it sooner.
12
@Hugh G You have correctly pointed out that the top folks have cashed out. At this point it's going to be about the Bag Holders when the air lets out....who can burn cash for that much for that long ?
4
This is where government is just behind society. We need a new classification for these workers. They are not purely independent contractors, they are not purely employees. They are somewhere in the middle.
1
Nationwide, combining this legislation with universal, non-employer health care would comprise a welcome revolution for millions of workers.
10
How does this law affect the "contractors" working along side of regular employees at California's tech companies?
4
Under Mexican law, it is a constitutional right and duty of a citizen to work. Worker protections are both constitutional and statutory. Where an employer accepts the work of a worker, with minor exceptions a full employer-employee relationship is established, regardless of what the employer may have said about the work.
Recently the allowable use of contractors has been extended. Contractors must comply with the employer-employee relationship and if they don't, the company that hired the contractor is responsible for the benefits to which the worker is entitled.
A better deal for contract labor is not the end of the world. In fact, it's part of a better world where everyone's contribution is acknowledged.
5
I am sorry, might seem like a good idea, but most of us like being independent with no ties to a company. Which is why we are independent. Make our own rules, and work at our own time. When we want to. I see this as a power grab by democrats to get more control of the people. Truck drivers mostly are company drivers cause they cannot afford the start up costs, then move into the independent class when and if the want to. The govt been doing all they can to shut down the owner operators. They can not control them thru a company. Most uber drivers here work only the hours they want. Some said if it happens here, they will leave. People want a company they should work for one, not complain to the state to force a bill to please them. Plenty of 3rd party sources out there that can cover what a company provides with out belonging to a company.
1
Most Uber drivers I have encountered are driving 12 hours a day.
7
@Barry The problem with your contention, and the whole point of the debate, is that the freedom you like is illusory for most gig economy workers.
They do not work in the gig economy because they want freedom, they work in the gig economy because it was all that was available.
Do not think that goes for you goes for everyone else.
5
This is hardly a meaningful victory for labor. If being classified an “employee” equaled health care benefits then Medicaid wouldn’t be necessary for fast food, retail...all the minimum wage jobs. Yes these employers pay a tiny fraction of taxes into the system but it hardly equates into meaningful improvements for the worker. Wake up. We need a country that provides basic universal healthcare and child care (like France). Then the issue becomes pay scale and no, unskilled labor shouldn’t earn as much as educated or skilled labor. We do need to reprioritize skilled trades as education paths (like Germany) here.
12
What about FedEx?
2
@Josh Levine: Are you saying passengers should stuff themselves into envelopes so they can be transported by FedEx?
Another things, that states should be doing, it to eliminate exempt status for professional employees. Companies may pay high salaries for technology jobs, but the dirty little secret is that they can make people work well over 40 hours a week (on call coverage), and not get paid for either performing the coverage or maintenance work. In many cases, a person could be working 16 hour days or more, under certain circumstances. And, depending on employer, if performing on call, the expectation is to respond, and start acting, in under 30 minutes.
Exempt employment was meant for managers. Companies have abused this so that it now includes almost all staff, except for lower level employees.
By paying overtime, you will quickly see how wage disparity starts to narrow.
12
@Nick Metrowsky There is actually a federal law that determines whether an employee can be exempt or not. It's pretty narrow. If tech workers don't meet the criteria, they should sue to become hourly workers entitled to overtime pay.
2
Retail managers haven't been paid overtime and are forced to work an extra 15-20 hours a week, year round. Say a peep and you lose your job. Complain to an agency and you lose your job. Join a class action suit and you lose your job.
Get rid of "exempt" status.
6
This is somewhat confusing. Fed the law apply only to app based companies or does it include franchises? If it includes franchises then this law may be seriously disruptive to independent contractors and franchisees. Sounds like classic government overreach.
@Mike L: It's overreach from your point of view. It's just-in-time for others.
Given how wrong California has been on so many issues, it is likely that they are wrong again here and that the people of California will, on balance, suffer from this decision. For the rest of us, California is a petrie dish of what American socialism looks like—and we will observe how a State with so many geographic blessings can deteriorate into a Cuban/Venezuelan/Bolivian disaster.
California gets some things right, some things wrong. Only partisan media argue that it is all one or the other.
6
@ehillesum California is the 5th largest economy in the world. They currently contribute far more to the federal treasury in tax dollars than they receive, making them the state that contributes the most to shore up red states failures to their people. Perhaps you should learn more about what socialism really is before you make such a negative comparison.
16
@ehillesum
Oh, those poor suffering people in Denmark, France, Germany, Sweden, Finland, and the rest of the socialist states. How can they pretend to be so happy?
1
Two months ago I took an Uber here in Paris. The delightful young man told me how Uber had changed his life: he was able to buy a home and get married, set his own hours etc. He also told me that having a gig was important has he had a congenital heart condition for which he needed regular treatment and non-physical labor was essential to his health.
So what's the difference? He doesn't have healthcare costs. In France he is self-employed, but his Social Security taxes pay into national healthcare so he doesn't have the worry of massive premiums, pre-existing condition exclusions etc. He is also paying into Social Security for his retirement (not a lot, but something). Uber, as a corporation, is also paying into the system.
The US has (so far) decided against any sort of national healthcare coverage that would ease the difficulty to self-employment, deciding long ago (and very wrongly) that healthcare should be tied to employment. Now corporations want no benefits tied to employment, they don't even want to call it employment! Someone needs to put a stop to it or the bottom will be very ugly indeed.
64
@Concerned Citizen
I'm American, and well aware of how it works in the US.
"their business model in FRANCE is totally different than the US"
Um, yeah, that's kinda my point.
And it's not an alternative "business model" here. The benefits the driver is receiving are the law, he pays into the system - we all pay into the system - and we get affordable healthcare, which allows this man's life as an Uber driver to be possible.
4
Let's be clear here: a free market has a point of equilibrium--it is that point where the supply (workers) is equal to the demand (contract jobs). The market should decide. Classic CA more government intervention.
@mark Free market capitalism is an economic system not a religion. It is not perfect, and the law of supply and demand does not automatically solve its inherent problems. One of which is the inequities that exist between capital and labor. The typical worker has absolutely no negotiating power when dealing with their employer, and is often subject to ill treatment. It is more than reasonable for the state to remedy any gross inequities.
3
This isn't the real problem. The much bigger problem is the millions of "contract" workers corporate America hires.
10
Correcting for my typos:
Employment lawyer here. This is the most important issue in employment law. From huge global corporations to start up "disrupters," employers have sought to break the social contract American companies had for decades with their employees. They've done that by outsourcing work to independent contractors, who get no benefits, have no job security and end up with no severance when they're considered disposable. Gig economy workers are the 19th Century piece workers of our time. Talk to them, and you'll mostly hear that companies' PR about the benefits of flexibility and independence is a lot of self-serving blather.
85
@Jonathan Ben-Asher 1st job was state unemploymet tax auditor. big part of job was findig misclasdified indrp cons.
It time to stop the race to the bottom.
9
I wonder why the bill only applies to app-based companies. Does that mean these issues were never seen as a problem until the advent of Uber and Lyft? After all, if most families owned a couple slaves, but a couple families owned thousands of slaves, would we pass a law that slavery is only outlawed for the couple families who owned thousands? On the other hand, if slavery is OK when no family owns too many, why isn't it also OK for the families who own thousands? Apologies for the extreme analogy, which some might find jarring.
I've long enthused about the role of the Supreme Court, in their efforts to search for and define principles to hold to in our governance (despite an unfortunate record of poor decisions), and if this distinction between app-based companies and other types of companies is as arbitrary as it seems to me at the moment, this issue may be fodder for the courts.
4
@TMJ You may want to use a different analogy than slavery.
1
@Artaxerxes III I'm sorry you found the analogy too jarring for your tastes. I took that chance because I think the analogy directly illuminates the kind of principle that should be held to when penning laws. Reading about this bill, I wonder if there is a sound principle which could be evenly and fairly applied.
1
According to the IRS, an employee is defined by three general categories: Behavioral control, financial control, and relationship.
From a behavioral and financial stand point, gig workers do often closely resemble contractors. There's no instruction, no evaluation, no training. You download an app and off you go. You're not reimbursed for expenses. If you work a bad shift, the wasted time is your loss. You have the freedom to work with any and/or all ride-hailing companies. All this suggests contractor.
