By on August 6, 2018

Uber ride, Image: Jason Tester Guerrilla Futures/Flickr

An April ruling from the California Supreme Court determined that most contract workers, including those partnered with ride-hailing companies like Uber and Lyft, could actually qualify as employees under the state’s wage laws.

While that’s great in an era when wages can’t seem to match the constantly ascending cost of living and companies are cutting corners to maximize profits, it’s not so great for outfits that depend on contract workers to exist — like the aforementioned ride-hailing firms.

Uber and Lyft managed to balloon their revenues far beyond the billion-dollar mark, but neither company is currently profitable. Despite taking a cut of every single fare, expenses still result in a net loss for the companies during most rides. Assuming California forces them to tack on employee benefits and all the associated trimmings, both businesses could be in for a world of hurt. 

Obviously, neither outfit is particularly thrilled with the idea, so they’re lobbying California Democrats to upend the court ruling. According to Bloomberg, nine businesses dependent upon the “gig economy” drafted a joint letter on July 23rd to attempt to sway California Governor Jerry Brown’s cabinet, presumed successor Gavin Newsom, and members of the state legislature.

“The magnitude of this issue requires urgent leadership,” reads the letter, suggesting the move risks “stifling innovation and threatening the livelihoods of millions of working Californians.” Co-signed by Uber Technologies, Lyft, Instacart, DoorDash, Postmates, TaskRabbit, Square, Total System Services, and Handy Technologies, the note warns that, without political intervention, the court decision will ultimately “decimate businesses.”

“If you have a business model that doesn’t lend itself to the strict structure that an employer-employee relationship dictates,” said California Chamber of Commerce president and CEO Allan Zaremberg, “[The ruling] puts you in a situation that it’s almost impossible to continue your business model … People depend very much now on an on-demand economy. In the worst-case scenario, it isn’t a viable business model anymore.”

How dire of a situation it would be for these businesses depends on on their individual business model. Still, some will have it worse than others. Uber and Lyft could simply elevate pricing to cope with new expenses. However, higher fares could result in customers leaving the platform or using it less frequently. While we don’t know the complete financial burden associated with the employment status change, California state laws entitle employees to a guaranteed minimum wage, overtime pay, protection from sexual harassment, payroll tax contributions from employers, and the chance to win collective bargaining. It sounds expensive. Considering the lobbying effort being made, it likely is.

However, labor advocates are fine with the court’s decision, claiming it as a victory for workers’ rights.

“These companies continue to have choices about their business model,” union leaders from California’s building trades, Teamsters union affiliates, and AFL-CIO chapter told Governor Brown and legislative leaders in their own letter. “They can convert workers to employees and retain control over their work rules and their rates. Or they can contract with true independent contractors. The only thing they can’t do after [the April ruling] is have their cake and eat it too.”

[Image: Jason Tester Guerrilla Futures/Flickr (CC BY-ND 2.0)]

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77 Comments on “From Contractor to Employee: California Ruling Poised to ‘Decimate’ Uber, Lyft...”


  • avatar
    NoID

    How in the world do these companies not turn a profit? Maybe their investment into automated driving? I don’t mean to minimize the cost of software/app development and maintenance, but these companies have almost zero capital to purchase/maintain. It’s all ones and zeros.

    Can someone enlighten me?

    • 0 avatar
      Syke

      Nice to know I’m not the only only one with that question. Theoretically, once you’ve developed the app, you take a percentage of the driver’s take, and all expenses are on the driver.

      Once the app development is paid off, shouldn’t that business be 100% profit for the app owner? Yes, that’s a gross oversimplification, but even adding in insurance, legal costs, etc., I would think that the business model would be at least 90% profitable.

      • 0 avatar
        SunnyvaleCA

        I think the costs are:
        • insurance — Lyft and Uber provide the insurance when the driver is actually driving, which must be an exceedingly high rate since the companies are easy lawsuit targets and especially don’t want to get a bad reputation in the crash department
        • growth
        • dealing with government and existing taxi services (like the government problems outlined in this very article)
        • spending hugely on self-driving cars

    • 0 avatar
      IBx1

      I think it must be their millions spent on the autonomous pipedream. If they just laid back and ran a half-price taxi company like we all see them as anyway, they’d probably be fine.

    • 0 avatar

      The fares don’t cover the cost of each ride. Last I heard, Uber kicks in about 40%. Even then, Uber drivers average a measly $8-$13/hour.

