Here is the new test (the ABC test if you're into unnecessary pet names for things):
> If A, B, or C isn’t present, the worker is considered an employee.
> A. Freedom from control over how to perform the service
> B. Service is outside the business' normal variety or workplace
> C. Worker is engaged in independently established role
So if any one of those conditions isn't the case, you are an employee under the law. I see people in this thread wondering how it'll affect companies like Uber/Lyft/whatever -- and I think it will actually be good for them, because now they'll use some of that warchest to hire the the best lawyers to figure out exactly how to best navigate the law (in california at least), and write their contracts in whatever way that best makes sure all 3 are present and they still get a healthy supply of drivers. Other smaller gig economy companies will then follow that lead so they can stay afloat and not purchase the legal work done by Uber/Lyft.
If I was invested in Uber/Lyft, I would welcome this, because it removes an avenue of risk, stabilizing the lawsuit risk.
[EDIT] - In the article there's a link to the decision from which the test comes from:
I think A and B present a difficult challenge for Uber/Lyft. Drivers do not have the freedom to control how to perform their services. They do have some leeway in route, but not total leeway. And there are many guidelines they have to abide regarding the condition of their vehicle and treatment of passengers.
Element B is a little less clear, but I think it would be difficult for Uber/Lyft to overcome. Drivers would argue that the normal workplace is actually the streets. Uber/Lyft could of course argue that it's HQ, but given the number of drives on the street and the number of employees at HQ, this is no slam-dunk for the companies.
Background: I am a (former) lawyer who worked on employee/contractor issues in the realm of tax law (which uses different tests than state law).
Well, I suppose Uber would argue that their service isn't the providing if rides, but rather, the matchmaking of independent ride providers to prospective customers, and facilitation of payment. (Not that we should believe them.)
They're just providing a free GPS, it's not a core part of the business. Even the rates thing isn't particularly compelling, the drivers can decide which sort of jobs to take, normal, high, etc. it's not like they have set shift patterns or anything.
I find the rates thing quite compelling. Uber/Lyft are dictating the prices. Drivers have no say in them. And, while you can technically decline rides, the Uber/Lyft algorithms will punish you for doing so.
What does it matter if Uber punishes drivers who decline rides?
If I’m an independent developer, and I frequently refuse to accept your contract work, you might “punish” me by not offering me as much work in the future. That doesn’t change the fact that I always have the choice to accept offered work or not.
It's no different to how every other freelance employing business works.
If I run an advertising agency and I've got 4 freelance film makers I regularly use and one of them stops taking my calls or almost always says no, I'll eventually stop calling him and add someone else to my regulars. It's just business, no point me wasting my time calling him.
I think there's a load of companies abusing the gig economy at the moment, but Uber aren't the worst and definitely not for things like they provide a GPS or set the rate, it's all the delivery companies and the gas-servicing people who all have to wear uniforms and work full days.
"If I run an advertising agency and I've got 4 freelance film makers I regularly use and one of them stops taking my calls or almost always says no, I'll eventually stop calling him and add someone else to my regulars. It's just business, no point me wasting my time calling him."
But that's different than the situation with Uber/Lyft. In your story, the person has the ability to find new clients. If you're an Uber/Lyft driver, you can't exactly "go it alone", so to speak. You're kinda stuck with Uber/Lyft.
"I think there's a load of companies abusing the gig economy at the moment, but Uber aren't the worst and definitely not for things like they provide a GPS or set the rate, it's all the delivery companies and the gas-servicing people who all have to wear uniforms and work full days."
I disagree; I feel setting the price unilaterally is a huge part of why they're abusing things. By doing that, they are kind of dictating the wages that the driver can earn. If Uber/Lyft decide to change the per mile rate, there's nothing the driver can do. By contrast, something like Angie's List allows the different providers to set their own rates.