However, there are two important aspects about the reide-hailing relationship that AB 5 is confronting.
1) "The permanency of the relationship is important. An expectation that the relationship will continue indefinitely, rather than for a specific project or period, is generally seen as evidence that the intent was to create an employer-employee relationship."
2) "Services provided which are a key activity of the business. The extent to which services performed by the worker are seen as a key aspect of the regular business of the company."
Uber fails both tests dramatically. Uber ceases to exist without drivers. Some drivers treat Uber as a full-time gig. Uber is illegally mis-classifying at least some employees.
The threat however is full-time employees are now subject to the not-so-fun parts of employment. Like training and evaluation and scheduling. You can trust Uber will do everything legally possible to ensure employees don't want to be employees anymore.
14
@Andy
You are wrong in saying that gig drivers are not evaluated. After every single ride, the company prompts the rider to evaluate the driver. Every evaluation is stored in the database tracking the driver over time. That is constant evaluation.
2
@Ellie
Drivers are not evaluated in the same way a regular employees are evaluated. There are no year-end improvement goals. The data on drivers is used more like a yelp review. You aren't going to lose your contract with Uber over poor customer service. There's no punitive action unless you're violating the contract. Like an inebriated driver for instance. Customers will simply avoid a driver with consistently bad reviews. The driver can't be "fired" for that behavior.
I use Uber a lot. I haven’t met an Uber driver who uses it as a substitute for a full time job. Each one I’ve spoken to in my admittedly insignificant sample - from multiple cities throughout the day and night - uses it part-time, when they “feel like it,” to supplement other income or just to pass the time and make some money while meeting new people (retirees). Now, I think that anyone who can make more money to live a better life should seize the opportunity, so more power to Uber drivers if this is what they want. But what are the consequences for the thousands of casual, some-time Uber drivers who ::gasp:: actually like it that way?
2
Use Uber more and you’ll meet more than a few full time drivers.
6
This will be a pyrrhic victory for the workers. It is unlikely that they will receive all the legal benefits of being an employee and not an independent contractor. The more likely outcome is that they will become unemployed.
It's pretty clear that as the cost of labor increases, we are moving to more of a self-service economy, from self-checkout lanes in stores to voice response systems in lieu of human operators.
6
@J. Waddell
If the workers become "unemployed" in the wake of AB5 who will step in. Are you suggesting that Uber and Lyft will no longer do business in California?
2
Employmrnt lawyer here. This is the most important issue in employment law. From huge global corporations to start up "distupters," employers have sought to break the social contract American companies had for decades with their employees. They've done that by outsourcing work to independent contractors, who get no benefits, have no job security and end up with no severance when they're considered disposable. Gig economy workers are the 19th Century piece workers of our time. Talk to them, and you'll mostly hear that companies' PR about the benefits of flexibility and independence is a lot of self-serving blather.
13
@Jonathan Ben-Asher
We need more progressive politics like that. Right to work states is a big part of the unsocial labor laws and for-profit laws the nation has. The most socially regressive free-market economy of any advanced nation.
3
“Let’s be clear: there is nothing innovative about underpaying someone for their labor.” This!
19
@kkane
That is why we need labor laws to protect the rights of the weakest in the economic chain.
2
Drunk driving deaths are down 15 percent in CA due to Uber and Lyft. This law will kill people. No one has to drive for a ride-sharing service. Just let the business be and let grown-ups make their own decisions about how they work, where they work, and for whom they work.
2
@O'Brien
Public transportation would solve most of that problem.
5
@O'Brien Taxi companies existed long before Uber and Lyft, so nothing has really changed other than convenience which is easy to copy. In a lot of foreign countries now you can get a regular taxi the same way you get Uber or Lyft. If they go away something will take their place, just without a lot of hype and inflated stock prices.
4
As an investigative contractor for a government agency for many years, i always felt like a second class citizen, even though I was treated well enough. I hope the California law inspires most other states to follow suit.
6
What took so long? And why is legislation required? For decades friends and neighbors have worked as "contractors" for government agencies, big insurance and pharma, going to the same offices, taking direction from the same supervisors. working exclusively and at the direction of the entity that by some slight of hand could classify them as "contractors". Try that as a small business and you'll eventually be answering to state labor and the IRS, the consequences are real and very expensive. Nobody cries alligator tears over your the damage that does to your "business model". Those of us who have paid our employees above board, who paid into unemployment and social security and who struggle to conform to ever more complex and demanding regulations (regulations that make sense and contribute to quality of life and work/life balance) are celebrating the unmasking of the "gig economy", revealed at long last for the scam it is. A contractor at minimum should carry liability insurance and be required to pay into the employment security systems that are in place. They should be required to demonstrate their independence, through regular business transactions with multiple clients or customers who contract directly with them, not through an "app" or some other transparent subterfuge. As it is the "gig" economy is a cheaters paradise and yet another competitive hurdle for legit businesses.
23
@Kelly
The "gig" economy is the product of lawmakers letting the lobbyists write the laws. We need real, functioning government, we don't have it. The Civil Service is no more than a skeleton from what it used to be and it shows.
6
Here is our good government stepping in to destroy a sharing economy it does not understand.
12
@Andrei Radulescu-Banu
Yeah, legislating a living wage. Terrible. Just Terrible.
14
@Andrei Radulescu-Banu
This is not a sharing economy, profit increases are not shared with the employees if the wages are stagnating while profits go through the ceiling. Employers do not think that there is anything wrong with child labor, 80 hour work weeks, no time off, safety, less than living wages, retirement and you name it. Labor had to fight, every inch of the way and putting their lives on the line demonstrating for better pay and working conditions. Employers aim to pay as little as possible, preferably nothing, ask Mr. Trump.
4
Thank. You Democrats for fixing another problem that does not exist for sake of a political sound bite and political correctness. America is nation based on freedom and opportunity not government regulation and oversight to paraphrase Ronald Reagan the scariest words are I am from the government and I'm here to help
12
@EAH
Really???
Functioning nations have real and dependable government.
Every failed nation also has failed government, that goes hand in hand. Before a regime change, the government has to be undermined and weakened. No government is even worse and will produce the same results, failed nations. Americans totally destroyed the Iraqi government and civil service that was some 16 years ago. Iraq still is a mess.
1
No doubt all those CEOs who signed that pledge to reorient their businesses around society not shareholders are cheering this new law.
Or perhaps not. Likely they are looking for loopholes or contemplating moving their operations to Delaware.
1
@Xoxarle companies, like Facebook, already headquarter their businesses out of Delaware for tax shelter purposes.
This instead is dealing with markets which the companies operate in, as opposed to where they’re headquartered.
We do need to wean the very rich off of their dependence on corporate welfare and near-slave labor.
34
I've been a "gig" worker since 2011, but in the field of education, an area that is usually overlooked in the "are-they-employees" question.
Right now the best-paying jobs in ESL teaching are online, mostly from China. As you might expect, these are all contract gigs.
All workers deserve the right to be able to make a living, but I find gig work that requires all the traditional bells and whistles from its workers to be especially scandalous.
In order to get the job I have now for a Chinese company, I needed to have a completed university degree, experience, and all the "normal" things one needs to get a job working with children. We have schedules (those take a dip when there is less student demand, reduced earnings absorbed - as in most places - by the workers), and punishments for not being able to work suddenly. Live online class IS the service of the company. The requirements of a "regular job" are there; the security and benefits of having one are non-existent. No amount of flexibility is worth the fact that many of us will be digging through garbage cans for sustenance when - for whatever reason - we can no longer work.
26
@Sarah
Looks like the Chinese were great students of our for-profit only economic system.
1
Uber and Lyft are more threatened by historic losses. I have used them and yes they are convenient but expensive and this will only make them more expensive. I am all for it though. Temporary employment and this gig employment is slavery in my opinion.
11
@Astralnut
The system is true predatory free-market economy where even the word "social" is despised as in social service.
1
Massive win for the State of CA. Bravo. Best news to come out of Sacramento in a while. Next up - vaping companies.
5
Now is when I’m proud to be a Californian. As an aside, how I wish some of these gig-style services were worker owned and operated.
5
This wonderful news is coming out of California despite the fact that we all live in the repressive Age of Trump.
I strongly suspect that strongman Trump has already asked his henchmen to draft new rules that could have a disparate and negative impact upon this state.
