Update on AB5

Uber&#x27;s defense is that it is licensing lead generation software to drivers, and that it just takes a commission from each trip as payment for use of its software.<p>In many ways, I can see it. I think the issue lies in a lot of Uber&#x27;s current policies around drivers e.g. very strict rules around cancellations. If Uber was just a lead generation provider then it shouldn&#x27;t care or intervene if a driver decides they don&#x27;t want a job, but depending on the scenario you can be punished if you don&#x27;t want to take a job.<p>Part of me thinks Uber could get away with this if they just relaxed some of their current driver policies (e.g. more limited penalties for cancellations). The issue is whether doing so would drastically deteriorate the quality of the service for riders.

Uber&#x27;s defense fails The Duck Test. They are describing a job, people doing a job, people paying for a job, and people taking a cut of the profits. They just don&#x27;t use those words.<p>I suspect if&#x2F;when this gets to a higher court, the whole thing will come crashing down, because to allow Uber&#x27;s weaselly redefinition of common terms, would be to allow other classes of employment to similarly become unprotected.

I feel like it&#x27;s pretty clear that gig economy jobs don&#x27;t neatly fit in either of the existing categories of workers: they&#x27;re not quite employees (you can clearly work or not work whenever you want) or contractors (you clearly have very little negotiating power or information in choosing your work or guaranteeing your wages). Attempts to munge them into one of those categories are just doomed; a new category is needed.<p>Failing that, if they are to be counted as individual contractors they should be able to negotiate like those: without one-sided deceptive deals.

I think the law will be bad for the people it affects, so this is good news for Uber drivers. Uber isn&#x27;t operating at a profit, so they don&#x27;t have extra margin to pass on in the form of extra driver pay or employee benefits. If Uber has to shrink their business in California or exit entirely, that won&#x27;t be good for drivers either.<p>It reminds me of before my software engineering career, when I was working at The Gap. The job wasn&#x27;t great, but a lot of people really needed more hours. Unfortunately, there was a rule that nobody could work more than 29 hours a week. Everyone hated it. Employees hated it the most because if they needed extra money they couldn&#x27;t take an extra shift. The managers hated it too because it was just more rules for them to deal with.<p>Apparently, this rule existed because there was a law saying that past 30 hours a week, employees had to get some extra benefits. Gap corporate just changed the job to avoid that law. As a result, that job got worse, and nobody got more benefits. Just unintended consequences.

As someone who drives Uber on occasion when I&#x27;m a little bored and looking for something to do, I think it&#x27;s great that I&#x27;m not an Uber employee.<p>I can do 10 hours or I can do 0 hours based on nothing but my own whim. I don&#x27;t have a problem with people organizing to get a better deal for themselves, but I like the way it works now.<p>I&#x27;ve worked for companies that misclassify workers, and Uber isn&#x27;t it as far as I understand. I may be convinced otherwise, but I don&#x27;t see it.

For those interested in understanding the underlying case law that AB5 codifies (a decision called Dynamex Operations West, Inc. v. Superior Court), my company, Judicata, published a visual (and tech-enabled) explanation of the decision when it was first published: <a href="https:&#x2F;&#x2F;blog.judicata.com&#x2F;understanding-dynamex-the-california-supreme-courts-response-to-silicon-valley-cdf281d75d2e" rel="nofollow">https:&#x2F;&#x2F;blog.judicata.com&#x2F;understanding-dynamex-the-californ...</a><p>Whether or not Uber drivers are employees or contractors under Dynamex and the ABC test is an open question, but the Uber explanation of the bill&#x27;s impact is more or less correct.

IIUC, AB5 might end up making Uber a monopoly in California (and US if other states follow suit) via regulatory capture.<p>Currently, most drivers seem to drive for both Uber and Lyft (based on their cars having stickers for both). But if classified as employees, and being guaranteed a minimum wage, then Uber&#x2F;Lyft might require them to be exclusively available. As a result, the drivers will have to choose either Uber and Lyft and since Uber has more market share, they will likely choose Uber and Lyft will be squeezed out.<p>What am I missing&#x2F;misunderstanding above?

I think the proper classification of drivers is likely an existential threat to Uber, and they are responding as such. I find it highly unlikely that a court would find <i>transportation</i> to be outside the scope of Uber&#x27;s business. Although you have to almost admire the sheer brazenness in their admission that they will not adhere to the law.