      Basically, Uber investors hope to put the taxis and the other rideshare services out of business, so they will have a monopoly. They are also banking on the advent of driverless cars, so that labor is no longer a cost.

      Once they are a monopoly, they’ll jack up the prices.

      • 0 avatar
        TwoBelugas

        “The fares don’t cover the cost of each ride. Last I heard, Uber kicks in about 40%.”

        I’ve never used Uber or worked for them so help me understand this part. As far as I can tell the app charges x dollars for a ride, the passenger pays x dollars and maybe tip, and uber gets y percentage and the driver gets (x-z)*(1-y), z being other uber fees like passenger safety fee or whatever else.

        So where does that 40% Uber contributes show up as, the app itself?

        • 0 avatar
          TW5

          @ TwoBelugas

          The 40% is conjured from thin air. Uber doesn’t incur the operating costs to transport a person from Point A to Point B. They are paid by the drivers. The complaint; therefore, is that Uber is paying less than the federal mileage rate of $0.535 per mile.

          The standard mileage deduction is a theoretical expense with a tangential relationship to reality. Needless to say, very few people incur that sort of operating cost per mile. Therefore, the complaint is that Uber drivers are “only making $8-$13 per hour” because their federal mileage deductions are much higher than their actual operating expenses, thus, they have substantial tax free income.

          Obviously, this is an enormous benefit to independent contractors, particularly those who are mooching on Medicaid and California health programs. That’s what California is really trying to stop. They are going to force Uber-drivers to suffer (while pretending otherwise) to keep their socialist state from collapsing under the weight of its own stupidity.

          • 0 avatar
            dwford

            All true. As a full time Uber driver, my annual mileage deduction pretty much negates my tax liability. It’s not all roses, though. Uber takes an average of 30% of each fare (not including the “booking fee” which they keep 100% of), sometimes more. I consider Uber’s cut to be my taxes.

            It does boggle the mind that they can’t be profitable when their only real expense is to keep the app up and running. They are wasting money on autonomous cars when they could just buy complete systems from pretty much any automaker.

          • 0 avatar
            TW5

            @ dwford

            I don’t mean to make it sound as though Uber employees are enjoy a lavish lifestyle they haven’t earned. I’m sure many aspects of the job and the fees are quite frustrating.

            My point is mainly that California sees Uber drivers as free loaders who are exploiting a glitch in the income tax system and social programs, and they must be shut down. It’s particularly irksome because Uber drivers are merely following the law, and they aren’t really the problem. The local and regional transportation haulers have the tax-free income game down pat, and many of them are also receiving huge credits under the EIC and CTC programs.

            Also, it’s not just problems in the transportation system that California can’t seem to handle. The state is fighting an uphill battle with their nonsensical income tax system. Not only is overreaching in terms of its supposed tax jurisdiction, it onerous and difficult to administrate, and utterly incompatible with high illegal immigrant populations.

            But rather than face the music, and start making reforms, California would rather put the existence of Uber and Lyft in jeopardy, and attack the jobs of the drivers. It seems externalizing the costs of their system is California’s favorite past time.

      • 0 avatar
        jkross22

        “Once they are a monopoly, they’ll jack up the prices.”

        Until a new competitor enters.

        • 0 avatar
          golden2husky

          …As a full time Uber driver, my annual mileage deduction pretty much negates my tax liability…

          …My point is mainly that California sees Uber drivers as free loaders who are exploiting a glitch in the income tax system and social programs…

          That is California’s problem. That “glitch” does deprive them of tax revenue. So the “fixed the glitch” on a Friday of course.

          …The local and regional transportation haulers have the tax-free income game down pat, and many of them are also receiving huge credits under the EIC and CTC programs….

          There lies the problem. Some get a tax gift, others find a loophole and the law goes to shut them down. Maybe getting rid of the subsidies for all might be a better path. But the “gig” economy has no clout – no big cash contributions to the elected/want to be elected folks. And we all know the system supports those who feed them money…
          —————————–

          I will say that Uber/Lyft have helped give people an alternative to the overinflated monopoly rates of the established cab industry. To which I say Good!

