This is an important point, as many times these laws claim to do one thing and end up doing another.

Does this fix a problem? Or does it keep the old problem, just in a new configuration, and add barriers to entry for new participants?

I think the answer may be "yes" effectively if it leads to establishing companies of contractors but not without side effects in themselves - like most regulations really.

If gig economies lead to working with companies instead of individuals that would lead to two distinct branches. * A self established one would give more regulatory surface for things like training and background check requirements. Not as easy to sign up before any added regulations. Constituents would get more of a pure cut. The barriers to entry would make their labor slightly more valuable. * A traditional company which hires employees. They would have a middleman to make signing up easier but likely less flexibility - which doesn't matter as much to fulltimers anyway.

It likely result in a less flexible market with more barriers to entry but it would solve some problems and act as a framework to add more solutions and problems for better or worse. It could be abused to create cartels again or responsibly handle externalities without unduly privileging - it depends on how the tool is used.

Second order effects are likely a labor pool that cannot rise and fall as quickly which would stabilize prices for the labor supply and turn instability into a company liability as they may be left with a choice of paying for idle labor for availability and meeting demand for sure or risking being unable to fulfill demand.

That said I wouldn't be surprised if widespread roll out of these sorts of laws caused a gig economy bubble to burst - especially given how many are doing a VC dumping strategy of losing money on transactions.

I don't really have strong feelings as to what would be the best nor consider myself above an amateur commentator.

Does it matter who the employees are employed by? All rules for an employer apply just as well for the employing company as they would for Amazon if they employed them directly.

It does matter. Here's why:

Uber agrees to pay X rate currently to drivers. A law is passed that makes X rate even more unprofitable.

Uber then engages the services of an external company which provides labor at a lower rate, fires all of the current Uber drivers, and encourages them to work for the new external company.

The external company, if sued, does not have the resources that Uber has, and simply goes bankrupt. The drivers are encouraged to work for yet another new company.

This process continues for a while as ride quality and driver satisfaction all suffers. Uber gets to lengthen the runway a bit longer, and either a miracle happens and the company continues operations or some other competitor swallows the market.

Interesting, in Brazil all the companies in the chain are liable in a labor-related law suit. Before the 2017 Labor Reform[1], frivolous law suits by former employees were a billionaire market because it used to be a risk-free gamble - after the reform the litigant is liable for exaggerated claims and there was a 46% drop in labor cases[2].

When I look at any market where the labor code is excessively protective, I see high unemployment rates specially among the young - Brazil, Spain, France[3]... I don't know about causation but clearly there is a correlation between employee over-protection and unemployment rates. I think it is the law of unintended consequences[4] in action: the legislator intention was good (protecting employee) but the net result is negative.

[1] https://www.jonesday.com/en/insights/2017/12/brazilian-labor...

[2] https://www.capital-ges.com/an-insider-view-of-the-brazilian...

[3] https://countryeconomy.com/unemployment

[4] https://en.wikipedia.org/wiki/Unintended_consequences

There is definitely a causation for high unemployment by such laws. But it actually goes even deeper.

In France for example, it is difficult for a company to fire an employee once they are legally hired.

Oracle, for example, has a policy of initiating an "intra-country transfer" where the employee is mandated to relocate from Paris to Montpellier. Not everyone wants to uproot their family like that. And then if they do accept the move, next year Oracle will relocate them to Bordeaux...

Interesting, so in France you can't fire someone but can legally make his life miserable through constant relocation? Brutal...

Correct, it is insane!! It is "legal" in the sense of "the law didn't specifically plan for this workaround that a particularly greedy company found"

I guess it’s more like in France, instead of being fired with no recourse, you can opt to be relocated instead (at least that’s what it works out to).

As I understood, once you hire someone in France the labor code makes it virtually impossible to terminate the contract.

In Brazil employers have to pay a fine if they fire a worker without a "fair cause" (~ 3.2% over the sum of all compensation paid to the employee while they worked for you), so the longer someone worked for you the more expensive it gets to fire them.

The law allows for veil piercing in situations like that, meaning they could skip the temporary intermediaries and just treat Uber as the employer.

Believe it or not, they did think of issues like this when drafting the law. Especially since almost all of these other issues brought up in the comments are decades old and already addressed by existing labor laws.