When the ACA passed, mandating that large employers offer health insurance to all full time employees, there was a massive push by large employers in retail and food service to cap people&#x27;s hours and make sure very few qualified as full time. This was because health insurance costs employers about $10k per employee per year, and if you are paying someone $10&#x2F;hr ($20k&#x2F;yr at 40hrs a week), raising labor costs 50% is a nonstarter.<p>An outcome like that may be possible here as an unintended consequence, with Uber and Lyft capping most drivers at 20hrs a week, and full time drivers splitting their time between the two (20hrs for each).

I think there is more truth to their argument than people are giving them credit for. It seems like an in bad faith perspective to not give their claim some credence. It makes YOUR argument stronger to first make the best version of Ubers argument before rebutting it.<p>Does it make me a Microsoft employee if I use Outlook to conduct business? Does it make me an Ebay employee if I sell things through ebay? Until Uber eliminates the ability for drivers to drive Uber and Lyft simultaneously, and bounce between the services at will, I DO view it as drivers paying for 1) a dispatch and messaging service 2) payment processing 3) insurance 4) a resume host 5) a customer funnel. Thats more than just a technology or software company, Uber sells transportation services to drivers. The fact alone that they can have two messaging&#x2F;dispatch apps open at once, on two phones, makes me question, which company do you think the driver works for? Both simultaneously? Just the one that the passenger is from? Is having both Uber and Lyft open looking for passengers any different than listing something I have for sale on Etsy, Ebay and Amazon, and pulling the listing once it sells out?

Why aren&#x27;t other industries up in arms about this? I work for Intel and we have a ton of contractors, so does Google. Under &#x27;A&#x27; of the &#x27;ABC&#x27; test, it seems to me that most contractors for these companies would now be employees.

Uber&#x27;s former mission statement:<p>&gt; &quot;Transportation as reliable as running water, everywhere for everyone&quot;<p>Sounds like transportation is their core business to me.

&gt; Our proposal avoids the potential harm of forcing drivers to be employees, whether or not they want to—and the vast majority tell us they don’t want to be.<p>&gt; Contrary to some of the rhetoric we’ve heard, AB5 does not automatically reclassify any rideshare drivers from independent contractors to employees.<p>This may seem like an immediate contradiction, but I guess they&#x27;ve reframed it so their proposal is actually in line with AB5?<p>great pr-speak<p>&gt; But just because the test is hard does not mean we will not be able to pass it. In fact, several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces.<p>Also seems like they will continue to thwart where they can (which I can&#x27;t blame them for really) but seems aggressive to note. This reads more like a shareholder update, which makes sense.

&gt; <i>drivers’ work is outside the usual course of Uber’s business</i><p>What... how... I don&#x27;t even know where to begin with this.

<i>Because we continue to believe drivers are properly classified as independent, and because we’ll continue to be responsive to what the vast majority of drivers tell us they want most—flexibility—drivers will not be automatically reclassified as employees, even after January of next year.</i><p><i>We expect we will continue to respond to claims of misclassification in arbitration and in court as necessary, just as we do now. But we will also continue to advocate for the independence and choice that drivers tell us again and again in surveys, polls, focus groups, and personal conversations that they value most.</i><p>Uber management is not going to get the message until top management goes to jail for contempt of court.

Uber: AB5 doesn&#x27;t affect us. Also Uber: We are prepared to spend $60M to stop it.

What I have a hard time understanding is the 3rd of the 3 tests that determine if a person can be classified as independent contractor. [1]<p>I understand A &amp; B, but as for C, why does someone&#x27;s normal job have to be in that same line of work to be considered an independent contractor? What does whether a person is a driver professionally, or a teacher making money on the side, determine whether they&#x27;re performing work as a contractor?<p>Maybe someone more expert can explain.<p>-------<p>[1] ABC Test that all 3 conditions must be satisfied for worker to be considered a contractor:<p>&quot;... (a) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (b) that the worker performs work that is outside the usual course of the hiring entity’s business; and (c) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

Could someone knowledgeable about employment law explain what will change for Uber&#x2F;Lyft drivers if the companies are forced to reclassify them as employees?<p>The post talks about &quot;potential harm&quot; and says that how many hours drivers have to work and whether they can work for competitors at the same time &quot;would all change.&quot; Is that right?

