A California Labor Commission has ruled that Uber drivers are actually employees rather than self-employed users of a web-based application. Here is Slate Article about it Here is LA Times Article & Huffington Post Article
The Commission says that this is a decision only applicable to this one situation --but everyone seems to recognize that this could set a precedent for other rulings to follow as well.
There needs to be some standards set for what is 1099 work and what is an in employee/employer relationship.I think the standards need to be applicable across the US -- not just in one state.
I can understand how a Labor Commission might make this determination. The drivers are dispatched by the application, and receive their money via the Uber application. Uber has standards for the employees and their cars to comply with in order to drive for them. However it could be said that Many other businesses are similar, and that this sort of ruling could destroy innovation, entrepreneurship, and venture capital.activities in California--and if it spreads, throughout the country.
I was a newspaper carrier for the Washington Star, an evening paper, in Suburban Washington DC (Silver Spring, MD) in the late 1950s and early 1960s. I was in 7th through 10th grade, and I had to cover a very wide growing rural area on my bicycle and eventually had around 100 customers. I paid for my newspapers, and then collected payments from my customers. I worked hard to get new customers, and provided my best service to try to earn good tips. I felt I was running my own business. My mom taught me bookkeeping so I could figure out if I made a profit when I had some customers who paid far in advance, and others delinquent. I bought IBM stock with my earnings and that investment's rapid growth helped cover a LOT of my college expenses. I thought the experience was VERY valuable for me, so I was very sad when government pressure forced the newspaper companies to convert carriers to full-time employees. All kids lost that opportunity! I'm afraid that this type of ruling could kill the opportunity we have with Uber & Lyft-type businesses to make our economy more efficient. It is clear that there is tremendous inefficiency in the taxi business when you see long lines of cabs waiting for a turn for several hours, and then, at other times, when we need a cab, there aren't enough around! Applications like Uber/Lyft help smooth out that problem.
At the Federal level, the 1099 vs employee situation has never been all that clear either. When a 1099-type employee files income taxes, there is always risk that the IRS could declare that the job was actually an employer/employee relationship. So companies and professionals are both taking risk when doing 1099-type work.
If Uber is determined to be an employer, what about "mechanical turk" or other similar job-placement services? There are hundreds of them! What about VRBO, AirBnB, and Flipkey? They have standards for rental properties, and collect and pay owners for renting. Are owners of AirBnB properties now employees, similar to owners of cars working for Uber? Why should Uber reimburse a driver for car expenses, and VRBO not reimburse an owner for utilities in a property rental?
I like the idea of having some sort of fair competition involved in all aspects of business. Too much competition can be bad, cutthroat, and counterproductive, so it does need to have rules to keep it all under control. So I like business constructs where labor is given opportunity to compete. 1099 work provides that opportunity, and these new internet applications have enabled more of that. I also see the advantages of having organized labor. Labor unions have a role to play, but they also need competition to keep them on their toes. Just like we have laws to prevent monopolies, we should have laws to prevent monopolies in labor. If every 5 years labor contracts were put out for bid, then unions could bid on those jobs and compete, rather than go on strike. If one union is more efficient with better trained and productive employees than another it should be selected as the winner! To implement such a system, Union size would have to be limited. To be fair, corporation size should also be limited. The size of our corporations are now so big that stockholders, customers, suppliers and employees have little or no control over it's power. Government recognizes that those companies are "too large to let fail" --so even if they are terribly mismanaged, Government will prop them up. Because they are so large, the corporations are free to contribute immense amounts of money to politicians allowing even more control over Government. I'm afraid now that the US Capitalistic system is in a "death spiral"....
I have the feeling that the Labor Commission made this decision as an attempt to put their "finger in the dike" to stop some of this --but as a result, made a bad decision that will further hurt the country.
The Commission says that this is a decision only applicable to this one situation --but everyone seems to recognize that this could set a precedent for other rulings to follow as well.
There needs to be some standards set for what is 1099 work and what is an in employee/employer relationship.I think the standards need to be applicable across the US -- not just in one state.
I can understand how a Labor Commission might make this determination. The drivers are dispatched by the application, and receive their money via the Uber application. Uber has standards for the employees and their cars to comply with in order to drive for them. However it could be said that Many other businesses are similar, and that this sort of ruling could destroy innovation, entrepreneurship, and venture capital.activities in California--and if it spreads, throughout the country.
I was a newspaper carrier for the Washington Star, an evening paper, in Suburban Washington DC (Silver Spring, MD) in the late 1950s and early 1960s. I was in 7th through 10th grade, and I had to cover a very wide growing rural area on my bicycle and eventually had around 100 customers. I paid for my newspapers, and then collected payments from my customers. I worked hard to get new customers, and provided my best service to try to earn good tips. I felt I was running my own business. My mom taught me bookkeeping so I could figure out if I made a profit when I had some customers who paid far in advance, and others delinquent. I bought IBM stock with my earnings and that investment's rapid growth helped cover a LOT of my college expenses. I thought the experience was VERY valuable for me, so I was very sad when government pressure forced the newspaper companies to convert carriers to full-time employees. All kids lost that opportunity! I'm afraid that this type of ruling could kill the opportunity we have with Uber & Lyft-type businesses to make our economy more efficient. It is clear that there is tremendous inefficiency in the taxi business when you see long lines of cabs waiting for a turn for several hours, and then, at other times, when we need a cab, there aren't enough around! Applications like Uber/Lyft help smooth out that problem.
At the Federal level, the 1099 vs employee situation has never been all that clear either. When a 1099-type employee files income taxes, there is always risk that the IRS could declare that the job was actually an employer/employee relationship. So companies and professionals are both taking risk when doing 1099-type work.
If Uber is determined to be an employer, what about "mechanical turk" or other similar job-placement services? There are hundreds of them! What about VRBO, AirBnB, and Flipkey? They have standards for rental properties, and collect and pay owners for renting. Are owners of AirBnB properties now employees, similar to owners of cars working for Uber? Why should Uber reimburse a driver for car expenses, and VRBO not reimburse an owner for utilities in a property rental?
I like the idea of having some sort of fair competition involved in all aspects of business. Too much competition can be bad, cutthroat, and counterproductive, so it does need to have rules to keep it all under control. So I like business constructs where labor is given opportunity to compete. 1099 work provides that opportunity, and these new internet applications have enabled more of that. I also see the advantages of having organized labor. Labor unions have a role to play, but they also need competition to keep them on their toes. Just like we have laws to prevent monopolies, we should have laws to prevent monopolies in labor. If every 5 years labor contracts were put out for bid, then unions could bid on those jobs and compete, rather than go on strike. If one union is more efficient with better trained and productive employees than another it should be selected as the winner! To implement such a system, Union size would have to be limited. To be fair, corporation size should also be limited. The size of our corporations are now so big that stockholders, customers, suppliers and employees have little or no control over it's power. Government recognizes that those companies are "too large to let fail" --so even if they are terribly mismanaged, Government will prop them up. Because they are so large, the corporations are free to contribute immense amounts of money to politicians allowing even more control over Government. I'm afraid now that the US Capitalistic system is in a "death spiral"....
I have the feeling that the Labor Commission made this decision as an attempt to put their "finger in the dike" to stop some of this --but as a result, made a bad decision that will further hurt the country.