That was not immediately known to me, because in New York where my family member is a lawyer, something like the following will happen:

Company X owns Company Y. Company Y builds an apartment building of low quality and hides the defects. They sell the apartments to individual buyers.

The individual buyers sue Company X years later upon finding the defects. The judge throws out the lawsuit and says "you can only sue Company Y, because that is the legal entity who built the building."

The only issue is that Company Y is several million dollars in debt to Company X and has absolutely no way of repaying anyone who sues Company Y.

Others are pointing out the problem with staffing companies too, but this reminds me of my experience (different countries, so YMMV). This means that even though "The law allows for veil piercing" there's a huge maybe there, companies unloading their liability know this and have great lawyers. So IF a lawsuit gets to the real employer it's only after a LONG legal process, so not worth as much.

There is also another reason: If Uber employs the driver and he/she acts unprofessionally, then it's a lot of work to fire him/her before they can hire someone else. (Uber does not want to drag passengers into any type of litigation)

If Uber deals with many companies, they can just reduce demand at the company with the bad driver and increase demand at another one. The company with the bad driver can then retrench him, saying they need to cut someone.

(Disclaimer, I know very little about Uber and the US and it may not work for them specifically. But the idea certainly applies to other companies)

> Good luck forming a union coz then the company will go poof too

The answer to this is to form a bigger union so that only the bigger contracting companies can survive, and then have high-paid union executives who can negotiate large industry-wide contracts between employer and labor provider that provide some minimal level of protections but largely protect the status quo.

Then, those in the employer camp can donate to conservative causes complaining about unions and regulation, and those in the labor provider camp can donate to progressive causes complaining about evil corporations and lack of worker rights.

From here, the leaders in the two factions will variously ping pong and vacillate and make various and sundry unfruitful negotiations while taking the advice from various lobbyists about how they might improve the state of affairs and generally enrich themselves through back channel dealings with their benefactors from either camp.

That’s partially true. The contract company can’t fully go poof every time there is a minor lawsuit and the company needs to still pay the state all the fees for unemployment and insurance that all companies have to pay. In the end the employees get workman’s comp, min wage and unemployment insurance but the state gets to collect a bunch of fees that they are owed.

Was Uber beholden to any of that before this? Did they get benefits or perks? Could they form a union? What was their odds of suing Uber?

Uber has no USP except the network effect. They are just a taxi company with an app essentially (givent that their self driving efforts havn't fruited at all yet). If they outsource the competency of drivers to an external provider then they are just a taxi company with an app and not even their own driver network, making them even more vulnerable to someone else coming with a better app and using the same driver provider. Customers are the fastest to migrate when price is the main factor and the barrier to switch to a different app is literally just a few clicks in the app store.

He's just talking about a legal reorganization. "Uber Drivers LLC" contracts the employees which is wholly owned by Uber. I don't see how this would actually help them though. Under the new law, Amazon Flex drivers are also categorized as full time employees and the child company would still bear the costs of that

They’re actually talking about Amazon’s delivery service partner program. It’s where Amazon helps people setup independently owned delivery businesses. https://logistics.amazon.com/

But in those instances, the company contracted by Amazon will now, no longer, be able to use contractors, they would be employees.

don't most drivers already work for their competitor as well? they have no "driver network". It was actually one of the good parts of gig work.

Somebody like WorkforceLogic, ManPower or other temp agency would just handle employment, background verification, compliance and 1099s, they're unlikely to start building apps around their own networks.

Cost/Benefit.

Uber doesn't want drivers classified as employees so they don't have to pay minimum wage, provide employee benefits, pay payroll taxes, or otherwise comply with the law vis-a-vis employees.

Yet, it is one thing for Uber to hire drivers as contractors individually where Uber has full control over the terms, in other words no driver is in a position to negotiate their contract with Uber...it is an entirely different thing for the drivers to be organized and those organized drivers now be in a position to negotiate (almost like a union).

I think the last thing Uber would do is assist the drivers in organizing...its not just the ability for them to negotiate with Uber collectively either, at that point said driver contracting firm(s) would then be in a position to launch their own ride-share app to compete, unlike say these Amazon driver firms would can't just launch an Amazon competitor.