I like how they both claim that the law does not actually apply to them, and that they are exploring working with Lyft and others on a statewide ballot measure in response to the law (clearly, implicitly, a referendum to reverse it.) They are careful to avoid making the self-contradiction explicit, but the implication is clear.

That is a clever argument that they are in business of lead generation. But if that was true then the consumer wouldn’t know Uber, they would know x ride share service. The problem with Uber is they also control the end user experience and pricing, so it’s a real stretch to argue they are not in the business of providing rides to customers.<p>Honestly I think their argument could be bolstered a lot if they made a simple change. Imagine you call an Uber, then your app tells you billy wants your job. You can see he is 4.5 star rated with 1000 rides, he is est 3 min away, and he wants $15. Do you accept? If so Uber connects you. If not Uber goes back to finding someone else.<p>With that change Uber removes itself from being in the business of rideshare, and now is in business of connecting drivers with riders (as they’ve claimed all along). They need to let drivers dictate prices and ask users to choose.

Uber’s disrespect for the law is astonishing. I hope California cracks down on them hard for not complying.

Would love to see source data that Uber is referencing (I know it&#x27;s not possible, as it&#x27;s highly guarded secret) - I suspect they cherry pick it a lot.<p>&quot;In the US, 92% of drivers drive less than 40 hours per week, and 45% of drivers drive less than 10 hours per week. [...] We will continue to defend the innovation that makes that kind of choice, flexibility, and independence a reality for over 200,000 drivers in California&quot;.<p>1. Does this distribution looks in California, not across whole US? Why talk about two different cases, unless you cherry pick? 2. How does this % look like, when we look at drivers that work for more than few months?

The reporting around this law is absurd.<p>Despite how it is covered, the law notably fails to do ANYTHING to help gig employees as it just codifies existing case law.<p>What this law does do is carve out exceptions in that case law so that gig employees have LESS protection.<p>This law could have been paired with other real protections for gig employees but that did not happen. No minimum wage guarantee extensions, no rights to organize, no improvements in access to the safety net...etc<p>How do people let our politicians get away with claiming they are protecting people with a bill that does nothing but erode those protections?

So basically their tactic is to eke out a few more years out of their business model as their fight with California over the classification slowly snakes its way through the courts to the California supreme court, and hope that in the meantime they can come up with a better business model?<p>It is actually not a terribly bad idea. They have the money to pay for the slow court battle, and it is strictly cheaper than complying.

I would be interested in hearing a principled defense of the exception that was granted to other industries. Would anyone care to try?

They continue to use the term &quot;rideshare&quot;, which just boggles my mind. So, I guess &quot;share&quot; in this case means that Uber is &quot;sharing&quot; a &quot;cut&quot; of the proceeds with the driver. Maybe they should call it, &quot;fareshare&quot; (but then that would be a play on words that turns out to be an oxymoron).

Honestly, would the, &quot;three important points&quot; have even been a remote consideration of Uber, Lyft, etc., if this legislation was was not even proposed (let alone passed) in the first place?<p>This sounds a lot like someone apologizing and saying they are deeply sorry, only after they are caught doing something wrong.

Uber always positions itself to be whatever is most advantageous for it given the current situation. Just a &quot;technology-based platform&quot;, no, they are a just a modern taxi company that uses a tech platform.<p>I think for many &quot;big tech&quot; companies there needs to be a paradigm shift in how society views them, not as pure tech companies that produce technology solely for technology&#x27;s sake, but like Uber - companies that use tech as a means to an end of a another business (in most cases). Facebook as a news company, Amazon as a retailer, Airbnb as a short term rental unit provider, etc. (these aren&#x27;t all necessarily accurate descriptions).

I can read between the lines an assumption that Uber will do the bare minimum required by law while exercising all restrictions on drivers they are legally allowed to.<p>How can they be for self-organization of drivers (as states in the release) while battling in other state courts for prohibiting unions?<p>If they want to allow drivers to also drive for other platforms (again, from the text), just don’t enforce such clauses in employment contracts.<p>They’re talking about all the changes they supposedly want to see while the only thing stopping it from happening is Uber deciding not to.<p>As if being an employee must mean a rigid schedule and inflexible working hours.

