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kiva

(4,373 posts)
Wed Jun 17, 2015, 03:54 PM Jun 2015

California pokes big hole in Uber's business model

A San Francisco-based driver for smartphone-based ride-hailing service Uber is an employee, not a contractor, according to a ruling by the California Labor Commission.

<snip>

Classifying Uber drivers as employees opens the company up to considerably higher costs, including Social Security, workers’ compensation and unemployment insurance. That could affect its valuation, currently above $40 billion, and the valuation of other companies that rely on large networks of individuals to provide rides, clean houses and other services.

Uber had argued that its drivers are independent contractors, not employees, and that it is "nothing more than a neutral technology platform."

But the commission said Uber controls the tools driver use, monitors their approval ratings and terminates their access to the system if their ratings fall below 4.6 stars.


http://www.reuters.com/article/2015/06/17/us-uber-california-idUSKBN0OX1TE20150617

This is an interesting turn of events.

32 replies = new reply since forum marked as read
Highlight: NoneDon't highlight anything 5 newestHighlight 5 most recent replies
California pokes big hole in Uber's business model (Original Post) kiva Jun 2015 OP
Good ellisonz Jun 2015 #1
About damned time thelordofhell Jun 2015 #2
The drivers are independent contractors. former9thward Jun 2015 #3
California Labor Commission disagrees with you. Kingofalldems Jun 2015 #4
I don't know what you consider to be an "expert" former9thward Jun 2015 #5
I asked if you were an expert, period. You say no. Kingofalldems Jun 2015 #6
Just because someone holds a title or position, this not mean they cui bono Jun 2015 #7
I did not say no. former9thward Jun 2015 #9
LOL, yes, because any ruling is never overturned! nt Logical Jun 2015 #18
By choice.... daleanime Jun 2015 #13
That question can be said about most jobs. former9thward Jun 2015 #17
Meaning you know that for many...... daleanime Jun 2015 #22
Again that applies in every field. former9thward Jun 2015 #23
So because 'bad' things exsist everywhere.... daleanime Jun 2015 #24
Florida seems to disagree rpannier Jun 2015 #16
Actually Uber drivers can't turn down too many fares or consistently not work during peak hours mythology Jun 2015 #30
I strongly suspect the courts will overturn this whatthehey Jun 2015 #8
Uber claims it only applies to thje individual rpannier Jun 2015 #15
Good! n/t Spazito Jun 2015 #10
Not unexpected. progressoid Jun 2015 #11
Largely because AirBnB skirt registration fees, charging and paying hotel taxes, Luminous Animal Jun 2015 #27
Yep. progressoid Jun 2015 #29
Similar with Uber. Unlike taxis, they are not required to pick up in every neighborhood, not Luminous Animal Jun 2015 #31
May this be a broad precedent. paulkienitz Jun 2015 #12
One of the criteria I.R.S. uses to determine contractor/employee claims is the control of hours: Hoppy Jun 2015 #14
The state of California has a significantly longer checklist than the feds Luminous Animal Jun 2015 #25
It will be upheld. Starry Messenger Jun 2015 #26
Are the Uber drivers unhappy? nt Logical Jun 2015 #19
they're uber pissed NightWatcher Jun 2015 #20
I still don't see how they are not an unlicensed taxi service NightWatcher Jun 2015 #21
+1 leftstreet Jun 2015 #28
Because.... technology ! Bonx Jun 2015 #32

former9thward

(32,006 posts)
3. The drivers are independent contractors.
Wed Jun 17, 2015, 04:24 PM
Jun 2015

This ruling will be overturned in court. Uber drivers work when they want and for as long as they want. They are not directed by Uber. The ratings argument is silly. Every company determines how good its contractors work is. Then they decide whether they want to use them in the future.

former9thward

(32,006 posts)
5. I don't know what you consider to be an "expert"
Wed Jun 17, 2015, 04:30 PM
Jun 2015

so I suspect it is a loaded question that I will pass on. I know they disagree. The courts will not. BTW are you an "expert" in all the opinions you post here? Did not know that was a requirement...

Kingofalldems

(38,458 posts)
6. I asked if you were an expert, period. You say no.
Wed Jun 17, 2015, 04:45 PM
Jun 2015

Apparently you think you know more than experts on labor matters.

cui bono

(19,926 posts)
7. Just because someone holds a title or position, this not mean they
Wed Jun 17, 2015, 04:54 PM
Jun 2015

are an 'expert'. Be it for incompetence or lack of ethics, a lot of people in every area of employment get it 'wrong'.