The other shoe has yet to drop.
3
It's either legislation like this, or a Basic Income combined with Medicare for All. One way of the other, though, all Americans deserve security.
16
True landmark legislation, close enough to Labor Day to be remembered. It is a new beginning in the battle for fair wages.
13
A lot of freelancers are going to lose the flexibility of their jobs because of this, and a lot of businesses are going to be unable to staff up and down to match demand. Overall, this will hurt the economy.
9
@QED - Read the article? "Experts said that there is nothing in the bill that requires employees to work set shifts, and that Uber and Lyft are legally entitled to continue allowing drivers to make their own scheduling decisions."
6
@NotSoCrazy
Read economics 101 ?
yes, they are legally allowed to, but can they do so economically ? or will the companies go out of business due to the cost of paying drivers for hours when there are no riders ?
1
@QED
Businesses that cannot pay their workers a living wage, pay their fair share of taxes and make a profit should not be in business.
10
If your business model relies on paying it's workers substandard wages in order to make a profit, then you have a rotten business model. This applies not only to the gig economy, but to the restaurant industry's treatment of wait staff. I just came back from Europe, where restaurant credit card slips do not have a line for tips. Yet the waitstaff were always courteous and prices were reasonable. It can be done. All it takes is treating workers as human beings, not disposable commodities.
117
@Andy
Right you are. Bravo and thank you.
6
@Andy
There's a name for the business model you are criticizing: it's called "capitalism."
1
Great news and law! I was thinking of this situation few years back about companies making money for CEOs and stockholders but workers doesn't get any benefits. Plus companies dont pay any social cost into social security or community benefits because if the workers got sick with no medical care, how are they going to supports their families or live, like if they get cancer or others major medical issues. So please think about buying stuffs from AMAZON because they started their own contractor drivers for their delivery! And Amazon CEO is worth over $100s billions dollars.
13
Go back in time twenty years. Our government was having trouble recruiting enough doctors, dentists, nurses and dental hygienists to join the military services. At the time, our government contracted for these types of services with large companies that in turn hired the individuals, paid them as employees along with their social security, etc., and then assigned them to work at the military facilities. But these professionals were underpaid by these companies, so the shortage continued. “Personal Service Contracts,” wherein individuals contracted directly with the government to provide personal services, such as medical services, were deemed illegal by our government, so our government simply granted itself a waiver to the law and began “Individual Set-Aside, Personal Services” contracts. As the Comptroller for the Northwest Dental Region, I helped develop, and awarded many of this type of contracts.
4
This is a good thing. I am disappointed that New York has not enacted similar measures. One point neither Uber or Lyft want to advertise - nobody is going to be young and healthy forever. On this 9/11 anniversary this is a point to keep in mind. Eventually all these independent contractor or their families will need medical care; they will need to use disability insurance which they will not have thanks to the so-called gig economy. Everyone will get old - what retirement funds will these once young drivers will have for retirement? Where will they turn? Welfare and public assistance? All the while the owners of both Lyft and Uber and all the other copycat “employers” have piles of money stashed in foreign bank accounts. Lyft and Uber and all the others like them are exploiters. The public needs to be aware of this.
30
The anti-worker and anti-union crowd is out in droves in these comments. This law is hitting big businesses where it hurts, evidentially.
Solidarity forever!
24
@Corbin Is it really anti-worker to provide an OPTION to let workers drive whenever they want and set their own schedle and earn a few extra bucks? I would think this is the definition of worker freedom.
3
I suppose this would include Amazon delivery drivers.
9
This is excellent news. Anyone who works for a business or a corporation is an employee, period. For too long, corporations have exploited workers by keeping them in tenuous positions, falsely labeling them as contractors, denying them benefits and legal rights, overworking them, shunting business costs onto the employees, and grossly underpaying them. The "gig economy" is a cutesy, corporatist buzzword that masquerades as hip and technologically cutting edge. In reality, it's just another way for a tiny fraction to become outrageously wealthy exploiting the work of others, and degrading the overall quality of life and compensation for working people in this country. Enough is enough.
53
Since I see many cars with Uber and Lyft logos, does that mean these drivers will be employed by both companies? If so how's that's going to work? double-dip on Social Security and other?
1
@laurent
Social Security and Medicare is paid according to the earnings. How can this be thought of as "double dip?" And, even if it were, what's the problem; whose is it?"
4
@laurent
You don’t understand how social security works at all. Nobody can “double dip”. You pay in your whole life no matter how many jobs you have, and people pay NOTHING on annual over 100k a year. Hope that helps!
5
@laurent
It would not double dip SS as it would be no different than someone working at Walmart and Home Depot at the same time. SS is a fixes % up to $132900 per year. I doubt many Uber/Lyft drivers are hitting that amount, and if they did it would be refunded when they file their taxes.
Yes the employer would still be paying, but what's wrong with that?
4
Now, extend this to technology positions. There are many shady so called "consulting firms" who take advantage of technology workers. Those, who are US citizens, not just those on visas. Just down the road from here is IBM. They outsource to a contract company, which outsources or smaller companies, each taking a cut. I have personally seen, contract jobs advertised, fro senior system engineers, as low as $25/hour (no benefits). Jobs, that should pay well over $100,000/year.
If California succeeds in this, and this spreads, the corporate gravy train will be over.
54
@Nick Metrowsky
In 2010, when I was at the Starbucks at Worldwide Plaza, I sat next to a man dressed in a suit going through architectural plans of a garden apartment house in New Jersey. I asked him if he was handling a closing. He said yes, but he was a temp. He was getting paid $50 an hour, was billed out to the prestige law firm at $125 an hour and marked up by the law firm to the client to $500 an hour since he was doing the work of a law firm partner, not an associate.
Some prestige law firms outsource document review to India where the lawyers are paid $5 an hour. The client s charged $100 an hour for the work.
7
@BigGuy
I'm sitting in a doc review room in midtown right now surrounded by NY barred attorneys with law degrees from Columbia, NYU, Fordham etc making $32 an hour. We're not even allowed to put the law firm's names on our resumes, even after working at the same firm for years and years. Some of us make out a bit better at $50-60/hr for foreign language review, but still no benefits. A friend worked at one firm for 6 years and never got one paid holiday. Not even one Christmas day. If there are computer problems, you're sent home with no compensation. The client on that matter was one of the biggest banks in the world. Did I mention we don't even get paid for a half hour lunch break during 10 or 12 hour work days? Insanity, but I've got 3 kids to feed, so here I am.
3
We can't have low cost, customer friedly alternatives provided by willing part time drivers. How long until we increase licensing costs, perhaps make them buy medallions, regulate their fares and add carbon taxes. Perhaps we can even add a layer of union dues inlcuding extra fees so they can lobby these polliticians they need.
4
@dave
If your friendly free agent driver slams into a tree or hits another vehicle head-on, and you are critically hurt, who do you sue? The "willing" customer-friendly guy whose on his own out there without that proverbial pot? The folks for whom he doesn't work?
2
If they are employees, how would they be responsible for those costs? That would fall on the welfare queen corporations.
@Rea Tarr it is called insurance....
It is ironic that in the name of helping workers, lawmakers choose to restrict their freedom to flatter the egos of those upper middle class minds who pretend they are doing good.
Mandatory vacations?? What about workers who don't want vacations and would rather earn money? It might be hard for some lawmakers to understand, but, most single low income workers don't "take vacations". They can't afford to travel and stay at resorts. All they can do is spend some days sitting in front of a TV. They would rather be working and have a chance to get ahead.
Mandatory overtime? Ditto. Most single low income workers would rather work more hours, provided that they can choose the hours of additional work Requiring overtime pay for workers means they aren't as likely to be allowed to work as much as they like because paying time and 1/2 for overtime is too expensive (and a sign of poor management).
Homemakers who would like to supplement the family income by fitting in a couple of hours of work while children are in school and between errands may lose that possibility.
The coastal elites just have no idea what life is like for the working poor and struggling middle classes.
12
It seems to me that it is you who has no idea what it’s like to be poor. Families, such as mine, may not vacation away from home very often, but we also don’t sit around in front of the TV when we’re on vacation. An enormous number of income-challenged families are single parent families some of whom work multiple jobs. And many families with two parents are families in which both parents work. Scheduling vacation time allows a parent to schedule doctor’s visits, attend teacher conferences and attend to other family matters (e.g taking our daughter to the DMV to get her license and taking delivery of a new refrigerator to replace our broken one). I don’t know anyone who doesn’t appreciate the option of taking vacation time even if a vacation at the beach isn’t in their plans.