I think they would have to end up far more like ebay where Uber gets a request for a ride, puts that up for a period of "bid" by the drivers who will bid a price for that ride, and then gives that list with sorting options back to the requester to pick from.
Of course, I imagine that sort of process would make it much harder to actually get a ride and make it far less interesting to the users.
The service is not outside of business standard variety.
Other cab companies have client driven matchmaking systems too now... They also employ office workers. The workplace for a cab driver is his car.
Therefore, what Uber does would make them a cab company that abuses contractors instead of employing employees.
However, the key point here is the test A. If Uber is specifically telling the drivers to pick up specific fares or otherwise forcing them to pick up fares beyond the number and/or time, they are actually employees not contractors.
Fudging with scoring system to fire those who do not follow such orders indirectly could be construed as such as well.
Considering the actual text posted by jaggederest in another comment, it does seem to be an exclusive or:
"the services provided were either outside the usual course of business or performed outside of all the places of business of the enterprise"
Regarding other cab companies, most cab drivers have been traditionally classified as contractors. The idea that Uber introduced this practice is propaganda.
That isn't an exclusive or; the English language lets that be interpreted as either an xor or or, and the reasoning of the context shows it to be an or.
To iterate; the statement sets out two conditions, either of which are sufficient independent of the other, and claims that each of a number of services met one of those conditions.
I think there is valid confusion to be had in interpreting this statement.
Usually, when a statement of "choose either x or y" is made, then the only valid options are exclusively x or exclusively y (None and Both are not valid).
Though, when the statement of "if either x or y then do action" is made, then the action is done with any of three valid options: x, y, or x and y (only None is not valid).
To change the second statement to mean the first, you could say "if only x or only y then do action." The "only" cancel Both as being an option.
No one's saying they can't be allowed such a method. But it may be the case that for persistent business relationships doing so may mean an employee/employer relationship rather than the relationship between a business and an independent contractor.
I believe the distinction lies in describing the final work product vs. describing means and methods. If you have an outsourcing contract with an independent contractor, you're allowed to specify (usually via specifications that are appended to the contract) performance objectives and quality of the work, and what the final work-product looks like. If you stray too far or too often over into specifying the means and methods by which they're supposed to achieve those results, then you're treating the contractors like employees, which actually come to think of it, is already sort of a no-no under most current contracting arrangements I'm aware of. Although there are always gray areas... for example what if you're turning over source code at the end of a project? Then your writing of the code is both a method and a final work-product. Some attorney needs to earn their keep and make sure everything is all laid out nice and kosher in the contract so things don't get murky.
A scoring system of the resulting work is fine. A scoring system that effectively encodes how they did the work is problematic because it means they company is now dictating how work be done, which is an employee relationship.
E.g. It's the difference between: a scoring system that uses a coding style standard and unit tests on the resulting code to build a score; and a scoring system that uses hours logged into the computer manipulating the IDE and lines of code written per hour to build a score (the contractor could use that as a way to score himself and for billing, but not the company).
Please read the decision re B (starting at page 64 of http://src.bna.com/ypI)—if I'm not misreading it, it has nothing to do with work location and the article is confused. But I am not a lawyer and would appreciate your reading if it :)
My guess is that B comes down firmly on the side of Uber/Lyft drivers being employees, unless they can convince a judge that their business is merely "providing an app that lets people find car companies" and not "giving people rides."
Yes, "providing an app that lets people find independent contractors who give people rides" is what Uber/Lyft will argue.
And there are a host of companies that offer similar services. They derive their value from being able to facilitate business interactions.
Angie's List is another example, and I can totally see similar businesses passing the "B" part of the test, because although they may implement some quality-control measures, such as requiring the independent contractors to abide by certain terms or meet certain standards, they are pretty hands-off in terms of HOW the recommended plumber fixes the clogged drain, or HOW the recommended carpet cleaner schedules its appointments.
But with Uber/Lyft, the HOW is much more like an employee relationship.