      • 0 avatar
        f1tifoso

        Except the monopoly you’re correct – they are pushing to be the go to ride when driver-less cars emerge – they know they won’t be the only game in town then and getting the base established now puts them in the best position when the conventional taxi service falls apart (or turns into a much smaller luxury service for those who won’t use driver-less cars…)
        Capitalism works provided REGULATIONS don’t stifle competition to the point of monopolies… Government poisons the free market time and time again

    • 0 avatar
      mister steve

      Companies like uber are beholden to their investors. As of today, that amounts to $21.7 billion (https://www.crunchbase.com/organization/uber), give or take. Eventually, those investors want a return on their investment.

      On top of that, somebody has to pay for those corporate employee perks (https://money.cnn.com/2017/02/14/technology/uber-corporate-culture/index.html).

  • avatar
    IBx1

    Ahh, the sound of thousands of jobs being legislated out of existence under the guise of protecting those same thousands of workers.

    • 0 avatar
      ScarecrowRepair

      Especially galling when all those workers signed up as contractors. No doubt some were disappointed and will think they can now laugh all the way to the bank, but more likely they will sniffle all the way to the unemployment office.

      I can’t count the number of times the government has helped me and upset my plans.

    • 0 avatar
      SunnyvaleCA

      Personally, I’d like my employer to just pay me more money (and stock!) and let me decide which insurance, retirement, and other benefits I want to purchase on my own. I’m not sure why, if I leave my job, it’s a good thing that I also lose my health insurance? Weird government that demands employment and health insurance be tied together.

      • 0 avatar
        ScarecrowRepair

        The tie-in twixt employment and health care was a consequence of WW II wage controls. Employers were not allowed to compete on price, but they were allowed to compete on non-wage benefits, which were not counted as employee income and were thus untaxed, and did count as business deductions.

    • 0 avatar
      ilkhan

      Its California. They’re used to it by now.

  • avatar
    jkross22

    If a driver brings their own car, works when they want to work and turns down work when they don’t want to work, how can that possibly be called an employer/employee relationship?

    This seems like CA labor unions flexing their muscle as opposed to rule of law ruling the day.

    • 0 avatar
      SunnyvaleCA

      Everything you state is true, and would indicate a “contractor” type of relationship. The only unfortunate miss is that the driver’s don’t set their own rates. I suppose Lyft and Uber will have to rework their software so that the driver can set their own rate and then Lyft and Uber will prioritize which work they send them according.

      • 0 avatar
        srh

        I wish they’d do this anyway. Of course it has to be done well, but I think the app should present the *average* rate from point A to point B, and then provide a small number of options below and above that average. After trying to get to SFO last Friday (I had 4 drivers assigned to me, who subsequently cancelled) I’d be happy to pay 10% above average for a driver in a nice car with a very low cancellation rate.

        • 0 avatar
          jkross22

          Can’t think of one instance when more choice is bad. If I want a ride in a 10 year old Camry I pay less than a ride in a new Explorer.

          • 0 avatar
            deanst

            There are many instances where more choice is “bad”. For example, restaurants often position their highest price option in the upper right corner of a menu. This anchors your expectations and makes it more palatable to settle on a lower priced, but more profitable option they actually want you to buy. Similarly, give people to many options and they will simply give up any analysis, taking the most familiar or the cheapest. Have too many candidates for your local city counsel, and the guy who’s been around for the longest time with the familiar name will win most of the time.

        • 0 avatar
          dwford

          …or at least have the option to offer a tip with the ride request so the driver is enticed not to cancel.

      • 0 avatar
        TrailerTrash

        Don’t taxi companies consider their drivers independent contractors?

        Isn’t this gonna have to be applied the same for taxi companies?

        Not sure, but taxi companies also lease out or farm out their cars to independent drivers.

        I wasn’t aware of taxi companies keeping books and payment as well as health insurance records of each individual driver as Uber and Lyft are here being asked to.

        • 0 avatar
          dwford

          Good question. Taxi drivers don’t get to set their rates, the rates are regulated. They DO know the destination of each fare they are offered before they accept it, which Uber and Lyft drivers do not.

          • 0 avatar
            MLS

            Of course the regulations vary by jurisdiction, but I was under the impression that taxi drivers legally aren’t allowed to refuse fares. Such rules ensure that passengers aren’t denied trips to poor, minority, or “dangerous” neighborhoods. I’m sure there are limits, however, and a cabbie can refuse a fare from NYC to LA.

      • 0 avatar
        ect

        It is not that simple, actually. The company, in this case, has the customer relationship, sets the price, assigns the driver and collects from the customer. The only thing the driver does is transport the customer, in which he is obligated to follow policies and procedures set by the company.

