California passes landmark bill that threatens to upend companies like Uber and Lyft

[chuckiechan]

California passes Assembly Bill 5 for gig workers

The legislation, known as Assembly Bill 5 (AB5), would require gig economy workers to be reclassified as employees instead of contractors. The bill passed in a 29 to 11 vote in the State Senate and now moves on to the State Assembly, where if it passes, it will land on Newsom’s desk.

The bill has the potential to change the employment status of more than 1 million low-wage workers in California, not just gig workers at companies like Uber, Lyft, DoorDash, Postmates and Instacart. It will make it harder for gig economy companies to prove that their workers aren’t staff, while ensuring key benefits and protections, like minimum wage, insurance and sick days.

Its my opinion that with very few exceptions, the people where the rubber hits the road aren’t making any money. Independent contactorship can work in lots of areas, but it takes big sales with low overhead. Uber snd Lyft make the money, the driver/owner gets the squeeze.

Tax collectors don’t like independents because they often end up owing, and cant pay. And regular taxi companies are getting hammered.

So we shall see. Uber and Lyft had better bring out the check books, ‘cause Daddy is hungry.

 

[Pound4abrown]

This will be interesting to watch unfold.

 

[Moderate Right]

California passes Assembly Bill 5 for gig workers



Its my opinion that with very few exceptions, the people where the rubber hits the road aren’t making any money. Independent contactorship can work in lots of areas, but it takes big sales with low overhead. Uber snd Lyft make the money, the driver/owner gets the squeeze.

Tax collectors don’t like independents because they often end up owing, and cant pay. And regular taxi companies are getting hammered.

So we shall see. Uber and Lyft had better bring out the check books, ‘cause Daddy is hungry.

Uber and lyft don't need checkbooks. They will just pass any additional costs on to the public. And, a lot of these contractors fall into the 50% who would not pay federal income taxes anyway, although they would ow FICA.

 

[Stealers Wheel]

Actually, the IRS has a specific test for determining when someone is an independent contractor. No state law is going to override that.

Some of the points are Does the worker set their own hours? Does the worker decide how they will complete the work? Does the worker supply their own tools or equipment? Does the work get paid by the hour or by the job completed?

Uber driver are independent contractors. Cali will pound sand on the first court challenge of this new law.

 

[Lord Tammerlain]

Uber and lyft don't need checkbooks. They will just pass any additional costs on to the public. And, a lot of these contractors fall into the 50% who would not pay federal income taxes anyway, although they would ow FICA.

Uber and Lyft have yet to make a profit. They are keeping rates low to drive out competitors then when they are gone raise rates in a monopolistic market (at least their hope)

 

[bluesmoke]

Independent contracting is a scam to get around having to hire employees. You are anything but independent.

 

[Barnacle]

California passes Assembly Bill 5 for gig workers
...
Its my opinion that with very few exceptions, the people where the rubber hits the road aren’t making any money. Independent contactorship can work in lots of areas, but it takes big sales with low overhead. Uber snd Lyft make the money, the driver/owner gets the squeeze.
Tax collectors don’t like independents because they often end up owing, and cant pay. And regular taxi companies are getting hammered.
So we shall see. Uber and Lyft had better bring out the check books, ‘cause Daddy is hungry.

"... The bill has the potential to change the employment status of more than 1 million low-wage workers in California, not just gig workers at companies like Uber, Lyft, DoorDash, Postmates and Instacart. It will make it harder for gig economy companies to prove that their workers aren’t staff, while ensuring key benefits and protections, like minimum wage, insurance and sick days."


I forsee more the potential of 1 million low-wage workers being out of a job.

On the other hand, if Uber, Lyft and the like hire a sort of middleman like an employment agency, their extra costs would be kept to a minimum with no need to offer health insurance, minimum wage or any other benefits to the low-wage workers.

 

[Harshaw]

Uber and Lyft have yet to make a profit. They are keeping rates low to drive out competitors then when they are gone raise rates in a monopolistic market (at least their hope)

California doesn't mind the cab companies doing that. They just mind rideshare companies not paying them their hefty tribute (buying medallions) in order to do it.

There's nothing stopping any other rideshare company from doing the same thing as Uber and Lyft. Competition.

 

[Waddy]

Independent contracting is a scam to get around having to hire employees. You are anything but independent.

Baloney. I did subcontracting construction work for years, and wouldn't have it any other way. Very, very few homebuilders have enough work to keep a tile crew, or an electrical crew, or a plumbing crew busy 40 hours or more per week. As a subcontractor you work for several builders at one time, align your schedule with theirs, and move from job to job. It makes zeo sense to try to keep a tile crew on a permanent payroll. And you make more money subcontracting. My youngest son has a full time computer oriented job, yet he contracts for work with a variety of companies who need software written. He makes very good money at this part time and can choose what he works on. I know several people who bought vans and deliver packages. They also make great money. Some people just thrive better under the subcontracting system.

