Slashdot Mirror
The Uber Economy Needs a New Category of Worker
An anonymous reader writes: Uber headlines a new group of companies building out the so-called "sharing economy," in which people can easily hop in and out of employment modes. Somebody can suddenly start hiring out his driving services to others, taking breaks and setting hours as he prefers, and then just as quickly stop participating forever. An article at NY Magazine says we need to define a new class of worker to fit Uber drivers and similar at-will employees. "According to American employment law, though, our driver must be one or the other, a 1099 contractor or a W2 employee. And the gulf between the two in terms of mandated government protections and benefits is as wide as the line between them is blurry. As such, thousands of on-demand-economy employees and scads of lawyers are at war in court to determine what camp our average driver should fall into. ... It might be time for a new standard that splits the difference between the two — a 'dependent contractor,' as some labor experts call it — that would be better for businesses, consumers, and all those workers themselves."
Look, I get that these guys are trying to do something new. And for that I applaud them and their efforts. However until there are new laws supporting the sort of things they're trying to do they need to follow the current laws especially regarding employment.
Just because you came up with a new way to run things doesn't mean that the rest of it like it or agree that's the way the world should work. Especially when it seems like all you're doing is trying to dodge current legal frameworks without any good reason for doing so.
People who do small side jobs (including myself occasionally) often aim for cash payment to avoid government reporting (especially so-called "self-employment" taxes); it's been called "working under the table" forever. Or if you do regular contract work (which I also do), you get an LLC, go the 1099 route and bury as many expenses you can against the LLC to avoid reporting much of a profit (because profit=taxes). Both routes are common and well-accepted.
>> dependent contractor
Please [diety], no. We just got done with this fight. If you define the terms of success and let me pick how it's done within certain standards of quality, I'm a contractor, and I'll take cash. If you ALSO want me to behave like an employee, controlling my hours, sitting through useless HR presentations, and acting like an agent of a corporation, then I'm an employee and I want the full benefit package. It's pretty black-and-white and has never really been an issue in the dozens of contracts I've been involved in.
Agreed. A "dependent contractor" is by definition an employee. We have several people that have moonlighted for us over the years. We generally considered them 1099s as they did not generally work in our office, use our supplies, or have responsibilities other than delivering a specific product, which would place them firmly in that category.
Reality is that more people need to be considered W2 employees because that is the easiest way to prevent abuses.
The "gotcha" with Uber is what happens when a driver is simultaneously driving for Lyft, Uber, and the Pizza Company? Has he achieved a nexus where he is independent?
My bias is really over the issue of exempt/non-exempt employees though. Labor laws for non-exempt employees are really hard for small businesses when you get beyond restaurant/retail and into the professional realm. (Would you like a coding session when you are in the zone broken up by a mandatory 15-minute break?)
In California it was ruled that uber drivers are employees not contractor so their trying to find a way to not pay employee benefits
Because usually these people only have one person that they sell their services to, and that makes them employees, not contractors. Uber doesn't like treating them as employees, so it wants another box to put them in, and deny them the benefits of being an employee.
There is no reason why Uber can't have work rules for employee drivers that fit the current Uber business model. They just don't want to pay for benefits and offer employment protection like unemployment compensation and minimum wage. Uber wants to take the profits while transferring all the risk to the driver.
There is no question that the current taxi system is a relic of another time and should be dismantled. But that can be done without dis-empowering the workers. The current trend in the courts is to classify drivers as employees rather than contractors since it is Uber that decides (via their app) when and where the work can be done. A contractor is free to decide when and where the work is done. So Uber does not fit the contractor model.
"He took a duck in the face at 250 knots." -- William Gibson, Pattern Recognition
What do think caused all of the stock market crashes: volatility. When you have people with no stability, like say working for a few days, then trying to find another job, they spend most of their time trying to find a job rather than actually working and doing something productive. Worse yet, with this kind of stability, people can not even begin to image of buying a house, a car, and I doubt working day to day, you can even get an apartment.
This form of volatile, "at-will" employment is just INSANE.
We all know what this is really about.
Revenue collection.
It's about the IRS and the state governments not liking that there are 162,037 independent contractors they have to go after for taxes, rather than going after a single choke-point for those same taxes. Thus they would prefer that Uber drivers be employees, rather than contractors.
The answer for Uber is obvious: The cheapest S-corp incorporation runs $39. So to get those 162,037 incorporated as contracting agencies with a single employee would cost $6,319,443.
I'm sure Uber would be happy to pay that out of petty cash. Now the IRS has 162,037 contracting agencies to deal with, all under the total number of employees thresholds that would subject them to most of the government regulations that Uber would be subject to, were they Uber employees.
So they are back in the same regulatory boat they started in, without the ambiguity that regulators are trying to exploit to get their hands on the money, and leaving with exactly the same enforcement issues they wanted to avoid.
They could probably also spin off an "Uber Business Services Division" that charges a flat fee for:
Business license
Business name and/or DBA registration
Account for taxes
Sales tax account
Federal and State Tax ID
Business checking credit accounts
Merchant account (to process credit cards) (or used the new "Uber Payment Provider Gateway" instead)
Insurance (business, liability, property, if applicable)
Accounting software (or use the new "Uber Books" online accounting system)
Or they could just create a damn franchising company, and make them all franchisees, with Uber's take coming as franchise fees.
P.S.: I suggested a similar approach to AirB&B to incorporate them all as actual B&B's...