The problem with that argument is Uber will kick people off the platform. They manage the relationship between customers and drivers instead of simply facilitating communication and payment.
By comparison most point of sale (POS) venders just provide hardware and software don't involve themselves in the actual business enough though they may provide phone apps etc. Marketplaces like App stores or Amazon get more involved, but they don't dictate prices.
On Angie's List, the contractor sets the price, and I don't believe they're punished (sent to the bottom of the rankings) if they don't choose to accept a client. This is not the case with Uber/Lyft, where Uber/Lyft sets a price the driver has no say in whatsoever, and if you turn down rides, you get sent to the bottom of the queue.
Angie's List seems like ... a list. I have the option of picking which independent contractor on the list I want to hire. I pay them, I don't have my credit card number on file with Angie's List. And in common speech I will "get an Uber" or "get a Lyft" to go somewhere, but I won't "get an Angie's List" (or even any slightly similar phrasing) to do some work, I'll "find someone from Angie's List." I definitely have never said that I'll "find a car service on Uber".
So yeah, I agree that Angie's List is clear of B and Uber/Lyft much less obviously so.
Having card on file is not a big difference - a lot of sites like Amazon or Yelp record cards, that doesn't mean Amazon sellers or Yelp business are employees on Amazon and Yelp. Ability to choose specific service provider is much more of a difference. But Uber could easily fix it (though it probably would raise some discrimination concerns, for example).
Being an app company and not a company that gives rides is a strange rationale for investing in self-driving cars. Will the robots be considered independent actors too?
I agree with your assessment (you failed to mention leeway with which rides to take, but maybe it doesn't matter) -- Uber/Lyft would definitely not want to lose control on how their drivers perform their services since it's directly counter to part of their value proposition/brand.
I pessimistically assume, however, is that assuming the A/B fight is a lost battle for gig economy compnaies, the next step is to limit these employees to being part-time with some kind of <20 hours per week or something rule.
> I pessimistically assume, however, is that assuming the A/B fight is a lost battle for gig economy companies, the next step is to limit these employees to being part-time with some kind of <20 hours per week or something rule.
How does 20 hrs/week factor in here? I didn't see a reference in the Bloomberg article. Though this is actually a good point — if time spent working isn't a factor, then someone who works for Uber, Lyft, Grubhub, and Google Express could end up as en employee of all of these companies. That seems like kind of a weird result.
I mentioned that since hours worked is normally a big distinction between a "full time" employee and "part time" employee for traditional roles, which have different employment costs -- It's not mentioned in the article
Not a lawyer, but I would think they could require drivers follow a reasonably direct route but not require the specific route offered by the driver’s app.
And in general quality issues can be handled by ratings. If a driver takes bad routes or has a dirty car they’re going to get complaints / bad ratings.
I’d be surprised if they couldn’t offer drivers “suggestions” on how to receive good ratings.
I think that Uber/Lyft could pretty easily argue A. The driver has control over the quality/cleanliness of the car, amount of conversation, extra perks provided, and timeliness of arrival.
While I agree element B would be difficult for them to overcome I would give it around 50/50 that they can successfully argue the drivers are not a part of the normal workplace.
The normal Uber workplace is the office where the app is developed, drivers never visit so they are not part of the normal work place. That argument or some other one that is equally dumb on it's face but might work in a court of law
> That argument or some other one that is equally dumb on it's face but might work in a court of law
> equally dumb
I was defending why I think there is a 50% shot that Uber could make part B not apply. It seems like you think it is more like a 1% shot which you might be right, I am not a lawyer.
I guess the question is whether the companies can allow the drivers enough freedom to make them contractors, while still retaining enough control to maintain service standards. Letting the drivers set their own prices, perhaps through some sort of bidding system, might go a long way.
Not so sure about the US, but having seen how contacting developers are working in Canada and the UK, I would say that contracting devs are almost always acting as employees.