 

[AliHajiSheik]

What now, the app won't let you log out?

 

[bluesmoke]

Baloney. I did subcontracting construction work for years, and wouldn't have it any other way. Very, very few homebuilders have enough work to keep a tile crew, or an electrical crew, or a plumbing crew busy 40 hours or more per week. As a subcontractor you work for several builders at one time, align your schedule with theirs, and move from job to job. It makes zeo sense to try to keep a tile crew on a permanent payroll. And you make more money subcontracting. My youngest son has a full time computer oriented job, yet he contracts for work with a variety of companies who need software written. He makes very good money at this part time and can choose what he works on. I know several people who bought vans and deliver packages. They also make great money. Some people just thrive better under the subcontracting system.

To be clear, I'm not talking about long-standing contracting work model. I've done sub-contracting construction and independent contracting consulting and loved it. It's more what has come about in recent yrs with the likes of Uber. People tossing newspapers were "contractors". You tell me. Do you really think of Uber drivers and newspaper deliverers as being the likes of an independent construction contractor? Really? They are COMPLETELY different.

 

[OrphanSlug]

I usually question bills like this that for whatever reason have intended targets without much consideration for unintended consequences.

Ultimately there is nothing in the bill for companies that do this to simply take the forced relationship cost additions and pass that right to the consumer, and most articles I can find on this all suggest that is the likely outcome.

All that really means is California *thinks* they are doing something for the worker, but the company will not go without, as the bill in this case literally targets the consumer.

We sure we are all good with California going at this "problem" this way? And are we sure that all employees in this condition are equal (meaning work for Uber, Lyft, and so forth all the same way and under the same terms?)

 

[Waddy]

To be clear, I'm not talking about long-standing contracting work model. I've done sub-contracting construction and independent contracting consulting and loved it. It's more what has come about in recent yrs with the likes of Uber. People tossing newspapers were "contractors". You tell me. Do you really think of Uber drivers and newspaper deliverers as being the likes of an independent construction contractor? Really? They are COMPLETELY different.

Yes, I would consider Uber drivers as independent contractors. They set their own hours, pay their own costs, and provide their own tools. Then pay Uber a cut. They contract with Uber of their own free will. That is the definition of an independent contractor. These types of jobs allow people to join the workforce on their own terms. A friend of my wife's is a hairdresser. She simply rents a chair from the owner of the shop. Makes her own appointments, pays the owner a fixed rent, and makes a good living. So long as a subcontractor meets the criteria, it should be no one else's business how they operate. I smell the traditional taxi companies lobby in all of this. And BTW; a taxi driver is also paid a percentage on what they earn, so the more rides they give on a 40hr week, the more they make. And most work well past that 40hr mark. The city also makes money off the taxi license. But all that means the fares will be quite expensive as well.

 

[Trump]

soon to be a moot point....when cars are completely autonomous ......

 

[TheParser]

If I am not mistaken, many newspapers (including the liberal Los Angeles Times) have protested this law, saying that if they have to treat the people who deliver newspapers as employees instead of contractors, then some of those smaller newspapers will go out of business.


Of course, print newspapers are rapidly disappearing anyway.

Even this 82-year-old no longer subscribes to the print edition of the Los Angeles Times, just the e-newspaper version.

 

[Stealers Wheel]

Independent contracting is a scam to get around having to hire employees. You are anything but independent.

Some employers do try to game the system. My employer tried to call me an independent contractor many years ago. Once I pointed out the IRS test for independent contractor, he backed off that idea. If someone were to report him to the IRS, he would be on the hook for past FICA, Medicare withholding. interest and penalties (for up to 3 years!)

 

[bluesmoke]

Yes, I would consider Uber drivers as independent contractors. They set their own hours, pay their own costs, and provide their own tools. Then pay Uber a cut. They contract with Uber of their own free will. That is the definition of an independent contractor. These types of jobs allow people to join the workforce on their own terms. A friend of my wife's is a hairdresser. She simply rents a chair from the owner of the shop. Makes her own appointments, pays the owner a fixed rent, and makes a good living. So long as a subcontractor meets the criteria, it should be no one else's business how they operate. I smell the traditional taxi companies lobby in all of this. And BTW; a taxi driver is also paid a percentage on what they earn, so the more rides they give on a 40hr week, the more they make. And most work well past that 40hr mark. The city also makes money off the taxi license. But all that means the fares will be quite expensive as well.