        In the case the California court decided, the company had reclassified its employee drivers as as independent contractors purely in order to save money, and I suspect that the court had it in mind to punish this “bad” action. It happens that the Dynamex drivers have a relationship with that company that is very similar to Uber and Lyft drivers, so one can see why those companies would be very concerned.

        It is also the case that this ruling only applies to the application of the California Wages Act and was based on the definitions set out in that statute. It does not apply to defining the company-individual relationship under other federal or state laws. application will be limited.

        • 0 avatar
          TrailerTrash

          I have never seen where a lyft or uber driver set the fee.
          As with any taxi I have ever taken, it is set by the company.
          Nobody gets to set anything but the company in any of these cases.

          and the location and distance is set before the uber driver accepts.
          Not ONLY the route and fee…BUT the PASSENGER RATINGS are there for them to see as well before deciding on taking the pick up.

  • avatar
    Sub-600

    “I’m from the government and I’m here to help”

  • avatar
    Eliyahu

    Vehicle operational costs are high, at least $0.545 per mile per IRS. Add the cost of Lyft/Uber and credit card processing and how much it left per mile for the driver? Of course, it wasn’t about the driver. It was about using technology to evade regulations and take market share by offering lower (introductory) pricing. The introductory period may be over in California.

    • 0 avatar
      TW5

      The cost of operating a vehicle is not $0.545 per mile, nor does the IRS make that claim. They allow you to deduct $0.545 per mile driven against your income, meaning lots of these drivers are earning tax free income because they know how to suppress operating costs to use standard mileage deduction to shield all of their income.

      • 0 avatar
        Eliyahu

        Incorrect. The IRS rate is based on a study of the national average of the cost of vehicle operation. Don’t forget that the IRS mileage rate is optional, the vehicle owner can also deduct the actual cost of operation. Most taxpayers do not keep the detailed records needed, but the actual cost of operation can easily be higher than the average rate. The largest cost of vehicle operation is depreciation.

        • 0 avatar
          TW5

          @ Eliyahu

          So you acknowledge that the IRS allows for standard mileage or actual cost, yet you don’t acknowledge that standard mileage is not actual cost? Nor do you seem to understand that depreciation is an estimated cost recovery, not an actual expense.

          Leave this to the professionals.

          • 0 avatar
            Eliyahu

            Of course either the depreciation portion of the standard mileage rate or actual depreciation are estimates. This in no way changes the fact that there is actual cost involved in purchasing the Uber/Lyft car. You are arguing that vehicle cost should be ignored in the profit calculation, and that therefore the drivers are really making money.

            I can make almost any business profitable if I can ignore the largest cost.

  • avatar
    dukeisduke

    So, kill every tenth driver?

    /decimate

    • 0 avatar
      IBx1

      Thank god someone else besides me notices when people say “decimate.”

      • 0 avatar
        bunkie

        Agreed. For those not familiar with the origin of the term (although decimation is also a mathematical process of removing every tenth item in a list or collection), decimation was a practice designed to severely punish Roman Legions, usually for cowardice in the face of the enemy whereby every tenth man was executed.

        • 0 avatar

          What was the birth rate in Rome? It seems they did not take cost into account. Consider how expensive it was give birth, raise, educate and train solders to just decimate them for no good reason.

          • 0 avatar
            bunkie

            “For no good reason”

            Rome was built upon the fear its legions engendered. Cowardice was a capital offense (as were a number of other offenses that we would find not so serious) as it undermined that reputation.

  • avatar
    indi500fan

    It’s expensive to live in California.

    Let’s make state regulations to improve the compensation of our service employees.

    It’s expensive to live in California

    and repeat…..

  • avatar
    I_like_stuff

    So the ultra liberal Uber which is beloved by ultra liberal coastal elites is in a fight with the ultra liberal govt of California. I guess when it comes down to it, protecting union contributions to the Democrat party, overrides proving a cheap and easy way for 20-somethings in SF, LA to get safely after a Friday night of drinking.

    This is also the same genius thinking that is looking to ban companies like Uber – ironically enough – from providing free lunch to employees. Why? Because restaurants are hurt by this and restaurant lobbyists provide a lot of cash to CA politicians.

    But remember, none of this has anything to do with graft. It’s all about protecting the CHILDREN!!

