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Transportation Businesses United States

Uber and Lyft Need To Make Drivers Employees, Appeals Court Rules (cnet.com) 88

Posted by BeauHD from the back-and-forth dept.
An appeals court ruled Thursday evening that an injunction issued against Uber and Lyft over the status of their drivers was an appropriate measure. CNET reports: The injunction was issued in August by Judge Ethan Schulman of the San Francisco Superior Court, who ruled that the ride-hailing companies must start classifying their drivers as employees in the state. The judge allowed the companies 10 days to appeal the ruling, which they did. The First Appellate District court in San Francisco heard arguments from the companies last week and issued its ruling Thursday siding with Schulman. The appeals court said in its 74-page ruling that there was an "overwhelming likelihood" Uber and Lyft are violating California law AB5. That law requires some employers that use independent contractors to reclassify their workers as employees and provide more worker benefits.

The injunction stems from a lawsuit against Uber and Lyft filed by the state of California in May in conjunction with the city attorneys from San Francisco, Los Angeles and San Diego. The suit says the companies "exploited hundreds of thousands of California workers" by classifying drivers as independent contractors and are violating AB5, which took effect in January. As this lawsuit works its way through the courts, Uber, Lyft and other gig economy companies have sponsored a state ballot measure campaign with nearly $200 million to bring the issue to voters. Proposition 22 aims to create an exemption for the companies to AB5 and allow them to continue classifying their workers as independent contractors. The report notes that this latest appeals court ruling "won't have an immediate effect. The court gave the companies at least a 30-day stay without requiring any changes to driver status."
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Uber and Lyft Need To Make Drivers Employees, Appeals Court Rules More

Uber and Lyft Need To Make Drivers Employees, Appeals Court Rules

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  • If the numbers don't work (Score:4, Insightful)

    by oldgraybeard ( 2939809 ) on Friday October 23, 2020 @04:32PM (#60641556)
    Uber and Lyft drivers will be unemployed.

    • Re:If the numbers don't work (Score:5, Insightful)

      by sdinfoserv ( 1793266 ) on Friday October 23, 2020 @04:36PM (#60641570)
      sure the number work fine... but then ride costs become equal with REAL Taxi's (which is what this really is), which pays wages, benefits, local taxes and certifications and doesn't require your to live off the equity of your car.

      • But what if we want a cheap underclass to drive us around to our upscale millenial stores?!

      • Re: (Score:1)

        by Anonymous Coward

        but then ride costs become equal with REAL Taxi's (which is what this really is), which pays wages, benefits, local taxes and certifications and doesn't require your to live off the equity of your car.

        In my state, no yellow cab taxi driver earns wages or has benefits from the company.
        They are all independent contractors.

        There is a huge difference though. They aren't just classified as contractors, they really are contractors.

        Drivers set their own schedule, pay a fixed fee to dispatch per call/pickup, and there is no consequence for accepting/rejecting any particular dispatch sent to them.
        There's no overtime either, and number of hours aren't dictated.
        The state has a cap on that however. Similar to the

      • Taxi's (which is what this really is), which pays wages, benefits, local taxes and certifications and doesn't require your to live off the equity of your car.

        Part about benefits is not true, basic internet search shows that: this for example

        https://www.huffpost.com/entry... [huffpost.com]

        It has been a battle, not unlike a battle of Uber drivers.

    • Many businesses have to balance sustainable capacity. Unsteady demand is challenging that no one wants to pay for under utilization of labor and lesser extent equipment(interest). Ride hailing services could reduce their control over drivers and just charge riders a booking fee, rest between driver and customer. But the ride hailing services exploited their equity to subsidize rides for growth and exert to much control over drivers thus they resemble employees. The safety aspect also requires admin costs.

  • What happens when Uber and Lift lose the final appeal? Will all drivers become employees as of Jan 1, 2020? And be owed full benefits for the period between Jan 1, 2020 and when the final is lost?

    • They won't lose. The higher federals courts – including Supreme Court - have been stacked by the corporatists.

      • The higher federals courts – including Supreme Court - have been stacked by the corporatists.