Of course, Uber drivers meet the legal definition of an independent contractor. The industry of Uber, et al, will only use independents with no option. California is changing that. If you ask Uber drivers, they know that they are controlled by Uber. There is nothing independent about that. They will say they would rather have employee rights. There are plenty of construction companies who have employees, and use independent contractors. If you ask the independents if they'd rather be an employee, the answer will be "No". If you don't understand that difference, then you refuse to recognize the obvious. "Makes a good living" and "how they operate" are areas more dictated by Uber to the so-called "independent contractor" than there is someone in your friend's hairdressing business dictating to her. Who pays your friend? Guess who pays Uber drivers. What a scam. If independent construction subs starting getting Uber-type deals, what do you think they'd do?

 

[bluesmoke]

Some employers do try to game the system. My employer tried to call me an independent contractor many years ago. Once I pointed out the IRS test for independent contractor, he backed off that idea. If someone were to report him to the IRS, he would be on the hook for past FICA, Medicare withholding. interest and penalties (for up to 3 years!)

Good man.

 

[Waddy]

Of course, Uber drivers meet the legal definition of an independent contractor. The industry of Uber, et al, will only use independents with no option. California is changing that. If you ask Uber drivers, they know that they are controlled by Uber. There is nothing independent about that. They will say they would rather have employee rights. There are plenty of construction companies who have employees, and use independent contractors. If you ask the independents if they'd rather be an employee, the answer will be "No". If you don't understand that difference, then you refuse to recognize the obvious. "Makes a good living" and "how they operate" are areas more dictated by Uber to the so-called "independent contractor" than there is someone in your friend's hairdressing business dictating to her. Who pays your friend? Guess who pays Uber drivers. What a scam. If independent construction subs starting getting Uber-type deals, what do you think they'd do?

In one sentence you acknowledge that Uber drivers are indeed independent contractors, and then you say they are controlled by Uber. Which is it? Does Uber control their hours, provide the car, the insurance, gas, maintenance, etc., or do anything besides sign them up to drive as independent contractors? The deal is Uber gets the booking fee and a cut of the fare. For that Uber provides a service, including rating both passengers and drivers. That rating costs the same whether it is a minimum ride or a long ride. So the booking fee is legit. I don't see this as a bad deal for either the driver or Uber. I smell the taxi lobby in this. They hate Uber.

How would construction sub-contractors like an Uber deal? Some would love it. Uber would rate the employees used by the contractor, which might making hiring lees of a crap shoot, they would rate the homeowner and general contractor, which means the sub-contractor might get paid on time, (sometimes they don't ever get paid, and put a lien on the home/business). So, yeah, some might just love it.

 

[ludin]

California passes Assembly Bill 5 for gig workers



Its my opinion that with very few exceptions, the people where the rubber hits the road aren’t making any money. Independent contactorship can work in lots of areas, but it takes big sales with low overhead. Uber snd Lyft make the money, the driver/owner gets the squeeze.

Tax collectors don’t like independents because they often end up owing, and cant pay. And regular taxi companies are getting hammered.

So we shall see. Uber and Lyft had better bring out the check books, ‘cause Daddy is hungry.

They are already fighting this and i think uber said to go sit on it.

 

[OscarLevant]

California passes Assembly Bill 5 for gig workers



Its my opinion that with very few exceptions, the people where the rubber hits the road aren’t making any money. Independent contactorship can work in lots of areas, but it takes big sales with low overhead. Uber snd Lyft make the money, the driver/owner gets the squeeze.

Tax collectors don’t like independents because they often end up owing, and cant pay. And regular taxi companies are getting hammered.

So we shall see. Uber and Lyft had better bring out the check books, ‘cause Daddy is hungry.

In point of fact Uber has been losing three to 5 billion per year.

 

[Deuce]

Part of Uber's argument is that driving cars is not a core component of their business.

If that doesn't get laughed out of court, I don't know what will.

 

[ElChupacabra]

Independent contracting is a scam to get around having to hire employees. You are anything but independent.

It definitely creates a gray area for businesses to do exactly that. This has been an issue in the fitness industry as well because many teachers are listed as ICs (independent contractors) but for all intents and purposes serve as employees.

 

[ElChupacabra]

Part of Uber's argument is that driving cars is not a core component of their business.

If that doesn't get laughed out of court, I don't know what will.

Yeah, I'm curious how they're going to justify that one. I suppose they could say their core business component is connecting people to drivers for hire, but even that's a real stretch.

 

[sjmay]

Part of Uber's argument is that driving cars is not a core component of their business.

If that doesn't get laughed out of court, I don't know what will.

Uber went HARD into the freight market,

I believe without seeing it, Uber's contention is that their core business is matchmaking software, not driving cars.