9
@ mac
Everyone wants a vacation. Many people can’t afford to. Nobody WANTS to be poor.
4
@Mac - I pray you will one day earn a living wage, take a vacation, have savings, and not need to supplement your full-time work with predatory side hustles. Then you might understand why this is good for you.
4
So... I guess it's back to taxi service, hotels and regular delivery, along with union dues and full wage taxes. Seems to me the gig economy came to be in Cali because we were fed up with the high cost and poor quality of service in all that stuff, but, I guess we forgot.
9
@Kouzelna
So your solution is to exploit workers?
6
What about companies like Google? Half of their workforce is contract workers who, even though they are paid well, lack the same protections.
13
This legislation doesn’t modify or modernize Uber and Lyft’s business model - it destroys it. Both companies should immediately suspend operations within CA, and throw all needed resources into the ballot initiative to overturn this law. All the CA voters dependent on Uber and Lyft, and all the Uber and Lyft drivers deprived of a livelihood, will ensure passage of that ballot initiative. Remember that Californians, when given the chance, always favour the rights of the individual (in this instance, to choose how she wants to live, including how many hours she wants to drive) over the state’s ravenous desire for control over people’s lives, and ever growing tax revenue. The AB-5 rescission ballot initiative is just like Prop 13 and the later ballot initiative that prohibited the use of racial preferences in CA public university admissions.
8
If it isn't worth for Uber to have unlimited numbers of drivers on the road under the new law, then it clearly isn't worth it for the drivers either. Perhaps this will limit the number of drivers to those whose profession it actually is to drive, making the service safer, more reliable and more professional for customers; and more reliable and better paid for the drivers.
10
There’s good and bad to this. Each will shake out over time.
In my hundred or so Uber rides I’ve learned that the “work when I want” flexibility is a huge benefit for drivers and making them employees could impact this. A lot will depend on implementation. This ruling may also foment change in the people who become Uber or Lyft drivers. This is not necessarily a positive thing. I personally like that the drivers are free agents because it is in their best interest to take care of passengers. They know they are being rated, and like being able to rate passengers. In my experience, Uber drivers are friendly and courteous. Cab drivers are notably less so and those drivers are employees.
Another side is the entree this gives California or other states to meddle with other types of businesses and in the lives of people who have long worked as contractors. People such as freelance writers, video producers, actors, graphic designers, artists, reporters, and more. Even some lawyers and bookkeepers and accountants. These and many others make a living as independent contractors, paying their own health insurance and taxes. AB5 seems focused on app-based jobs in the gig economy, but many in the businesses and professions I noted do regular work for certain clients but are definitely not employees. Nor do they want to be.
A better solution is to raise fares and let more money go to the drivers.
3
These "innovative" apps are just the adoption of old-fashioned cottage industry practices by technological means. The "gig" economy is nothing more or less than an attempted end run around laws designed to protect workers and to provide at least a basic standard of living for them. It´s high time for it to behave like any other business.
28
The lead paragraph puts it well ... but not well enough.
That is, the question should not be "Is work under Uber-like groundrules too insecure?"
It really boils down to said work being too low paying.
Think about it. There are some "driven" people (no pun intended) who either love their jobs or - think the proverbial 1st year associate at a law firm - who are chasing not a brass ring but a platinum one.
For THEM, a 60- or 80- hour work week is one thing. It has a high cost, but it doesn't take mental gymnastics to see why those individuals make that choice.
But the many millions who get more affluent people where they want to go a few minutes sooner or in greater comfort; ditto, those who put food on other people's table -
THEY have more in common with slaves and piece workers of bygone days. Just as both of those were eventually outlawed - for good reason - I'm glad that California took the step that it did.
We all know that if an employer gets enough people to work hard/long enough at low enough pay, said employer can get incredibly wealthy.... I randomly met someone yesterday who said, "Some of those bike messengers make $200/day," and he said it admiringly.
On 9/11, when we honor the first responders who risked their lives, let's acknowledge that those on bikes ARE risking THEIR lives ... and when the "superstar" makes $20/hour in 2019 NYC - with an Seamless exec's bonus being 6 or 7 figures, there's no other word for the situation other than EXPLOITATION.
13
If there is no more gig economy, plutocracy will gag. But it's far from dead.
9
ending digital piecework is the 21st century labor movement
15
I'm always glad when a lawyer tells 'me' what makes sense for business.
4
@Calirangr
I'm always glad when my elected representatives protect me from the grasping schemes of plutocrats to enrich themselves by ripping off our society.
2
@Calirangr
Are you including lawyers employed by Uber or Lyft in your statement?
Finally. At least one state has had enough of modern slavery-all work and no benefits or job security. CEOs who earn 1000’s what their average employee makes but does not feel any impulse to balance the scales.
747
Can we next work on the greatest creator of job insecurity, stress and anxiety in our society...and is regularly abused at all levels of companies: at-will employment
Being able to release an employee “for any reason or no reason at all” is a corporate legal right that is simply abused by too many managements when a budget number is missed or the boss is feeling some agitation
151
@M E R
Agreed. Charles Dickens would be proud of CA's move.
49
@S K Waters
That's what unions are for.
25
Many will hail the passage of this bill as a good thing. They could not be more wrong. Employment law needs to be changed — there is no logical reason why I can only put $6000/yr in an IRA as an individual but can put 55000/yr in a 401k, which requires an employer to offer benefits plans. There is little to no protection that will be available to gig economy workers who have been classified as employees under this bill. Uber drivers are not employees. They can drive whenever they want in their own car. They can wear whatever they want. There is no schedule. That’s the appeal of the job. And all of that will have to change as a result of this shortsighted and rushed reclassification of what our outdated employment laws need to apply to and in what manner.
Further, the “tax cuts and jobs act” made it impossible for employees to deduct unreimbursed mileage expenses (while they can do so as a contractor). This is going to make their lives much worse in more ways than one.
Employment has changed. The laws need to catch up. Waving a legislative wand and just classifying Uber drivers as employees won’t fix anything. It will simply make the disparities and the issues drivers face much worse. Their flexibility will vanish. The tax breaks are gone. Prices will rise. There will be fewer jobs. What’s the gain?
6
@Matt Ivan'
The laws have been there all along. Politicians are finally catching up and attempting to enforce them.
Uber sleazed it's way to success.
There have always been illegal cab drivers. Uber just found a way to exploit them.
1
Employers of long term open ended contract workers should be making payments to social security, Medicare and disability. Their employees should have quality healthcare.
If your company’s business model is only profitable by using temp labor, that’s not a company, it’s a sweatshop.
1127
@Deirdre
Agreed. These companies need to make a choice and can't have it both ways.
30
@Deirdre My only disagreement with your statement is the last sentence of the first paragraph. The quality of employees’ healthcare should not be connected in any way to their employment! This is a strong reason to sever health insurance from employment and instead work toward a government baseline (i.e.,single payer) model—which could be supplemented by private insurance if desired.
99
@Deirdre - Unfortunately, the common attitude throughout society is about getting what's mine (and more) - enjoying as much as I can, while I can. There is a deficit of gratitude, and respect and traditional threads of social fabric that build honorable communities, strong civilizations.
How can people making billions off a business model of paying worker's less, how can they justify their life and socially maneuver a life of decadent greed so effortlessly...
This issue about contractors is about more than business models, it's about American perspectives of entitlement, self and community. It is about being part of something greater than oneself - not about aspiring to be an island unto oneself, living on one's proverbial island of wealth of fame.
The "identity" of a citizen in a modern democratic nation needs to be cultivated by more than the Walmart bill of rights that offers American's the right to sell and buy the cheapest stuff, America needs to ask once again about the national democratic contract (as well as natural ecological contract with Earth). What citizens must do and what the government must do - and how we can back to a better balance of citizen and government identity and responsibility.
37
Uber was valued at 60 billion at one point. They can't afford this. Is that so hard to understand? If their drivers get hurt and need Workmans comp, all the people paying for insurance can just pick it up with higher rates, hospital cots and taxes. If they retire with little or no SSI, so what! C'mon people, these app-makers are disruptors and visionaries!
