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California Bill Makes App-Based Companies Treat Workers as Employees (nytimes.com) 188

California legislators approved a landmark bill on Tuesday that requires companies like Uber and Lyft to treat contract workers as employees, a move that could reshape the gig economy and that adds fuel to a yearslong debate over whether the nature of work has become too insecure. From a report: The bill passed in a 29 to 11 vote in the State Senate and will apply to app-based companies, despite their efforts to negotiate an exemption. California's governor, Gavin Newsom, endorsed the bill this month and is expected to sign it after it goes through the State Assembly, in what is expected to be a formality. Under the measure, which would go into effect Jan. 1, workers must be designated as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company's regular business.

The bill may influence other states. A coalition of labor groups is pushing similar legislation in New York, and bills in Washington State and Oregon that were similar to California's but failed to advance could see renewed momentum. New York City passed a minimum wage for ride-hailing drivers last year but did not try to classify them as employees. In California, the legislation will affect at least one million workers who have been on the receiving end of a decades-long trend of outsourcing and franchising work, making employer-worker relationships more arm's-length. Many people have been pushed into contractor status with no access to basic protections like a minimum wage and unemployment insurance. Ride-hailing drivers, food-delivery couriers, janitors, nail salon workers, construction workers and franchise owners could now all be reclassified as employees.

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California Bill Makes App-Based Companies Treat Workers as Employees

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  • I'm not entirely sure if that was the intent, but I can sure as hell see it being a consequence.
    • I'm not entirely sure if that was the intent, but I can sure as hell see it being a consequence.

      I doubt it. From the news reports this bill was pretty targeted just for companies like Uber and Lyft. Specific exemptions have already been inserted for delivery people, custodial work, etc.

      • Sounds like a lawsuit in the making. "Everyone else can have independent contractors but you can't because you use an app for dispatch!!!"
      • by RobinH ( 124750 )
        Well there's a delivery company around here (Ontario) called Intelcom Express that's using an Uber-style model to deliver for Amazon and very low rates, so delivery companies can't be exempt.
      • There was some concern about building tradespeople earlier on in the process, but not sure how it ended. (Also not sure what the right classification for them would be.)

    • by PCM2 ( 4486 )

      The bill does nothing to change the definition of a freelance contractor in California. It only clarifies that companies in the so-called gig economy are not exempt from existing California labor laws. There are fairly strict definitions in place for who qualifies as a contractor and who is an employee, and that applies to every type of company.

    • by Baki ( 72515 )

      Many (EU) countries have the concept of virtual employment:

      A true freelancer is not affected. But if you're a freelancer but are dependent on a single "customer" for, say, more than a year, you are determined to be virtually employed.

      The result is that the company must pay social security taxes in addition to the state, about 20-40% extra.
      Companies don't like that, so either they have to rotate their freelancers, or hire them permanently.

      It is intended to prevent companies from diminshing their responsibil

  • by SuperKendall ( 25149 ) on Wednesday September 11, 2019 @11:26AM (#59181370)

    I have talked a lot of Uber/Ltfy drivers, because I like asking them how they feel about doing their jobs for these different companies (most of them work for both).

    Almost all of them say they really like the freedom they have, about working whenever they want, however long they want.

    If they become employees doesn't it seem like that will be curtailed?

    Also speaking of most of these drivers working for both companies, is that even allowed if they are considered real "employees'".,,,

  • Lower costs of lower labor costs vs the East coast.
    What happened when the East coast of the USA got too expensive?
    Projects and money moved to CA.
    Make app-based companies pay more in CA?
    Do app-based companies need the good weather of CA and its app tax?
    • Cheap colleges is what really made CA a tech hub. Now that's over and tuition is increasing at a record rate we can expect the slow exodus of businesses. Silicon Valley is no longer the focal point of the brain drain, and sadly the rest of US won't be the winner in this either. We already see an international spread of new campuses and increases in hiring outside of the US. The party is over, and the East coast isn't going to suddenly rise up from the West coast's ashes.

      • by AHuxley ( 892839 )
        Unless it really needs the good weather, everything "app" can be set up outside CA.
        The East coast needs to get its no new app tax message going..
  • by Etcetera ( 14711 ) on Wednesday September 11, 2019 @11:31AM (#59181398) Homepage

    ...every once in a very great while Newsom (and our California Democratic one-party overlords) surprise me.

    This is a good law, for several reasons. First off, the workers clearly *are* employees. "Ride-sharing" may have originally been a noble carpooling goal, but it's blatantly obvious to anyone who uses the service that Uber and Lyft are functioning as employer-provided services. That much is clear. Secondly, the lack of rules-following that these companies (Uber in particular) have gotten away with is staggering. It's only *because* they've flouted rules on employment, payment, insurance, and regulation (or successfully dodged enforcement of arguably applicable ones) that they've "succeeded" this far... Of course, I say "succeeded", but Uber loses money constantly and shows no signs of going into the black any time soon. In the meantime, real existing entities suffer disruption that they can't compete with because they're playing by the rules and regulations that we've had in place for a long time. That's blatantly unfair and quite anti-competitive.

    CA is generally a horrible climate for businesses, but allowing app-based business to disrupt those existing ones by side-stepping rules doesn't help anyone in the state except Silicon Valley investors. Either deregulate everybody, or stop letting the Bay Area walk all over physical, bricks-and-mortar, existing, or mom-and-pop shops.

    My $.02

    • by MobyDisk ( 75490 ) on Wednesday September 11, 2019 @11:40AM (#59181436) Homepage

      So I haven't paid attention to this in a long time, but I am unclear why "the workers clearly *are* employees" when they set their own hours, decide their own location to work, provide their own vehicle, and don't get paid a salary. In what way are they employees?