    • 0 avatar
      SCE to AUX

      +1

    • 0 avatar

      If you want to get rid of liberals all you need is to wait. Thats what happened in Soviet Union. Germans were able to advance so fast in the beginning of the war because Soviets decimated their own army and exterminated all high rank officers. Red army was in chaos when Germans invaded from western border.

    • 0 avatar
      golden2husky

      …I guess when it comes down to it, protecting union contributions…

      Don’t worry. The municipal unions were just dealt a death blow by the Supreme Court, and I’m sure a ruling on other unions is just another case away. The family value party indeed. While I’m not fully onboard with unions – they are often as big a problem as the problems they purport to solve – it is important to note that America had the strongest middle class when union enrollment was high.

  • avatar
    ciscokidinsf

    For those who don’t get neither how Uber is ‘losing’ money and the status whether the drivers are employees or contractors, here are some pieces of info to help:

    1) Uber CONTROLS pricing (from both ends, driver and passenger) and to grow (and as many studies have shown, they are siphoning mostly from Taxis/Public transport – they are undercharging some users and all in all, likely using VC money to subsidize the true cost of giving a ride to someone.

    2) Uber further CONTROLS the drivers by determining the rates they pay. Some markets are given ‘driver bonuses’ to keep them active. Their ‘war’ with Lyft (when Travis was running the show) also made them offer driver incentives above market rates.

    3)If you were a ‘true’ contractor, you would control your pricing, which is critical. But it doesn’t happen here. Imagine you are a contractor and I asked you to work on December 25th. You would say yes, if you pay me extra rate, just like the majority of workers/contractors. For UBER and Lyft, you cannot do this. Same rates no matter what the day

    4)UBER can ‘terminate’ you from being a driver, if you mess up too much, make videos, over cancel, etc… so once again, your actual employment status is not fully controlled by the driver as the contractor.

    5)UBER has also taken steps to reduce true ‘supply/demand’ pricing, so in order to grow, they are no longer letting surge pricing work naturally.

    6)The unions really haven’t helped or influenced UBER drivers yet. I would not claim that unions are influencing this debate.

    7)UBER does give requirements for vehicles and functionality. So, no, you cannot pick people on your 1989 Crown Victoria.

    In anyway you see it, the relationship is ill defined as of today, and to the complete advantage of UBER/Lyft – The status Quo plays to their advantage.

    • 0 avatar
      TW5

      True contractors don’t have absolute control over their pricing. There are tons of gig related jobs and services where contractors are taking a price from open bids by companies requesting work or service.

      Uber is basically telling people they have a fare from A to B for amount X, and people either accept or they don’t. This is still a contract function. The only issue was Uber trying to punish drivers who declined their rides by publishing acceptance rates and screwing with their ratings. Allegedly, that was shut down last year, which further undermines the notion of drivers being employees.

    • 0 avatar
      dwford

      Where Uber is messing up is in the pricing. Per Uber’s terms of service with the drivers, the passengers are the driver’s customers, and the drivers pay a service fee to Uber on each trip. The drivers agree to charge no more than Uber’s rates (though they COULD charge less by messaging Uber and asking them to refund the passenger). The problem is with Uber’s “upfront pricing” scheme. With Upfront Pricing, the price the passenger pays does not relate to the driver’s earnings for the trip. Uber makes up a flat price that the passenger pays for each trip, but the driver’s earnings are based on the exact time and miles for the trip. The result is that service fee the drivers pay to Uber is a wildly varying percentage of the fare. By disconnecting the passenger’s fare from the driver’s earnings, they have turned the drivers into employees of Uber, instead of independent contractors providing services to passengers.

      • 0 avatar
        TW5

        So if a credit card clearing company charges merchants a flat fee to clear payments, the merchant is an employee of the clearing service. Flimsy.

        Uber drivers are contractors. California is getting roasted because their revenues and social programs rely heavily on income tax, and the state has neither the time nor the inclination to create rules for Uber drivers. It would look like they were being targeted, they would screw it up at tax time, and they would rather just regulate the industry out of existence.

        California’s only argument is “we have a terrible system and your industry is making it worse”. They actually make this argument quite frequently, along with “we’ve seized your money by forcing backup withholding, we dare you to file our complicated returns to get some of it back”.