        This is about a Californa law, so the federal courts have no jurisdiction.

        The only way the feds would get involved is if Uber and Lyft could make a plausible argument that the Calfornia law violates federal law, and that is very unlikely.

    • That is part of the lawsuit, they are seeking retroactive pay and benefit back to 2018 when the law was changed.
      So if they lose the appeal and drivers are employees then the court will switch to deciding if retroactive pay and benefits are needed and to when.

    • I think if Uber and Lyft lose all of their appeals and lose on the ballot initiative, then you could see the app start opening a popup saying:

      "This service is no longer offered in this area. Click this link for for information."

  • and will uber fix the time clock leading to new lawsuit.
    Say uber only pays when an ride is in the car vs paying for pick up time , waiting time, time that they forced drivers to sign up for open shifts?

    • Re: (Score:2)

      by dj245 ( 732906 )

      and will uber fix the time clock leading to new lawsuit. Say uber only pays when an ride is in the car vs paying for pick up time , waiting time, time that they forced drivers to sign up for open shifts?

      I think they would go in the other direction- make their business practices more aligned with a true contractor system. That would include:
      Not dictating what worker does and how the worker does his or her job
      Changing how the worker is paid (possibly by having or offering 3rd party payment processing) and ceding control of other financial aspects of the contractor's business
      And probably a couple others.

      Uber in those states would basically become a sales agent for the contractors, who more or less do bu

  • It looks like Californians are going to pass Prop 22. So, gig workers will continue to be allowed to work as contractors.
    • Only drivers. Sadly, musicians, hair stylists, gym trainers, and tons of others of self-employed contractors will still be SOL. CA doesn't like you to work for yourself; it's too hard to control all those independents...

      • Re: (Score:2)

        by galabar ( 518411 )
        More propositions?

      • Re: (Score:2)

        by PPH ( 736903 )

        CA doesn't like you to work for yourself

        No governments like that. There are too many advantages to being a sole proprietorship/independent contractor that were originally created to benefit Big Business. No fair you little guys finding a smart accountant and taking advantage of them yourself.

    • It looks like Californians are going to pass Prop 22. So, gig workers will never have the opportunity to work as contractors because it will be illegal to make an app that does that, and all future apps will have to use Uber's business model instead.

      FTFY.

  • California prop will also insist... (Score:3)

    by sarren1901 ( 5415506 ) on Friday October 23, 2020 @05:35PM (#60641738)

    California prop 22 will also make it so uber/lyft have to consider their employees w2 earners.

    I expect uber to leave most markets in California altogether. I can't say that bothers me, but I'm not much of a taxi consumer nor do I drive one. I feel bad for some people that do it on the side for pocket change or as an easy no commitment kind of job to do. The people doing this as their main gig hopefully will get a full time job out of this but it still a terrible option.

    I think most would be better off working at Target/Walmart or a grocery store. The shifts aren't always fun and you work weekends and holidays, but it's an essential job. Amazon warehouse is another option.

    Uber and Lyft are unlicensed taxi cab companies that as far as I know still haven't turned a quarterly profit. They just keep getting investment money given to them because surely once the driveless car thing gets here they will be in perfect position to dominate. Or so they hope. I can't say I feel bad for this company in the least. They need to be governed a bit.

    • I can't say that bothers me, but I'm not much of a taxi consumer nor do I drive one. I feel bad for some people that do it on the side for pocket change or as an easy no commitment kind of job to do. The people doing this as their main gig hopefully will get a full time job out of this but it still a terrible option.

      At the risk of offense, that attitude bothers me. It sounds like you're not a driver, never have been one, and have little direct experience as either a driver or passenger. And yet you're making judgement calls about what's best for all the people actually involved in that market.

      I humbly suggest all of us who are not passengers, drivers, or working for the ride share companies themselves just butt out. Fer cryin' out loud, let the people involved make the decisions about whether this is a terrible option

      • Personally I think he's just saying it how it is. You can't possibly think it's better to pay people less and less and less until they have to work for almost nothing.