3
Oh California, yet another reason we can’t have nice things. You just had to go and spoil it for the rest of us.
5
Here's hoping this is a Norma Rae moment. Unions need to rise and protect an abused workforce. It needs to happen all across this country where profits have become more valued than people.
7
@Bob Bruce Anderson
There has never been a time when profits were not more valuable than people. And, worse, there has always been a time when some people don't realize that they aren't valuable, and do the work anyway.
1
"GIG Economy" is just another exploitive business mechanism that ENORMOUSLY $ BENEFITS a few and cares Nothing for actual "people" who are Working because they Need to !
8
I think this is good. If they had not done this, every work place would start looking for a way to turn everybody into gig workers.
Amazon, for instance, uses mostly “contractors” hired by another company to staff it in the holiday season. They’re worked like donkeys and slaves and paid peanuts.
Any employer could make up an app or other platform and have workers log in etc as “gig workers” and before you know it everybody is a “gig worker.”
Gig work shouldn’t mean cheating workers.
14
@Freak
The "At Will" contractual relationships today are the same as gig work. And more and more jobs are being sucked into this maelstrom.
So they can finally lock in the 10.00 an hour that are the real wages of those poor souls ferrying tightwads about town.
3
These companies are not innovators, they're just using new technology to take existing jobs and extract every last cent of value out of them. They remind me of Starbucks, which replaced thousands of quirky, neighborhood coffee shops with, drumroll --- coffee shops!, just charging considerably more. It's
laughable the upset this bill is creating among these parasites; it's as if they feel entitled to a piece of everyone's action.
14
In fairness to Starbucks, they charge more because they pay their staff better. They earn more than minimum wage and get benefits even for part time. I go there instead of places that don’t pay minimum wage and insist they tips are a better deal. What kind of tips can you make on a cup of coffee that justifies not paying them in the first place?
I live in an affluent area and I find that the customers with more money are the ones that don’t tip, people who work in the service industries will agree. Rich people feel entitled to something for nothing.
4
@stan continople
SF had some great little neighborhood coffee shops, many of which shut down when their lease expired. Chains like Starbucks are highly restricted in this city but guess what many of those quirky little coffee shops were replaced with- other coffee shops!
1
Ok, Cuomo and New York. Your turn. Let’s see if you can improve on California’s lead. Why are we leading instead of lagging?
4
“Uber, Lyft and DoorDash have pledged to spend $90 million to support a ballot initiative that would essentially exempt them from the legislation.”
These "plantation owners" have a lot of spare cash lying around; money that was generated for the plantation by soon to be employees. If things will be so rough, why not use it to help defray future employee expenses?
14
Thank you CA. As someone who inherited contract workers and struggled in a nonprofit service to move them to be employees I am certain that for-profit companies have the means to treat workers humanely.
Greed is the only barrier.
12
"Uber and Lyft, which have hundreds of thousands of drivers in California, have said contract work provides people with flexibility. They have warned that recognizing drivers as employees could destroy their businesses."
If your entire business model is based on treating your employees as though they aren't actually employees, in denying them benefits, then you DESERVE to go out of business.
26
@Samuel
Sort of like worrying about destroying the businesses of Attila the Hun's contract workers.
Human nature is fascinating and ultimately so very sad. Crowd sourcing rides to cut down on pollution, dangerously packed highways and streets and offering a way for independent workers to use their cars to make a wage turned into Uber's sharecropper economy. It reminds me of those lovely idealists of the late sixties and early seventies turning into the out of control capitalists of the eighties and nineties. We've never met a good intention that we can't subvert to pure profit.
10
I've been a member of the gig economy for over 40 years. Many musicians have been stuck in it, except for union jobs for a long time - longer than Uber and Lyft and others have been around. Here's one of my many stories: I was teaching flute at a very expensive private school in Westchester, NY. I was a contract employee and had about 15-20 hours of work a week. I had to keep to their schedule, follow their rules of when to arrive and when to leave, go to meetings, perform on school concerts (no pay) etc. They paid a good hourly wage at the time of @$48 an hour. No social security, no taxes withheld etc. And no job security as my story will show. They treated all the other teachers the same way and finally we all got frustrated enough to complain to the musician's union, Local 802. I agreed to be the one to contact the union (we were all members). Local 802 agreed they were breaking the law on contract workers and contacted the school. I was immediately fired!! This was over 20 years ago, so I'm thrilled that the tide might finally be turning for gig economy workers and hope that other states adapt this new law. Thank you California for leading the way!!
27
This is messy for both sides. Maybe a simpler solution would be to allow multiple unions to form based on areas. All drivers must join unions. Unions can negotiate pay benefits with companies.
1
That’d be smart enough.
I really think gig workers need more protections. But just know making them “employees” isn’t going to do much to help. They’re going to lose tax deductions. Pay more in tax. Have less flexibility. Have fewer benefits (Uber and Lyft aren’t going to provide benefits packages or retirement funds to these “employees” are they? Pretending otherwise is folly).
At its most basic, the externalization of healthcare and environmental costs away from corporations is a bad idea!
1
I agree that companies should be responsible for environmental costs associated with the business they conducted, but health care for their employees is not their responsibility anymore than providing clean drinking water in their homes is a company's responsibility. Access to good health care is a human right that we as a society, not individual companies, are responsible for.
4
Thed concept of the gig economy ISN’T innovation. It's a regression to the 1880s.
34
It’s piecework. It’s similar to the 1800s in that you get paid per task you do.
There is nothing wrong with that. Hourly wages reward the least competent employees and punish the best and most effective.
@Matt Ivan
The idea of punishing a worker who doesn't please an employer is why we wrote labor laws that rid us of the horrors of the 19th century's sweat shops, cotton fields, coal mines, and so on.
1
I use Lyft. I find it convenient and efficient. I will gladly pay 20-30 percent more if it means the drivers get better pay, benefits etc.
21
@Caracal
I use Uber and I’m also willing to pay more if it means even a small step towards having a more egalitarian society.
8
If you think companies care about the people who do the work for them, look at how these businesses are fighting this bill and think again -- and call a Yellow Cab.
7
Great. These companies will reduce the amount of workers they have. Good job CA, I guess the streets were getting a little empty with homeless.
2
At last. Put some of the money the shareholders into the pockets of the people who are actually doing the job. So some of the bigwigs complain that this might destroy their business. But the business of becoming a billionaire in a few couple of years is not a given right to anybody.
We have already read enough about Amazon and their distribution and I most sincerely hope Bezos and the other guys grow up and learn to take som responsibility for those who actually make their silly wealth possible.
These money and power addicts just don't get that money will be of no use in heaven.
9
If Uber, Lyft, and Door Dash have $90 million to toss around to influence legislation, they certainly have enough disposable income to pay their drivers more. Please.
176
Great news. Equal rights and regulations for all employees (if it looks like a duck and acts likes a duck. it is a duck) and employers. Mew technologies should not be exempt from the standard legal employment processes.
8
Workman's compensation is left of of the arguments against the gig economy as well. Too many subs don't carry it.
By pushing it off on subcontractors companies save substantially, especially in high risk trades.
8
Over 25 years ago, the advice I got regarding hiring temporary staff was that if I tell them where they need to report, what to do, and when to be there, then said temp staff become my employees, and therefore are subject to with holding, benefits etc. Pretty clear that Uber etc (most of the so called sharing economy) want to avoid dealing with any such responsibility so that they can keep as much of the earnings as possible. You get what you pay for, and if drivers aren’t making a living wage after tax (Fed, state, social security, etc), turnover will be high, service quality low. I really have a difficult time understanding the US tendency to pay wages as low as possible. Yes, I get the profit motive, but it seems to me that if one treats one’s employees on the generous side, one is rewarded by loyalty not to mention happier and more productive staff likely to look out better for company interests. What
possible difference could making a few millions (I’d retire if I just had 1 mill) less make to the leadership of these enterprises?
24
“Let’s be clear: there is nothing innovative about underpaying someone for their labor.”
Thank you representative Gonzalez for pointing out this very real yet sometimes ignored truth.
I’m glad the bill passed. I’m done with companies playing the “woe is me” card. Easy to say that when your model depends on the backs of the underpaid and underrepresented.
58
@Wellie you are so correct. Now if we can only get companies like Wal Mart to pay living wages. Many of their employees qualify for food stamps.