  • avatar
    ClutchCarGo

    “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”

    -FDR

    • 0 avatar
      stingray65

      Who gets to define what is included in a living wage? Does living mean being able to pay rent on a shared studio or enough to buy my own two-bedroom apartment/house? Does it require being able to buy the latest iPhone or being forced to get a cheap Chinese Android? Only enough for Hamburger Helper or should I be able to afford the Whole Foods Organic Salmon? Enough for my tattoos, piercings, cigarettes and booze? Should I get enough for a bus pass or enough to lease on a near-luxury brand car? Who gets to decide?

      • 0 avatar
        jalop1991

        “Who gets to define what is included in a living wage?”

        EXACTLY.

        Every time I hear whining and moaning about Wal Mart wages, I have to wonder how many people would be very, very happy having 20 hours/week for gravy money to help pay for extras around the house that’s already being provided for by someone.

        Instead, the whiners want to make it all about how Wal Mart is obligated in THAT SINGLE JOB to provide a “living wage” for those people, to support a family of four to…well, to SOME kind of standard of living that includes vacations and college.

        No one is allowed to want part time work. This is not unlike what the women’s studies programs want you to think, that women are allowed to make any decision they want about their lives–as long as it falls in line with what the women’s studies department agrees with.

    • 0 avatar
      jkross22

      That includes all fast food and all retail jobs. You sure you don’t want to reconsider?

      Those jobs are by their nature to be temporary/part time jobs. It’s a recent phenomenon that people are making careers out of entry level jobs.

      The term ‘entry level job’ is not a career.

      • 0 avatar
        Erikstrawn

        I’ll counter that most jobs didn’t used to be “entry level jobs”. Each year more and more jobs are being pushed down into minimum wage territory. Most McDonald’s employees aren’t teenagers living at home with mom and dad, it’s adults working two or three jobs to try and make ends meet.

        “Every time I hear whining and moaning about Wal Mart wages, I have to wonder how many people would be very, very happy having 20 hours/week for gravy money to help pay for extras around the house that’s already being provided for by someone.”

        It doesn’t matter what the person’s living situation is. You’re trying to paying people poorly because they *might* have their living expenses paid for by a parent, never mind that most people working those jobs aren’t in that position.

        If you don’t want people dropping out and mooching off everyone else, pay them fairly for work.

        • 0 avatar
          stingray65

          Erikstrawn – its a myth that lots of people are working 2 or 3 jobs to make ends meet. Most people in the bottom 20% of income distribution don’t work at all. Only 4.9% of the workforce currently works 2 or more jobs. Furthermore, why should a firm pay higher wages if they can get the quality and quantity of employees they need at a lower wage. Walmart typically has hundreds of applicants for each new position they advertise, and when they have struggled to keep positions filled they have raised wages.

          https://www.factcheck.org/2018/07/ocasio-cortez-wrong-on-cause-of-low-unemployment/

          https://www.bloomberg.com/view/articles/2018-01-12/the-real-reason-walmart-raised-its-minimum-wage

          • 0 avatar
            Erikstrawn

            From the Bloomberg editorial – “What’s especially interesting is that we are seeing tight labor markets even though labor force participation (the percentage of the population that is either working, or looking for work), remains well below where it was in 2007.”

            Your statement – “Most people in the bottom 20% of income distribution don’t work at all.”

            My statement – “If you don’t want people dropping out and mooching off everyone else, pay them fairly for work.”

            Even though we may disagree I think there’s a pretty good Venn diagram between our arguments. It’s been a quarter century since I worked at McDonald’s, so I may have overestimated how much of the work force is working two jobs, but I know my kids are searching out second jobs to help make ends meet. I’ve worked a second job my entire adult life.

    • 0 avatar
      brn

      If the job doesn’t pay a living wage, get a different job.

      For most, this is supplemental income.

  • avatar
    hreardon

    I see a few ways out of this:

    1. Ride share companies start allowing drivers to set their own rates;
    2. Ride share companies increase rates 30-50% to cover the additional expenses.

    In either event, we will quickly see what the true demand is for ride share services. I suspect that there will be a definite drop off in total volume, however, it is undeniable that one of the great values in these services is their sheer convenience.

    The problem is that ride share companies (like many other ‘.net 2.0’ businesses), have removed the correlation between convenience/service and value by leveraging VC money to subsidize them. And yes, I agree that the endgame is, like with Amazon, to establish a monopoly practice.

    And I am also one of those people who has a hard time understanding why people who willingly signed up to work as ‘contractors’ are now crying for benefits, etc. I know lots of people who drive part time to pick up a few bucks, a lot of retirees who do it to get out of the house for a few hours per day. Great way to keep these people engaged.