In many tech companies you can't even tell the difference between who is an employee and who is a contractor, unless you ask.
In every role I was a contractor, there was essentially no difference between me and employees. Even had gigs where I was in one cube over, had a company badge with my photo on it, and had an @companyname.com email.
There are a few differences: employees are invited to the meeting where quarterly financial performance is shared; they have to do the yearly goals; they are invited to the the year end holiday lunch; and they sometimes get a bonus. The last one is contractors are first cut when there are financial hard times.
Many employees skip the financial meeting. Contractors are often ignored when they sneak into the holiday lunch. For most contractors the bonus is the biggest difference, and the courts tend to agree that is not enough and force the contractors to get the bonus as well.
One company (Sabre) actually had a department (development team that supported HR) holiday lunch/outing. Everyone on the team went, contractors and employees. (Don't get me wrong - I'm glad I had a great manager who would do that ... but honestly the only difference I really ever felt was my paycheck was signed by someone else)
I was a contract consultant for over a decade; I didn't hide any work. I usually didn't work out of their office, but when I did use their resources my working assumption was that any artifact left behind was theirs, modulo any agreement to the contrary.
Intermediate documents, experimental code, etc. weren't offered to customers, but I can't imagine what I'd want to hide. (Aside from my shame, given how a couple projects went.)
Sorry that was quite hard to parse - I mean, what would you expect to appear different to colleagues?
The differences between employees and contractors may reside in the work they do, but doesn't need to, it's in the legal basis of their employment - which other workers can't see. Just like you can't see the wage another worker is getting, rat doesn't mean they're getting the wage you think they are.
The way you know someone is a contractor is they leave after a few months, or they retired and still work there. You can't necessarily tell by their work output.
If an employee and contractor are digging ditches the only difference is likely to be in the paperwork; though possibly the contractor uses their own PSE and tools, but not necessarily.
No, it is not just a matter of which set of papers the company and the individual signed. I expect, and the government expects, that if someone works like an employee they are an employee (and have employee rights and payroll withholding, etc.)
Different agencies have different criteria, but the IRS considers several factors:
The agency [IRS] is more likely to classify as an independent contractor a worker who:
can earn a profit or suffer a loss from the activity
furnishes the tools and materials needed to do the work
is paid by the job
works for more than one company at a time
invests in equipment and facilities
pays his or her own business and traveling expenses
hires and pays assistants, and
sets his or her own working hours.
On the other hand, the IRS is more likely to classify as an employee a worker who:
can be fired at any time
is paid by the hour
receives instructions from the company
receives training from the company
works full time for the company
receives employee benefits
has the right to quit without incurring liability, and
provides services that are an integral part of the company’s day-to-day operations.
A collegue in the UK was forced^Wencouraged to start a limited and contract for his former employer. As far as I can tell that was purely a scheme to shift liabilities and to pay less taxes.
There is a big case in the UK about the BBC forcing the "talent" to set up self employed companies - the tax man didn't like this and is fining people hundreds of thousands of pounds.
Though as presenters they have a better chance of beating ir35 as they can legitimetly work out side of the BBC in a way that a developer cant - eg pa's at events etc
The IRS' concerns aren't exactly the same as the state law concerns, but the lists they use to qualify contractor versus employee seem pretty similar, just with the CA state law test being more simplified (though IANAL, the more simplified CA state law list seems no less likely for companies to run afoul of with this sort of relationship).
I think that B is going to be very difficult, if not impossible, for Uber/Lyft to overcome. The act of driving is the core business operation for ride-sharing companies; it’s the fundamental means by which they create value. I can’t see a good argument for how that could possibly fall outside of their “normal variety”.
They could potentially argue that their core business is creating a marketplace where riders can find drivers and not the driving itself. That would classify the office workers as employees and the drivers as contractors.