        • Personally I think he's just saying it how it is. You can't possibly think it's better to pay people less and less and less until they have to work for almost nothing.

          As the consumer, yes I can. Or I might decide to pay more for a product because I sleep better at night knowing my producers are well compensated.

          As the employer, maybe, maybe not. Perhaps paying more for higher quality drivers makes for a better ride experience and thus turns out to be profit-maximizing. Maybe it doesn't. Beats me. We have lots of cost-cutting discount products which compete with luxury brands so there's no one answer which works everywhere.

          As the driver, maybe, maybe not. Fewer higher pay

          • And let's get down to the real motives behind AB5 and Prop 22. It was a blatant attempt by some trade unions to put the squeeze on their competitors. They wanted to unionize drivers so they could get more union dues.

            True.

            I also firmly believe free markets and competition prevent what you fear.

            Same.

            Here's my question to you: These companies treat their workers terribly, rip them off, rip off the customers, and in the case of food delivery, ALSO rip off the restaurants. It is also true that free markets require both parties to have the same information. These companies keep all of their market data secret. They keep secret from the drivers where the real demand is. They keep secret from the restaurants all of the sales data, consumer feedback, etc. In this situation, all it would take is one

            • Great answer.
            • So... the answer is that workers aren't participating in a 'free market'.

              • So... the answer is that workers aren't participating in a 'free market'.

                If you parse more carefully, I was explaining how none of the participants have a free market. The drivers don't know where the demand is, they are often lied to about it with bogus "heat maps" that even in a perfect ideal case, only give absolute demand and not demand vs supply, which is the only metric that would be useful to the driver. They are also not given access to their ratings, or any complaints, or any other data whatsoever, that as a true independent contractor they would have access to. If they

  • First off, I hate the commercials that only call out Prop 13, 15, 22, 37, whatever. How about giving me the gist of the thing? I already voted on all the props, but can't match numbers to outcomes. Is prop 15 rent control, kidney dialysis, or prop 13 diddling? Danged if I know, but if you give me the gist I can tell you the pros and cons of each.

    That said, if you want to be independent who is the government to tell you you can't? I assume you have at least half the brains of Lorena Gonzales (not a h
  • Contract vs Employee is about degree of control. Do you set your own hours, provide your own tools, don't work in a company property - Contractor. Work 9 to 5 for a single day at a government job on a government computer at a government office - Employee. Also the wages are pretty good because otherwise no sane person would do the job. I don't get the hate on Uber, they are giving workers an easy option for employment with no tie in or cost of becoming a driver. More options is always better. If the o

    • More options is always better.

      Then don't pass Prop 22. It makes Uber's business model the only legal business model. You won't be able to make an app that treats workers more fairly, or more like independent contractors.

    • Re: (Score:2)

      by dj245 ( 732906 )

      Contract vs Employee is about degree of control. Do you set your own hours, provide your own tools, don't work in a company property - Contractor. Work 9 to 5 for a single day at a government job on a government computer at a government office - Employee.

      There are other tests which Uber fails miserably, which is the whole point of the court case. If Uber really wants to call their driver's independent contractors, they need to not be dictating what each worker does and how the worker does his or her job. They also probably need to change how the worker is paid (possibly by having or offering 3rd party payment processing) and cede control of other financial aspects of the contractor's business. Their level of control over the drivers work and the method a

  • This may be good for traditional private car services and the decentralized ridesharing alternatives, e.g.:

        arcade.city
        swarm.city
        Cell411

  • What if I created an app based company that:

    -- Allowed drivers to work for any company including mine.
    -- Allowed drivers and passengers to bid for pricing, and I had no control.
    -- I had no control over the type of car the driver drove.
    -- I had no control over the hours that the driver worked.
    -- I only took a flat 5% of the overall driver/passenger negotiated fee and the driver got the rest (including all tips).
    -- I added every other possible degree of freedom for the drivers (that anyone could think
    • No. That would be 100% legal. If Prop 22 passes, it will become illegal.

      • Re: (Score:2)

        by dj245 ( 732906 )

        No. That would be 100% legal. If Prop 22 passes, it will become illegal.