3
As someone who left a company to form my own company years ago, I pay into SS and Medicare, both the employer and employee portion. I provide for my own health care and insurance.
Being an employee gave me lots of benefits. It also constrained me in and made me feel like a cog in a big machine.
For the person who views himself as independent who will now become an employee of a big company it may have very negative implications in their lives and how they view themselves. For others being part of large work force may be okay.
We need cheaper and more portable health care if we're really going to promote a more entrepreneurial society. We need the public sector to start providing more services through taxation to provide some of the social safety net big companies formally provided.
This seems to me a denial of entrepreneurship by the state to protect the state from their responsibility to deal with a rapidly changing economy. We need the public sector to start responding to the changing economy and actual provide services instead of providing contract work to private companies.
7
@HL Universal healthcare
3
Being an employee is horrible. You pay all the taxes (substantially more than as an IC, assuming you can deduct your expenses) and get very few benefits as a result. You are forced to be a cog in a machine that doesn’t fit. It’s a shame this bill passed. It is not a good idea. It will not solve anything. It will just reduce the take home pay of hundreds of thousands of new “employees” for no discernible reason.
It is about time politicians do something about worker exploitation and income inequality. Of course if we had a federally mandated living wage and universal health care as they do in most of Europe, this would be less of an issue. Companies such as Wal-Mart have for decades taken advantage of all of us, by gaming the system putting many workers on food stamps and other aid which we pay for. Now they keep workers hours just under the required hours to call them full-time, avoiding expenses for benefits. As usual, California is again leading the nation in dealing with these kinds of thorny issues. There is no conceivable way the con artist in the White House would address this in spite of the fact that many, if not most, of the low income workers are his suppporters.
25
I am thrilled. Young people today are totally responsible for their jobs, their healthcare, their retirement, everything. That’s too much, and they hate it. Bring back what we older folks had: Some sense of security. No wonder suicides and mental illness are rising faster than employee wages. Thank goodness for California. If the greedy ones opposing this measure can’t get it, they will have to: Young workers today can’t stand for this any more.
26
I don't think that any society will be sustainable based on the gig economy model. Use of contractors that pay low wages, no health benefits, and no retirement plan is a prescription for disaster. The theory that every worker should be responsible for their own benefits and retirement and government should be limited in a low tax environment is useful to companies that seek to cut costs to the bone but ultimately delusional and mean-spirited. Stuff happens in millions of peoples' lives all the time which renders the freedom and independence believed to be part of a gig lifestyle and work environment a cruel hoax.
11
This will have the unintended consequence of raising the official unemployment rate. Now when the Uber drivers car breaks down and they can't afford to fix it they will be able to collect benefits.
2
@Billy I'm confused- are you trying to say that providing a time-limited safety net to a person in that situation is a bad thing? (Also, not entirely sure that is how unemployment works....)
4
@Kara
No Kara I'm saying this trend will more accurately reflect what has become an almost meaningless statistic. But it won't look good for the next president.
2
@Billy
Um, no. If a factory worker's car broke down and they were unable to make it to their job (where they are classified as an employee), they would not be eligible for unemployment benefits.
If Uber workers are classified as employees and, say, the company goes out of business leaving them without jobs, THEN the drivers may be eligible for benefits, but only if they have worked long enough - usually the better part of two years - AND earned enough wages to qualify.
3
Other countries already have laws that protect such workers; bravo to California -- this is essential to ensuring fair pay for work.
8
I dislike taking taxis, the world over their drivers are impolite, bad drivers, charge much more than the ride is worth. Here in France, some make so much they drive TESLAs, Large Mercedes, even Porsche Cayenne. But, UBER and Lyft are making their money with slave labor, only the slaves often don't know they are slaves, this is the real genius in these companies; fooling some people all of the time, playing into the American dream of being 'independant'. This law is a good thing; until its world wide, I'll try to avoid both as often as I can.
26
"They have warned that recognizing drivers as employees could destroy their businesses."
In 2018, Lyft loss almost $1 billion, and Uber lost $1.8 billion - both have lost money since their inception.
If "recognizing drivers as employees could destroy their businesses", maybe they were never viable business models to begin with, and this is just the final nail in their coffins.
"Tech is not exceptional."
112
@kenny fry. Perhaps. I don’t mean to support Lyft and Uber for their exploitive business model, but just want to point out that amazon lost money for a decade before becoming one of the most successful companies in the world. Amazon still has a long way to go in treating their employees ethically, but I don’t think they’re going away any time soon. People love using their ridesharing apps — they are truly amazing. Would they be willing to pay more for the convenience?
1
Folks who propose and those who support these types of bills are clearly locked in the past. They want to anchor back to old business models… Old ways of working… Old ways of organizational hierarchies and relationships. Fortunately we know from history but these groups of people do not prevail.
4
@Rob There's nothing innovative or forward thinking about underpaying your employees. The argument against this bill, that "our business model is unsustainable if we have to actually pay the people working for us" is the same one Confederate plantation owners made arguing against the abolition of slavery.
"How ever will I turn a profit, if I have to actually pay all my workers an appropriate wage?!?!?!?" If you want to live in the 1830s, that's fine, but don't assume that everyone else wants to live there with you.
6
Forcing companies to pay employees properly is the best way to make them most efficient. Temps, contractors, etc are effective for temporary, one-time situations (i.e. helping with a merger, creating docs for a new regulation). After that people are the reason and cost of doing business. Making them permanent makes a great company. Oh, and part of working for a great company IS flexibility.....
12
Encouraging news. The trend has been for companies to increase the percentage of part-time and contract employees to avoid health care, minimum wage and other benefits legally due full-time workers. These costs are simply passed on to taxpayers. Enough.
25
The suffering of the American worker has been steadily rising for decades. Many, if not most, of Trump's supporters voted for, and still support him because they falsely believe he will change the status quo and bring back their dignity, honor, and a livable wage.
Elizabeth Warren became increasingly aware of this problem and changed her career from teacher to politician because she is absolutely determined to fight for decent living conditions for ALL Americans, not just the wealthy who are in bed with the Republican party trying to keep them in power as long as possible so they can avoid paying their fair share of the cost of maintaining equality for all.
14
@Richard Phelps
About the only worker groups that hasn't suffered are most civil service groups. They are among 9% of American workers who still receive guaranteed retirement benefits.
In many ways, our effete elite Washington legislators often forget that private sector employees . . . are Americans too!
Now more than ever, we need Washington to work for American and not for their own self-interest.
The Lyft spokeman says that drivers "want a thoughtful solution that balances flexibility with an earnings standard and benefits.” If Lyft is so aware, why wasn't it devising that solution on its own? I fear Lyft's complaint is a dollar short and a day late.
24
As far as I know, the definition of “employee” in the bill has always been the legal definition of “employee.” These gig companies have just been stretching and abusing the law.
35
These debates are really about who bears the risks of entrepreneurship. Commenters chanting about fair pay and benefits ignore the risks taken by the entrepreneurs, who create the opportunity for employment for others.
5
As a moderate I can’t begin to tell you how wrong you are. This is a bill about the future of work in our country - and the winner take all inequality that has overtaken corporate America. Without intervention we are on a direct route back to the 1850’s where people were paid in Scrip by all them great entrepreneurs.
84
@Chris Thank you for your reply.
4
90 million to exempt themselves? Spend that money on healthcare or the insurance for unemployment, Lyft is worth $29 BILLION DOLLARS, UBER is more— valued at 50,60, 100 Billion... their top tier employees make millions and receive benefits and much more. I understand the freedom to choose their hours, to make their $$ to survive, every driver I met works to the last minute that is allotted. I think before taxes a drive could make $30 an hour but if they own their car! in NYC many rent their cars. I am an artist and it can get quite lonely out here there’s no one to catch me if anything happens to me. I think this bill that pass is making these behemoth companies to wake up and see the humans who made their money and not robots!
25
This action by Democrats in California has far less to do with workers rights and more to do with the influence of labor unions. The Democrats have given the unions a huge gift that they will now expect to be repaid.
5
@Matt Williams
The influence of unions has been waning for some time - helped by a misinformation campaign from the right. This is a step in the right direction.
Unions are far from perfect, but companies like this are inviting them in with their abusive treatment of the very people that make their cute little inventions work.