A: You hire an external contractor to do work (roofing, pouring concrete, creating a website, etc.), the contractor should have full autonomy (and liability) regarding how, when, and by whom the work is done--the contractor is responsible for the end result. A good (bad) example might be a language school--just the type of business that often operates in this grey area. A language school might 'hire' a teacher, technically an independent contractor, to do teaching work, yet nonetheless treat the teacher as an employee, specifying exact teaching times, methods, books, locations, etc., closely monitoring performance (as with an employee), and even integrating the person into an internal hierarchy (so the boss becomes a boss rather than a client). True autonomy (freedom from control) in this case would be the freedom to decide upon the times, locations, methods, materials, etc. and a dependence upon own's own independent expertise while performing the contracted duty.
C: The contractor (ideally) works for many companies (i.e. has many clients) and not just for you. Is the contractor (individual or company) independently established? When determining C, the authorities might look specifically at things like whether the contractor has an established business location, whether the contractor has employees, how much work the contractor does for any individual client, etc.
B is mis-stated in this article (and therefore in your summary): it's about whether the type of work is part of the type of business, not about the location. The decision gives an explicit counterexample that a plumber fixing a bathroom in a retail store does not fail test B and still counts as an independent contractor, because even though the plumber is on aite, the retail store isn't engaged in plumbing work.
(B would be a surprising change for consultants and trainers if it were about location, but it seems to avoid that.)
See, I was thinking about B from the other side. If I work for a plumbing company, I'm likely not doing my plumbing in the office. So, where would my normal workplace be?
I'm framing this as an argument that the plumber could be considered an employee of the plumbing company, not the retail store.
I'm not at all qualified to read this sort of decision, but, it seems to me like if you're clearly an employee of company 2, then you're definitely neither an employee nor an independent contractor of company 1 and this test doesn't even apply.
(I'm not sure if/how this breaks down if company 2 exists solely to provide people to work for company 1 and has no meaningful independent existence, which ... is probably the case for many Uber drivers now, so that's a relevant question.)
I was thinking from the perspective of Uber for Plumbers or Pluber (TM), where there would be a dispute over whether the plumber was an employee of Pluber or not.
So if any one of those conditions isn't the case, you are an employee under the law. I see people in this thread wondering how it'll affect companies like Uber/Lyft/whatever
'B' is downright apocalyptic for contract developers in all sorts of roles. Sounds like massive judicial overreach to me. If your summary is accurate, I wouldn't expect that particular guideline to survive appeal.
> Sounds like massive judicial overreach to me. If your summary is accurate, I wouldn't expect that particular guideline to survive appeal.
It's a California state law issue and this is a decision of the California Supreme Court upholding the decision of the Court of Appeals, which had upheld the Superior Court. This has already survived the whole chain of appeals.
It's a California state law issue and this is a decision of the California Supreme Court upholding the decision of the Court of Appeals, which had upheld the Superior Court. This has already survived the whole chain of appeals.
So you're saying it can't possibly raise any (US) constitutional questions?
As an example, consider what happens when one of the affected contractors is in another state. That makes it a Commerce Clause issue. You can wave your hands and sputter indignantly all you want, but Wickard and Filburn are going to wave right back at you.
If you are an IT company and all your work is done through contract developers, perhaps you _are_ going against the spirit of the law.
Labor law is meant to protect those in the employer <-> employee relationship, and most contractual work explicitly weaken this relationship a lot. So contractual work really shouldn't be the norm in a business.
If you can't provide your main business without this set of people, then those people are probably your employees?
> If you can't provide your main business without this set of people, then those people are probably your employees?
That's not the case. A home builder may exclusively hire various sub-contracting companies to assemble a home, put in electricity, add finishings, etc. Those sub-contractors contract for many other home builders or landlords and are not employees of the home builders. That is the case, even though a home builder would go out of business without the sub-contractors.
Here is a different example. If a programmer works for one tech firm which calls the programmer a contractor, then if the programmer also create a personal website or side project for income, they may have established themselves as contractors.