As to the Uber case, I have no position at this time.

EDITED

former9thward

(32,006 posts)
9. I did not say no.
Wed Jun 17, 2015, 04:57 PM
Jun 2015

I said I was not going to fall for a loaded question from you because you would shoot down anything I wrote. Did you ask the other posters if they were experts on labor matters? How could they say it was a correct ruling if they were not? There are a lot of experts in pretty much all subjects. They sometime disagree. Go into any court anyday and you find out. The real experts are the judges who will rule on this matter.

 

mythology

(9,527 posts)
30. Actually Uber drivers can't turn down too many fares or consistently not work during peak hours
Wed Jun 17, 2015, 09:45 PM
Jun 2015

Additionally, Uber dictates the price of the fares, the type/condition of the car and Uber collects the payments and gives the drivers a share.

Also in California, if somebody is essential to the core of the business, they are an employee, not a contractor. Uber without drivers, is an app that makes no money. Uber can insist all they want that they are a technology company, but it's a load of horseshit.

As for if it will be overturned, the 9th District Court already spanked FedEx for trying to claim that their delivery drivers were independent contractors. It's a good decision and one that will drag Uber, kicking and screaming like petulant children, into treating their employees correctly.

And that's before you get into Uber's other reprehensible practices like sabotaging competitors through a concerted effort to place phony requests for pick up and then cancelling at the last moment and smearing journalists who reported on Uber.

whatthehey

(3,660 posts)
8. I strongly suspect the courts will overturn this
Wed Jun 17, 2015, 04:55 PM
Jun 2015

Incidentally this ruling applies to only the individual who brought the case and contradicts a previous ruling by the same commission.

I have no interest or bias in the decision, but it's a strange employment agreement that allows employees to work at will at any given moment and which involves no hierarchy, no interview process, no place or term of employment, no employer-provided resources and assigns work only by smartphone app. If that becomes employment, then what exactly is a contractor?

rpannier

(24,329 posts)
15. Uber claims it only applies to thje individual
Wed Jun 17, 2015, 06:54 PM
Jun 2015

Although the ruling affects only California, the state is Uber's home base, one of its largest markets, and sets a path often followed by regulators and courts in other states.

"Assuming it’s upheld on appeal, it may be more than influential," said Thomas Wassel, a partner at Cullen and Dykman. "It will be controlling in California."

I would also mpoint out (referencing the article) that it being overturned is not a done deal either

In another case earlier this month, Uber lost a bid to force arbitration in a federal lawsuit brought in San Francisco by its drivers. Earlier this year, the same U.S. District Court rejected Uber's bid to classify its drivers as independent contractors, saying a jury would rule on their status.

Also, a state agency in Flordia (though it doesn't say which one) ruled that Uber drivers are employees

Uber's business model is the 'have it's cake and eat it too' model. Their employees don't really make the money Uber promises. There have been assaults, rapes, robberies associated with Uber drivers on passengers and Uber claims they have no liability because the drivers are independent contractors

Luminous Animal

(27,310 posts)
27. Largely because AirBnB skirt registration fees, charging and paying hotel taxes,
Wed Jun 17, 2015, 08:17 PM
Jun 2015

and safety regulations.

progressoid

(49,990 posts)
29. Yep.
Wed Jun 17, 2015, 09:39 PM
Jun 2015

One of my clients is in the hotel biz. So far it hasn't impacted them much, but they aren't too pleased with airbnb not having to follow the same rules as them.

Luminous Animal

(27,310 posts)
31. Similar with Uber. Unlike taxis, they are not required to pick up in every neighborhood, not
Wed Jun 17, 2015, 10:03 PM
Jun 2015

required to have adequate insurance coverage when they are off the clock (though still driving around looking for a fare), not required to have a finger-print background check, not required to have their vehicles inspected, and not required to have a handicap fleet. And surge pricing is bullshit.

paulkienitz

(1,296 posts)
12. May this be a broad precedent.
Wed Jun 17, 2015, 06:08 PM
Jun 2015

There are dozens of other industries that abuse contractor status. Including my current one. This is my fourth year as a temp. Uber can go (redacted)

 

Hoppy

(3,595 posts)
14. One of the criteria I.R.S. uses to determine contractor/employee claims is the control of hours:
Wed Jun 17, 2015, 06:42 PM
Jun 2015

Time and quantity. Based on this, I also believe the decision will not hold.

Luminous Animal

(27,310 posts)
25. The state of California has a significantly longer checklist than the feds
Wed Jun 17, 2015, 08:13 PM
Jun 2015

when determining employee status.

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