&gt; Our current offer represents a new progressive framework that includes:<p>&gt; Establishing — for the first time ever — a guaranteed minimum earnings standard<p>&gt; So as you can see, we are not arguing for the status quo.<p>Well, ok. The real question though is why.<p>Only companies with massive investments can afford to burn cash to keep the price to the final user as low as Uber&#x27;s.<p>Such regulation would reduce the number of competitors appearing on the market.

Seems like it will bring uber &amp; lyft&#x27;s cost basis in line with cab drivers, making the latter group competitive again.

&gt; We expect we will continue to respond to claims of misclassification in arbitration and in court as necessary, just as we do now.<p>Translation: &quot;We want to help our workers by fighting against their own attempts to assert their legal rights. We will do so in special courts where we hire and pay the judges. This will be perfectly fair.&quot;

&gt;Bringing drivers access to robust portable benefits like sick leave and injury protection;<p>What? Those are embarassing offers.<p>&gt; Our proposal avoids the potential harm of forcing drivers to be employees, whether or not they want to—and the vast majority tell us they don’t want to be<p>I would love to see the data behind the &#x27;vast majority&#x27;

I wonder what&#x27;d the courts would say if Uber decided to charge a nominal fee (say $1&#x2F;year) for the driver app in the App Store? That would make it more obvious that it&#x27;s a piece of software that is being licensed by drivers for lead generation.

It seems Wall Street is not all that worried about AB5.<p><a href="https:&#x2F;&#x2F;finance.yahoo.com&#x2F;quote&#x2F;UBER&#x2F;" rel="nofollow">https:&#x2F;&#x2F;finance.yahoo.com&#x2F;quote&#x2F;UBER&#x2F;</a><p>Looking at the 5 day stock trends, it seems up compared to last week.

this is probably going to be labeled as a naive view, but to me it&#x27;s clear that no one cares about the spirit of the sharing economy (not even corps like uber or airbnb): no one should be dedicating 100% of their &quot;work time&quot; to ubering... nor buying up properties to rent it out as airbnb permanently... I thought it was about unused&#x2F;wasted time&#x2F;resources that could be shared (for some profit).<p>Corps likely airbnb and uber should probably go back to building their platforms to promote occasional resource assignment rather than permanent.

Are they really trying to claim that Uber is not a transportation company but instead &quot;a technology platform for several different types of digital marketplaces&quot;?<p>I guess we do live in a post-truth era.

Summary: &quot;This bill does absolutely nothing to affect us. But please don&#x27;t pass it, or at least let us compromise, since it would affect us so much.&quot;<p>Seems a little bit contradictory?

The government seems to be solving the wrong issue. Shouldn&#x27;t the government instead fix the Whatever it is that makes being classified as contractor suck in the first place?

As regards to the hour claim, if the law goes into effects, what would happen to those drivers who can&#x27;t drive 40 hours per week?

It’s nuts for Uber to talk about their “offer.” They don’t make the offer, the voters do.

What&#x27;s the defense of a business model that loses bucketloads of money despite not treating their drivers with the dignity they deserve? Both Uber and Lyft are not going to be killed by regulation, they&#x27;re going to be killed for being shitty businesses.

Perfect way to eliminate the competition via regulatory lock out

tl;dr &quot;Bill clearly aimed specifically at us doesn&#x27;t apply to us.&quot;

Wow, just .. wow. I thought it was going to be Uber&#x27;s plan of coming under compliance of AB5 and sugar coating the entire thing to made them sound like some honorable people. But no, they&#x27;re still scum. You get half way through and you realize it&#x27;s just business as usual. We&#x27;re going to ignore, fight and not give a shit about the law.<p>The build up to this legislation was that it was specifically around companies like Lyft, Uber, Dolly, etc. To argue against this just shows how desperate the company is to not give up anything.<p>Personally I stopped using Uber in 2016 and never looked back. I&#x27;d rather pay more for a Lyft. If both of them disappear tomorrow, there will always be Taxis; and maybe cities will finally start building out real mass transit like America has needed for decades, instead of hanging on to the brain-dead dream of a self-driving cab.