I think there's a distinction here, which is often lost due to similarity of the language.
One class is "contract employee". These people are basically treated as second-class employees (with just enough arbitrary restrictions to enforce that) of the company they effectively work for.
The other class is "employee of a contractor". These people are real employees of a company that hires them and provides them benefits. The company they work for then sub-contracts to various other companies and uses those people to fulfill the work under that contract.
Since both cases use the term "contractor", and the former is far more common in the minds of everyone here, its easy to get the two distinctions confused.
In my experience "contract employees" normally work for a third party company that gets contracted by the hiring company. Then, the third party contracting company pays their employees after deductions and taxes. Otherwise, if not working for a third party company those individuals may be classified as independent contractors. When they are classified as independent contractors there already are limits on the number of hours that can be worked before they get turned into employees.
> even though a home builder would go out of business without the sub-contractors. //
They wouldn't, because they could drop in a replacement contractor. In your example the house builder relies on contractors but not the specific set of people doing the contracting (as in the parent), so any contractor can be replaced readily from the pool of contractors.
In theory a contractor can send someone else in to do the work, as long as the work in the contract is completed. If you demand a specific person to do work then they're likely an employee.
> In your example the house builder relies on contractors but not the specific set of people doing the contracting (as in the parent), so any contractor can be replaced readily from the pool of contractors.
All you've done is restate my comment.
> In theory a contractor can send someone else in to do the work, as long as the work in the contract is completed. If you demand a specific person to do work then they're likely an employee.
That theory is wrong. If Business A depends upon the specific person B, and B does other work outside of A, then B is not necessarily an employee of A. There are many people with specialized knowledge that others do not have. The acquisition of that knowledge doesn't make them employees. It makes them valuable.
> If you can't provide your main business without this set of people, then those people are probably your employees?
This doesn't make any sense. Farmers are not employees of grocery stores. Factory foremen are not employees of drop shippers. Amazon warehouse staff are also not employees of drop shippers. Comcast cable layers are not employees of YouTube.
You think farmers aren't employees of grocery stores because the stores could buy the same food from different farmers? That's just as true of the IT company and its contract developers.
This is a pretty big simplification. Grocers buy produce from the farmers, not their time.
This matches some conrractors, of course. But it also extremely doesn't match many contractor developers.
Are you required to be online 4-6 hours a day? Do some of the companies employees not even know if you are actually a contractor? Are you the one picking up the metaphorical phone when the company's client is calling with a support issue? You might actually be an employee
If you show up with a deliverable , can go on vacation without clearing it with anyone, and are actually your own boss... Well that's different of course
If you show up with a deliverable , can go on vacation without clearing it with anyone, and are actually your own boss... Well that's different of course
It was different, but my point is that the 'B' clause ("Service is outside the business' normal variety", whatever that means) can be interpreted to remove this distinction.
A lot of people are cheering for this bullshit without thinking it all the way through.
But that is wildly different. A farmer provides goods that hold value for almost anyone. Once they have produced a bushel of apples, that bushel can be bought by anyone. On the contrary, once a software developer has produced some code, it only holds value for the specific company that order this specific piece of code.
Not always. Consider two scenarios: (1) adding a feature to an existing product that the company sells. (example: writing a better grammar checker for MS word). (2) contracting with the developer of a small open source embedded database to add a specific SQL feature that you wanted to use in your web backend.
Honestly, most contracting developers are actually employees, and this position is just used as a way to skirt tax and labor laws. The abuse here isn't from the court, it's from devs and businesses.
Devs don't care simply because the pay is high enough and there are a ton of jobs available.
Somewhat true, but to me what matters as a freelance is that I get to make the call when I’ve had enough of a particular contract, or choose whether to wait for a more interesting project, or just sign up to whatever conference I feel it’s important to my own career plan.