    • 0 avatar
      deanst

      Given that we have minimum wage laws, it does not seem fair to allow firms to call employees by a different name just to get around the rules and pay them less. The real issue is that investors don’t want to wait longer/pay more for a firm to dominate a market and reap the benefits of monopolistic pricing.

    • 0 avatar
      TW5

      We’re arguably seeing true demand for the service right now. We are perhaps not seeing true supply of labor based on market compensation because glitches in the income tax regulations and social programs are subsidizing workers into the system at current pay.

      • 0 avatar
        dwford

        About 1/2 the trips I do each day are discounted in some way by Uber, so we do not see the true demand at this point.

        And yes, tax regulations do play a part. If driver’s couldn’t deduct their mileage, rideshare would cease. As would many other circumstances where employees have to use their personal cars for work.

  • avatar
    TW5

    California’s government is a fraudulent train wreck, but at least this ruling fits their modus operandi. They don’t believe people should have the privilege of being contractors, and they ruthlessly shut down industry to stop the frivolous accumulation of vehicle-miles-traveled in their state.

    Sad, but transparent, consistent, and seeming nonpartisan.

  • avatar
    jkross22

    Why is the answer to spend more tax dollars?

    • 0 avatar
      markf

      “Because we would save money as a society by reducing crashes, injuries and fatalities, reducing Medicare expense as well as costs of police and EMTs.

      It’s a cost savings for tax payers – like paying for pre-K schooling in low income neighborhoods.”

      Please provide a single shred of evidence for this…..

    • 0 avatar
      stingray65

      Big 3 – you are so full of sh-t you could be a street in SF. You never offer any proof for your leftist statements because there usually isn’t any to offer, but there is not a shred of evidence that pre-K helps anyone except teacher’s unions.

      https://www.dailysignal.com/2013/01/13/another-study-confirms-head-start-doesnt-work/

  • avatar
    brn

    If they’re employees, they’ll likely make them sign non-compete agreements. No longer will you be able to work for both Uber and Lyft (and anything else similar).

  • avatar
    dartman

    Non-compete agreements between employees/employers are generally illegal under CA law in the absence of a genuine employment contract.

  • avatar
    dartman

    Some other employee friendly CA laws: Overtime is calculated after 8 hours not 40 hours. Vacation time/ pay is not mandated but if is offered it it treated the same as wages and must be accrued and cannot be taken away if not used. Yes it is a terrible state for hourly wage earners…

  • avatar
    golden2husky

    …We need a program like that for elderly drivers who no longer have the ability to drive safely…

    While your response is tongue-and cheek, this is a serious problem. As one with a 90 year old father that steadfastly refuses to give up his keys, this is a real problem. We got him full time day care to skirt around the issue. Sorry about the thread hijack.

    • 0 avatar
      geozinger

      I like the Uber idea, also. Before we took the keys (and the car) from my mother, unaware to us kids, she had developed mid-level Alzheimer’s and continued to drive. She’d never been a very confident driver, so she wouldn’t drive very far and get lost. Unlike some of our other relatives who would get in the car and drive three states away or until the gasoline ran out, whichever came first.

      We didn’t even know how far she had descended into dementia until she had minor accidents (thank God!), but no real personal injury stuff or major property damage. She was very good at hiding her illness and with only one of us nearby (and he worked a lot, i.e., not around much), she managed to get away with it for quite a while.

      In my mother’s case, we’d have to put some sort of restrictions on her ability to hail an Uber, but I think something could be worked out. Who knows, I’m in the age range to develop Alzheimer’s now, maybe I should look into it, too…

  • avatar
    FWD Donuts

    Good. Those are all trash jobs, anyway. A guy got into an accident outside my place in San Jose a couple of years ago. Ran his beater Corolla into a Suburban in the middle of an intersection. He worked for some startup that delivered “warm, fresh baked cookies” to slobs to lazy to cut up a dough log and turn their oven on or grab a few chocolate chippers and toss them in the microwave. Had an illuminated sign on the roof — it wound up 300 feet down the street.

    Grabbed my medical kit and ran out. The woman in the Suburban was fine. The poor guy in the Toyota was a mess. I will never forget holding the split across his face closed to slow the bleeding down.

    All because of some trash job. He shouldn’t have been out there in the first place.

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