In my country, working as an Uber driver gets you a good salary. I think it's around 1000€ (minimum wage being less than 500€). Is it different in USA? Do they get less than minimum wage for 8 hours?

According to one analysis [1], working for Uber pays $8.80-$11 per hour (after subtracting car related expenses).

The federal minimum wage is $7.25/hr. But certain cities are much higher, for example New York City is $15.00. In San Francisco, it’s $15.59.

Also worth mentioning that most of these averages are not taken from drivers working full-time (40 hours per week). So while they may be able to make near minimum wage on an hourly basis, they may not be able to achieve that hourly rate for a full 40 hours per week due to fluctuating demand for rides.

[1] https://www.ridester.com/how-much-do-uber-drivers-make

Do minimum wage workers typically get the option to get health care?

It depends if they’re part-time or full-time.

Companies are not required to offer health insurance to part-time employees. Employers with more than 50 employees are required to offer health insurance to full time employees.

(IANAL)

The crux of the interpretation is what constitutes an hour of work.

Once the ride starts with a paying client in the car, the hourly earnings are easily above minimum wage.

But what about the time spent logged into the app waiting for a ride? If you take a standpoint that's friendly to Uber, that is not billable time - the driver could potentially be working in other capacity (including doing gigs for direct and indirect competitors, like Lyft, Postmates, TaskRabbit, etc.) If you take a standpoint that's employee-friendly, this is similar to a store register clerk being by the register with no customers in the store - they're still present to perform their duties when necessary and therefore must be compensated.

How are you measuring the hours exactly? Just time when a passenger is in the car? Time on the way to pick up the passenger until you drop them off? All the time logged in and looking for a rides?

How do you factor in the car related expenses? And what about depreciation and other expenses beyond the direct out of pocket costs?

It is certainly possible to spend more than 8 hours trying to get rides, and end up with less than 8 hours worth of minimum wage pay after subtracting vehicle costs.

Depends on where. New York for example guarantees an hourly wage. But yes, in general they often make less than minimum wage: https://www.theguardian.com/technology/2018/mar/01/uber-lyft...

Seems fair to me no one wants to deal with the bureaucracy of employing people or being employed why not out source that to a third party?

The main problem Americans seem to face with gig economy is the lack of health care but thats americas problem you can't blame employers or employees for it.

Where I live the gig works make about or a little less than the minimum wage after expenses for vehicles. This doesn't include saving for retirement, healthcare, workmans comp, disability insurance, or a bunch of other things.

Basically, even if healthcare were taken care of the amount they make would not be a living wage.

I would argue that every job designed to be ones full time job while they are at a life phase where they have to be roughly self sufficient should have a wage that enables them to do so. Or, they need to go do something else.

This is not every job. It is the situation for many in the gig economy.

The reason people don't go do something else more often is something I would love to see studied.

Why shouldn't every job supply a living wage? You realize what your proposing is a net societal negative, right?

If a person has X amount in their savings and their job is not a living wage, then by definition they are likely going to have to rely on their savings to make up the wage differences. This is kind of a bad thing for capitalistic-based societies because you need people to consume, and if you have a large amount of people unable to consume then that negatively impacts the free market.

It's also bad because it places stress on other parts of society. No healthcare means when you eventually get sick or injured the hospital has to take on those costs, which means people pay more while destroying the lives of said injured or sick person.

People will have to make up the wage differential somehow, which also means that underclass of workers is more easily exploitable and/or pushed into illegal behaviors in order to survive.

School and society both teach that you should work hard at a job to make a living. It's the fundamental of economics.

Then that makes them too much (or exactly like) a taxi outfit, which would not go down too well.

So perhaps each Uber Driver could be given the tools to form their own LLC, where they are an employee of that LLC, and that LLC contracts with Uber and potentially other gig services. It could be completely automated for them.

Even if it is automated, that is an $800 out of pocket expense every year for LLC fees, and more complex accounting requirements. It's not worth the effort unless you are making significant money or are serious about your business

Labor law jurisprudence allows for piercing the veil when a company outsources its primary revenue generating function.

Drivers themselves will probably do that, so they can work for multiple riding companies

I've seen Uber or Lyft in-app receipts suggest the driver is actually an LLC.