15
@Matt Williams These are great talking points, but totally ignore the facts that real wages haven't increased in decades and are declining, and income inequality is at record levels and rising. Sticking your head in the sand and parroting some Faux News talking points is how we got into this mess. Democrats solving problems like this will reduce the anger among the white working class which in turn will reduce Republican votes.
10
So are the Temps, Vendors, and Contractors at Facebook, Google, Apple, and Netflix and other major Silicon Valley companies now suddenly employees, after this bill passes? Or does it lead to mass layoffs of people who work for agencies within those major companies cause a horrible ripple effect for people who truly like working in the gig economy or that’s their main bread and butter being a contractor coder.
6
@Summer
I hope so. Major companies have been abusing the temp system for years in order to not have to pay their workers a
Living wage or offer any benefits. These meager benefits used to be given to regular employees at most employers. My first job out of high school was a chain restaurant that offered health insurance. My next employer was a regional department store that offered health insurance and vacation days. I was hired directly by the employer. During the nineties the big trend was to sign up with a temp agency and work for major companies. The agency got a cut and you ended up with a few cents more than minimum wage. People lucky enough to have been hired the company received higher wages and benefits. It’s about time the government regulated industry.
6
I too was wondering that, but it appears that this bill only applies to “app-based” companies, eg. Uber, Lyft, Door Dash. I’m curious why they limited the scope in that way.
No. They were all exempted. Even hairdressers in salons are exempted.
This bill is a farce.
2
I mean cool, but in 5-10 years, none of this will matter and an algorithm will take me to where I need to go .. for a fraction of the price.
Thank God for California. In Uber's case, in the US alone, net profits run at 16% of revenues. They can well afford to pay benefits and ensure minimum wage.
18
@PeteG Try being the Uber driver who now won't be allowed to scramble for money, and instead be told that he won't be working when he is available, because there isn't enough work to support his needs.
3
“Allowed to scramble for money” is about as inhumane and undignified a take on work as I’ve ever heard. Desperate workers *will* do this, for the profit and entertainment of those who exploit their desperation. What’s next: put people in a stadium and make them compete for tossed coins?
6
@Bob Fowler "won't be working when he is available, because there isn't enough work to support his needs"? Really? Sound like...ANY JOB I'VE EVER HAD.
There is no way the Oligarchy, I mean the Supreme Court, will let this stand.
7
"He argued that the bill could set a new bar for worker protections and force business owners to rethink their reliance on contractors."
This line makes it sound like these are bad things?
19
@kas Seriously. I am a consultant in NYC. The new person I answer to at the company that is my main client has been breaking every rule in New York State's employment laws. I am glad to be freelance but can't help but notice that in this City it can be the same as employee without the benefits.
7
Hey...this bill has nothing to do with workers being able to get benefits...or more money...it has to do with California getting a their share of the payroll taxes. You see gig workers can deduct their expenses, thus reducing the taxes they have to pay. California and other states who are poorly run and bleeding see this as another way to get a revenue stream. This is big brother getting into the business of business. This will do nothing but put a strangle hold on the ability of businesses to offer work. And by the they, I work in the gig economy...I am a corporate travel agent who works virtually out of my home for one of the largest corporate travel providers. I am a farmer, and this extra income is vital to me and is now threatened by bills like this selling itself as a benefit to workers. It is absolutely nothing of the sort. It is a money grab for government.
14
So if you are correct and the state government wants payroll taxes to pay for state services, what’s wrong with that. Citizens pay taxes so that society runs. Have you seen the condition of CA roads? Have you seen the homeless problem in the Bay Area? Schools? Infrastructure? Taxes are the price of civilization.
342
FYI California has had a budget surplus since 2011. I don't thing your primary premise us consistent with this fact.
21
Thank you!!! My thoughts exactly!
Gig economy only works when health Care is decoupled from employment.
52
Good. Workers deserve protection, regardless of how companies choose to refer to them.
23
Excellent news, the counter-reaction to Trumpism and his predatory capitalism has started. I always maintained that Trump's presidency coupled with his betrayal of the proletariat and utter disregard of the environment would foment a people's revolt that would have been impossible under Wall Street Democrats like Obama, Clinton or Biden.
16
Thank you once again California for leading the way. Companies reap all the profits but provide none of the benefits to “contractors”. They also assume no liability. This will cost Amazon, Uber, Lyft et al a bundle which will probably be passed on to the consumer. This new tech economy is still finding its way but the reality is these are full time jobs for many people and employers should be responsible.
27
Unions are the backbones of workers in this country.
Corporations have, and will always, find their way around laws. Forming strong unions is the responsibility of the people to stand united against corporations. While this law may be a step in the right direction, unions are losing strength.
61
"Contractor" status is a huge loophole that companies having increasingly exploiting for years. It's about time that states (and workers) drew a line in the sand.
123
Wow, fantastic. I hope Australia follows California's lead.
9
As a former two-year Uber driver in SF, I can verify that working fifty hour weeks, paying for all maintenance and gas, a terrible diet from being on the road 12-15 hours a day, and sleeping in the car, never equaled minimum wage. Uber and Lyft obviously destroyed the taxi industry with a new plan: free labor, no capital investment in vehicles, and no vehicle maintenance costs, thereby offering cheaper rides. I could never understand how a business model that lost billions every quarter just to keep drivers driving with "bonuses," could turn ever turn a profit without significantly raising costs to taxi levels. How is it not a Ponzi scheme, with all of us as the victims? We think "cheaper ride." But the pound of flesh is coming from somewhere, and it's coming from those least able to afford it, the most vulnerable. In other words, the poorest among us. How is it different than buying products made by cheap "third-world" labor, undercutting American labor and manufacturing, feeding the coffers of corporate America? Corporations minimize costs to maximize profits, which shareholders demand as a return on investment. It's not like there's a conscience back there somewhere. CEO's don't take millions of dollars to have a conscience. Nothing has changed since 1947, when "It's a Wonderful Life" was released. Wake up.
645
Almost every App or startup that isn’t a
utility, educational resource, or e-commerce platform for a brick-and-mortar retailer is a variation of a Ponzi scheme engineered to enrich a cadre of very few through the manipulation of labor, laws and regulations, marketing and user needs. For end users, the shilling is amortized in equipment and data costs. For labor, the cost is entrapment in the largest sweatshop in modern history.
35
@Patriot Missile The answer to your very good question is that Uber and Lyft are using the John D Rockefeller approach of flooding the market and absorbing losses until the competition dies. Then prices will go way up.
100 years after the original, Uber and Lyft have improved the model by making their product a little sexy and getting alot of good pr as an "upstart" and a "revolutionary" when, in fact, they are giants crushing large numbers of small and mid sized businesses.
42
@Paul’52 Except that the barriers to entry are very low and Uber and Lyft will have a very hard time raising prices.
I could imagine someone being competitive right now that doesn't have the burden of paying billions in stock options.
4
"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."
This should be the rule nationwide. There are simply too many "workers" who provide essential regular services for businesses who are not designated as employees.
Companies are getting away with murder - literally.
Did you read the recent NY Times article on Amazon's network of contractors paid to deliver their packages on the last leg of the trip? And how many fatalities have occurred? And how Amazon has forced these companies to absolve Amazon of all liability for any accidents including fatalities?
https://www.nytimes.com/2019/09/05/us/amazon-delivery-drivers-accidents.html
285
Amazons network of delivery contractors are generally employees, they are just employees of small companies doing delivery work for Amazon. This rule would not apply to people in those positions.
6
Under how the IRS defines employee for contractor, it IS the rule nationwide. If the IRS had people power to step in and begin auditing all of these companies, this would likely end many situations because the penalties would be too steep. ....this doesn’t happen.
10
@Ben
Did you read the article?
You are mistaken. These are not employees.
My point is this rule SHOULD apply to more companies than just gig ones.
6
Yes, many contractors should be employees, but ride-share drivers have a strong reason not mentioned for preferring their current arrangement: It allows them to deduct expenses for income tax, including the standard mileage rate of 58 cents per mile, often reducing their income and self-employment tax from driving to little or nothing.
@Paul Bonner
I think that's a fair point, but how does that measure up to the loss of insurance and unemployment benefits?
22
So drivers pay no taxes and employers pay no benefits - how is that good for California again?
22
@Paul Bonner
They can organize as a "driver cooperative", where they share an app to supply customers, and get group insurance, but set their own rates and working hours. Computers can handle posting a rate by each individual driver, and the customer can choose who to use. A cooperative will also take a smaller cut of the fares, since you are not paying huge CEO salaries and other overhead.