      • by jwymanm ( 627857 )
        No fucking way that guy/girl is a republican. Not at all. You're a socialist if you don't want one company to get away with avoiding regulations "because all others don't". Guess what? Taxi companies WANTED those regulations to keep out competition in the first place. Regulations harm everyone but big business because they can keep out smaller competitors or disruptive technology that replaces their failed ecosystem. And yeah. These workers are not employees in any sense of the word. They do not suffer from
        • by Etcetera ( 14711 )

          No idea who you are, but I'm willing to bet I had proved my GOP bona-fides before you were able to vote.

          I'm a libertarian-ish/leaning Republican, but that doesn't mean I have to be a pure Libertarian, nor must I conclude that all regulation is bad. Some regulations are good. I'm no fan of Newsom or the CDP (no CA Republican could be), but leveling the playing field by requiring everyone in a given industry to play by the same rules makes for better competition.

          Look, I'm old enough to once have been naive ab

        • That is true. But they also do not suffer from having health care, either, and I'm sure this is one of the considerations for the CA proposal.
      • The IRS gives suggestions for [irs.gov] when a person is an employee or a contractor [irs.gov]. Unfortunately they don't want to box themselves in, so they hedge and waffle saying that certain traits may make you an employee or a contractor, but not necessarily. In am ambiguous case like Uber/Lyft, it'll probably take a ruling by the U.S. Tax Court to definitively establish this one way or another.

        This is one of those cases where the uncertainty of not yet having decided is worse than deciding it one way or another. In t
    • "CA is generally a horrible climate for businesses"

      I'm sure that they're the 5th largest economy on the planet because it's such a horrible business climate. That makes total sense.
  • by OrangeTide ( 124937 ) on Wednesday September 11, 2019 @11:39AM (#59181428) Homepage Journal

    The right approach is anyone who isn't a licensed contractor is an employee. From a maid to a web designer, no special casss. Once someone is licensed with the state and sets up a sole proprietorship or LLC then they can be a real contractor.

  • by DaveV1.0 ( 203135 ) on Wednesday September 11, 2019 @11:51AM (#59181512) Journal
    This bill essentially outlaws independent contracting. I don't know about CA but where I live, most couriers, taxi drivers, strippers, many construction workers, temporary workers, and a lot of other workers are independent contractors.Companies that hire independent contractors usually "exerts control over how they perform their tasks" and often "their work is part of [the] company's regular business".
  • The West shall make you free!

  • This is going on over many spectrums of software now for so called "freelancers" or "contractors". I can't tell you, as a freelancer, how many companies are hiring a "contractor" for their mobile app or webpage and want them to work 40 hours a week and many times onsite (no remote allowed), despite the IRS being very clear on how employers should treat non-employees

    The whole point of being a freelancer/contractor is to do the work, when you want, how you want and where you want as long as deadlines are
    • by MikeKD ( 549924 )

      The whole point of being a freelancer/contractor is to do the work, when you want, how you want and where you want as long as deadlines are met, no matter how many hours it takes. If we are stuck working full time and cant even work remote then whats the point? All they want to have is the availability and work of a regular employee, without having to pay for benefits.

      The company also gets to shift it's payroll tax obligations (~7.5%, for SS and Medicare) onto you (assuming US). So, a definite win from their point of view...and what are you going to, risk getting blackballed by standing up for your rights. Don't jeopardise your credit rating, boy.

  • CA will find this to be a double-edged sword. It is going to increase the expense of the gig services and drive casual providers out, being replaced by those making Lyft and Uber fulltime jobs. These gig services were never envisioned as a fulltime position and those choosing to work 12-hour days and sleep in their cars are forgoing better paying and better benefits elsewhere. Rather, it was supposed to be a way those with a capital asset, a car, to make some money putting it to work when it isn't being
  • Governments protecting the common man in favor of large corporations! Oh no!
  • by bradley13 ( 1118935 ) on Wednesday September 11, 2019 @01:17PM (#59181914) Homepage

    As CoyoteBlog as already discussed in detail: this is the beginning of the end for companies like Uber and Lyft. [coyoteblog.com]

    If workers are contractors, they can choose when and where they work. If they want to hang around at some suboptimal place - maybe at home - waiting for a gig, that's on them. Uber/Lyft don't care how efficiently they use their time. One they are employees, that freedom is gone. If they are on salary, they will be told where to wait, when to work, which rides to give. They will be required to be efficient, or they will be fired.

    There's the old saying: "Be careful what you ask for, because you might get it."

    For Uber and Lyft, well, they are now just ordinary taxi companies, with apps and ridiculous valuations. Of course, that's all they ever were, just like WeWork is just a real estate company with espresso machines.

  • What other major job category out there can you work as much as you want whenever you want? Want work? Press a button anytime. Want a break? Press a button anytime. Take as long as you want. Press a button when you want more for as long as you want. No timecards, no callin, no douchbag boss breathing down your neck. Its the ultimate in freedom. What more can you ask for? Sure you probably won't be raising a family in a nice middle class suburban tract with a picket fence with platinum healthcare on Uber fe
  • I am assuming this summery is poorly written, as I am pretty sure a law using that wording would make Google and Amazon employees of millions of other businesses. But I have to wonder how they expect to enforce this? How do they expect to basically make two independent corporations signing a contract to exchange goods and services illegal?

    It disembowels the entire American system of equality, marking every actor as either a serf or a baron.

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