Uber drivers are employees, Calif. court rules. A blow for ‘sharing economy’ startups? via /r/technology
Posted at 11:15h, 14 Jul 2015 in List Archive by Bonnie Halper No Comments 135 Likes Share

Good morning, All,

There’s an expression that the many in the tech community have glommed onto as if it’s part of the startup manifesto: Ask forgiveness, not permission. We’ve covered this in the past, in other forms, but factoring in that tech is very much and has long been the domain of the alpha male, let’s face it: the concept of forgiveness is not really part of their lexicon. So while it’s a nice idea, honestly: it’s more a ‘whatever’ attitude. Asking permission is not what they’ll do and as for the consequences, it’s left to the world at large to deal with it.

Which is never a good idea. This arrogance is inviting regulation, and it’s never a good idea to catch the attention of the regulators.

Uber is the perfect example, and note to self: when a company has a name like Uber, it wreaks of Alpha, and speaks volumes. Uber is a technology solution, meaning, from their point of view, that they’ve absolved themselves of responsibility for the Uber drivers who are using the technology. They’re not employees; Uber has taken no responsibility for the crimes/misdemeanors they’ve incurred in various cities, states and countries. Nice idea, but not so, said the recent ruling of a California court: Uber drivers are employees, Calif. court rules. A blow for ‘sharing economy’ startups?

But Uber being Uber: ‘The California ruling is “nonbinding and applies to a single driver,” Uber said in a statement. But if taken as precedent, it has potential to undermine the nimble profitability of such businesses. If Uber drivers are considered employees, the company would have to provide employees benefits and regular salaries, and pay the government for Social Security and Medicare taxes for each employee. The sharing economy, in other words, might have to grow up and give a real job.’

Uber is not alone: There were also Labor cases filed against Shyp, Washio, Postmates. Although the package pick up and delivery company decided, enough of this Shyp and made a somewhat preemptive move, transitioning their couriers to W2 employee status. So while we have covered this before, with the growing number of lawsuits, regulation is likely not far behind. Time to take responsibility. Resistance, it seems, is futile.

Speaking of which, what is even more of a concerns than playing fast and loose with regulations is that Uber is reportedly losing boatloads of money. Uber knows that millions of Uber China rides are faked and can – but won’t – shut them down out of concern that “doing so would slow its genuine organic growth because being overly strict could result in false positives, banning real drivers and passengers who aren’t cheating the system.” It’s just another iteration of eyeballs/perception uber alles, and note to self: since they’re supposedly not employees and not reaping those benefits, why not start their own cottage industry, or game the system themselves? Payback is always a bitch.

The tech industry is no longer in its nascent stage. It’s a major employer – including having employed lobbyists – and has inserted itself into every aspect of our lives. There’s no doubt that the work paradigm has shifted: with people working remotely, or being hired for only to a certain number of hours a week/month, heads up: that person is still working for that company and expected to deliver a certain amount of work, no matter the number of hours they’re working and this is going to be the next issue that finds itself in the regulators’ sight line. It may not come about immediately, but it’s already out there in the vapors (A Third Classification of Worker? Don’t Count On It), and isn’t that where it always begins? Management seems to sometimes overlook the fact that people are always a company’s greatest asset – and that includes everyone along the food chain, lest we forget that no matter how big and strong you may be, you can be done in, in a heartbeat, by a microscopic virus. The so-called sharing economy is no exception, the operative being ‘share’ and considering Uber, what we’re seeing is that they’re taking a hefty share of investor money and growing quickly before building a truly sustainable business. Time will tell, and asking forgiveness is all well and good, but as always, there’s always a price to pay. And the waiter always comes around with the check. Onward and forward.