It's a matter of control. If a company dictates prices for the product, the people who work for them are employees. If drivers set their own prices, they are working for themselves.
8
It is about time that the states wake up and tell the tech giants that, no, they haven't invented something new by calling it a "gig." Work is work. The organization that directs it is the employer.
169
Far too many jobs are classified as an 'independent contractor' so the employer can avoid paying benefits and pass costs - and legal liability - onto someone else.
Companies appear to have gone to great lengths redefining their businesses to avoid hiring 'employees.'
Whereas in the past a delivery driver would be an employee of a company and drive a company truck, now many of those same people are 'independent contractors' who PAY for the 'right' to deliver in a defined area using their own truck, bearing all the costs associated with that business.
Many of those working 'high paying' tech jobs have become 'independent contractors' instead of employees. Go work for a company that becomes the next Microsoft and you're likely to get a 1099 instead of stock options.
41
One of the alternatives is world's best practice public transport.
7
@BBB - That would be true if the U.S. had a good public transportation system. We don't.
33
Uber, Lyft, and Door Dash have pledged to spend 90 million to fight the effort via a ballot initiative.
I'd say it's long past time to take all money out of politics, no money what so ever, not even personal money. And while we're at it ballot initiatives should be extremely hard to bring up let alone pass, such that they are used only in extenuating circumstances.
12
This will all be irrelevant within 5-10 years as these drivers will be replaced by self-driving cars anyway. As to the stock play companies that might have to scale down the mega salaries they earn in exchange for people getting a living wage, I don't feel bad for them either. Kara will have to live on her $6M+ per year for a company that lost almost $2 billion last year. If it drives people back to cabs so what. For the medallion drivers that paid millions for the right to drive a cab in NYC, I'm sure no tears will be lost.
21
Will Uber and Lyft be paying up front for the self-driving cars and paying for upkeep? Different business model.
5
@Fred Rogers Hey Fred, it's certainly a different business model and who says it will be uber or lyft. If I had to pick a co that doesn't exist yet I'd guess a Telsa or Google.
1
These guys claim to be innovators. Let's see them innovate their way out of this.
These so-called gig companies were built on a terrible premise: maximum exploitation of the worker to reap maximum profits for the investors. That Uber was losing massively -- including $5 billion last year -- even before this legislation was proposed is proof enough of a bad business model. Why not let these companies fail as they should have done long ago and, in the case of the ride-hail services, just fix the taxi industry? It can be fixed if the political will exists to do it, and cab driving at least provides a viable income for the drivers when the system is working.
218
@Tony Long
Well.....you may be right....but what happened here is tantamount to changing the rules of a game in the first quarter. Maybe some folks like the caprice of that kind of thing. Speaking as as business person, I'm not a fan. Secondly, if you believe in free markets, you can't be a fan of this situation. Once folks are employees, companies like Uber and Lyft can start dictating work. I take both Uber and Lyft...and in almost all cases, drivers use both services. I'm guessing 'that' changes immediately once employee status us achieved. Also, these drivers love flexibility. I'm not sure that remains status quo. Finally, once you're a company employee, you're bound by company rules, regulations and standards. That's fine for folks that want that, but one should assume that in this economy, Uber drivers are doing this work because it better meets their needs. Of course....that's just an opinion.
5
@Tony Long this just means that Uber and Lyft will accelerate R&D for autonomous driving vehicles and replace all human drivers. This was the long game anyway so this measure will drive that technology faster.
4
@confounded
I’m a researcher in computer science. Uber is nowhere near rollout of autonomous vehicles, and they’re doing better than Lyft. Self-driving cars is looking more and more like a pipe dream.
And how would a company spending billions on R&D while hemorrhaging capital at an unprecedented rate further accelerate?
19
What this will create are 'employees' competing against each other to remain employed. Uber and Lyft will have to meet this overhead and the only way is to set a weekly, monthly ride share income minimum to remain employed.
My husband is retired and was looking for a part-time job with flexibility, and no boss to answer too. Lyft is the perfect fit; the freedom of being self-employed. AB-5 may just have killed his dream of answering to no one and reaping the benefits of deciding how often he choices to work.
9
@mary - I'm sorry your husband is disappointed but his disappointment doesn't outweigh our country's need for people to be compensated fairly for the work they do.
Most people don't have the luxury of working here and there just because they want to.
109
@DR
Some people do have that luxury, and you're saying that's a luxury they shouldn't get to enjoy.
This is the exact sort of thing that will forever keep me voting Republican.
4
@mary
Sorry to be so harsh here, but it sounds like your hubby HAD a career where he could expect things like health care, benefits and vacation days. Why does he have to undermine those things for others in the workforce during his retirement?
32
The 9-5, 40 hour work week is dead. The gig economy is not just Uber drivers, it is the world of the self-employed from Grandmothers watching children to high priced consultants, and everyone in between. Many industries, especially the creative economy, rely on freelancers. The old work model assumed that dad made the money and provided health insurance for the family--a model that certainly doesn't match how many people and families work. The need to restructure medical coverage is critical for those that don't have full-time employment. What percentage of the work economy is self-employed and how much has it grown? Some self-employed hold down many jobs from need, and some like the freedom it offers. Structuring systems that are fair for the self-employed are critical to the growth of this sector and good for the country.
57
The only flaw in that logic is that the gig economy devorces
the cost of health insurance from the job done by the worker, and fails to actually cover the full cost of the health insurance. It also doesn't cover rent, food, child care, utilities, savings, and educational expenses. The new gig economy is more or less a new take on modern day servitude because the full costs incured by the giger are not covered by freeriding stockholders. The gig economy makes the case for why the full cost of health insurance needs to be added back into wages tax free so that the worker can buy their own coverage.
29
@Concerned Citizen
What are SS credits? Full Social Security/Medicare tax has to be paid whether you are an independent contractor or employee. If you are a true "freelance/independent contractor" then you pay the employer share too when you file your taxes.
True independent contractors (as I have been) would be able to factor that into their rates. If they can't "negotiate" their fees, then they aren't ICs. That's federal rules and also in NY State. That the Supreme Court is allowing them to be classified as ICs sounds like corruption.
16
"Structuring systems that are fair for the self-employed" is perfectly said. It's a much better option than denying Americans the right to be self-employed.
3
Phyrric victory for the woke Left. This legislation will massively raise the cost of Uber and Lyft rides, cut into rider demand and cost drivers their livelihoods. Will also serve as a massive boost to autonomous vehicles (with no driver whose Social Security and Medicare taxes need to be paid), just like $15 minimum wage is encouraging wholesale automation of fast food restaurants.
31
@Richard
Money isn't everything. Ethics matters.
11
@Richard
It's not a $15/hour minimum wage that's causing automation in fast food restaurants and supermarkets. It's the greed of the shareholders and executives, who want to squeeze every possible dollar of profit from their operations.
13
Yes, and slavery massively raised the cost of agricultural products. At least until the former masters figured out sharecropping and other wage gouging techniques.
4
Silicon Valley has used gig work for years; employees at Facebook coding next to independent coders. This bill targets "app-based" businesses—evidence California lawmakers are too afraid to extend rights to all workers if it means taking on entrenched interests.
67
@Brendan
No. The bill does not "target" app-based business. Instead, it clarifies the distinction between an independent contractor and an employee, using a three criteria known as the "ABC test.
Why not create a status in between employee and contractor? One suited for the new economy, that includes both worker rights, and flexibility?
11
So, how does CAs goal of dismantling the gig economy affect those employed by it? For example, what is the advantage to using Uber or Lyft after they become just as expensive as a traditional cab?
13
I mean I guess your consumer choices are what matters over the well being of workers.
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Should the cost of rides be subsidized by gig drivers? Why not make the cost of rides subdidized by all workers so they all get to work on time on public transit? Like in other countries.
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@Ajvan1
"What is the advantage to using Uber of Lyft after they become just as expensive as traditional cab?". How about a reasonable surety that you won't get raped? Once drivers are 'employees', background checks will once again be de rigueur.
Oh, and employees will be entitled to fair compensation for the wear and tear on their primary asset - their vehicle. If the titans of ride sharing want to stay in business, they'll have to take a smaller cut for their brilliant algorithms.
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