        Incorrect. Prop 22 is heavilly funded by the ridesharing companies and does the opposite- it considers all drivers for phone apps independent contractors regardless of how the app company exerts control and processes payments.

        • You are wrong and very naive about what prop 22 says. What I'm saying is that OP's business plan would become illegal under prop 22. They would have to adopt the Uber business model, and purchase extra insurance for the drivers, and do all sorts of other pseudo-employee stuff that Uber does. They wouldn't be able to take a hands-off approach anymore. For practical purposes, after prop 22 passes you will no longer be able to run a business where the workers are actually treated as independent contractors, yo

        • regardless of how the app company exerts control and processes payments.

          I think your misunderstanding stems from this part. Prop 22 also requires that you exert control and process payments the way that Uber currently does.

    • Re: (Score:2)

      by hey! ( 33014 )

      Sure, if you keep refining your model, you'll find a place where you finally end up on the other side of the "contractor" line. That's what these companies do -- they tweak the work conditions for their workers until they have as many of the advantages of having employees as possible, without being on the radar of labor regulators.

      Some of the things they do are transparent dodges. I had to spend several months in Chicago last year, and used ride shares extensively. Talking to the drivers, I soon realize

      • The fiction here is that the leasing transaction and the ride payment are two completely unrelated things.

        That is one of the so frustrating things about what these companies are doing. In that situation they pretend the transactions are different, but when it comes to the fare, they collect a fare and make a separate transaction to pay the worker (employ them), and maintain the fiction that it is a facilitated single transaction (network provider). They love having their cake and eating it too.

      • I suspect the 2.5x lease payment you describe includes scheduled maintenance and comprehensive auto insurance, it's not just the car itself.

    • Re: (Score:2)

      by dj245 ( 732906 )
      No, if a company satisfied those requirements, then the drivers would indeed be independent contractors and it would be fine. The problem is that the current app companies exerts too much control over how the contractors do work and process payments.

      Prop 22 is heavily funded by the ridesharing companies and would classify such persons as independent contractors regardless of how the companies treated them.
  • Hey guys, I hope someone can help me understand this. So apparently there's a proposition 22 that we're voting on to decide whether Lyft/Uber have to treat drivers as employees and not as contractors. But the date is not up yet. How is this being decided now by a court? I'm completely clueless and quite frankly dis-satisfied with the way it works.

    • Re: (Score:2)

      by PPH ( 736903 )

      Confused much?

      Prop 22 asks for an exemption from current law which says Uber/Lyft drivers are employees and must be taxed as such. Uber/Lyft treated drivers as independent contractors. State stepped in and said "Nope". They are employees and a court case ensued. In the meantime, Uber/Lyft sponsored this initiative to carve out an exception and allow the independent contractor status.

      I predict that your confusion (and others) will be used as grounds by the state to challenge a possible success of the propo

      • Thanks for your info...

        So I got the part where it's asking for an exception from current laws. But I'm still more confused.
        If current laws mandate that drivers are employees, not contractors, then how come all current drivers are contractors?

  • The only reason the state is bitching about this is because they ultimately believe it's costing them money or possibly power.

    • In a sense, you are right. Xavier Bacerra, the CA Attorney General, and the 3 city attorneys, only care because of employment taxes and are only fighting because of employment taxes. They aren't fighting for the worker. They don't care about the worker. They aren't prosecuting the litany of illegal conduct of these companies. They aren't even lifting a finger except 2 reasons: tax revenue, and also political pressure from unions. They are ignoring the duties of their job to protect against corporate fraud a

    • The only reason the state is bitching about this is because they ultimately believe it's costing them money or possibly power.

      I am going to be a bit more generous about political motives here. There is such a thing as protecting workers' rights and individual freedoms, and people across the political spectrum would tend to support those principles. I am not sure where Uber and Lyft figure in this, but I suspect that a major problem is drivers being treated as employees, without getting employee benefits.

      I do not think anybody objects to self-employed taxi drivers, who operate under the badge of a local firm that gets them work. I

  • Put them out of business completely.
    Require routine drug testing on all their drivers.

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