When I was an employee I always had to beg to do anything, as well as suck up whatever shite projects the accounts would figure out would mean a sweet billability streak... dammit, the humiliation...
Eh that’s a good question, practically never. But there’s some good reason for it, in that development is not a routine job where you are completely interchangeable. There’s - thankfully - a certain amount of creative skill and professional judgement that makes me the hire and not a sub of my choice.
Several years ago Italy introduced CoCoCo contracts to capture this concept of temporary professional employment, between an employee on your payroll and a butcher you buy a stake from.
Eventually companies abused it and applied it to completely subordinates such as call center operators. It was - rightfully, given the circumstances - repealed.
I wonder if we could have something like that again, it would be easier than this pantomime.
Judicial overreach? Someone has to interpret the law. The original standard was judge-created and the refined over several decades. It was a mess and gave conflicting results in quite similar cases. This, no matter what you think of the outcome, is unquestionably a giant leap forward in clarity.
Yeah exactly. This is a question of state law and the Cal SC is the final word on what state law means. The only exception is if the USSC agrees that the state law violates some provision of the US Constitution and that’s extremely rare. Not going to happen.
That said, my (non-lawyer, pre-coffee) reading of what B actually says is that while it won't turn consultants into employees of the place they consult for, it will turn specialists into employees, whether or not they work on site. If a company occasionally submits patches to an open-source project they use, and then they hire a maintainer full-time for a few months, that sounds like B would require them to hire the maintainer as an employee.
I honestly am not 100% sure of the ramifications, but I am sure that these companies are going to act in their best interest, and with the current imbalance in the labor market (some might argue that the markets are right where they should be), I'm relatively certain that will mean employees being turned into contractors, or worst case they'll take the walmart route and make everyone work "part-time", drivers will think they're pulling a fast one by working for more than one company but they'll really just be driving their own wages and benefits down.
Of course companies are going to act in their best interest. But this ruling does not change that, because companies have been acting in their best interest all along.
If anything, this makes it easier for contractors to prove they ought to be employees.
Well, you've rehashed what I said -- That was meant to be to all the people wondering how this ruling would affect companies like Uber/Lyft/other gig economy companies.
The answer is it won't affect them, because they'll do what it takes legally to act in their best interest, like they have always done (and have had way more resources than the average worker to do). So nothing will change, outside of a likely reduction in lawsuits for companies most able to navigate the new legal climate.
The answer is it won't affect them, because they'll do what it takes legally to act in their best interest
But how does that follow? You're essentially saying that no law can ever affect them, since they'll always "do what it takes legally to act in their best interest".
I didn't say no law, I was remarking in the very specific context of this one.
What I was trying to say is that this legislation is unlikely to affect the most successful gig economy companies very much, if at all, because they'll likely find the best way to circumvent it. Even if they don't there's already very large corporations doing their best not to pay employees higher wages by taking advantage of the differences in protection for part-time and full-time classified workers.
Basically, the most upside I see for the worker with this legislation is every driver in a company like Uber needing to become an "employee". Let's assume that happens. I would expect Uber or any of the other companies to immediately take steps to reconfigure to evade this -- which I think in the "worst" (for the company, as in they weren't able to evade well) case is accepting employees but limiting them to part-time status -- it's already worked very well for companies like Walmart (and badly for the communities and workers there).
On the other hand, there is also an upside for Uber/gig economy companies -- the reduction in risk in the legal arena makes them much more attractive as an investment. Up until now, it's been an open question -- this will do much to close it. That benefit will ripple to the other lesser gig economy companies, because they will have a playbook to follow.
I got that you were talking about this law, but what I was missing was what you thought made this particular law different than others which would affect them. Now I think it's clearer.
That said, I'm not sure I agree that part-time wouldn't be that bad. It works for Walmart because their employees have low fixed costs for working (essentially just the commuting), so working fewer hours is still worthwhile.
But Uber depends on drivers buying new cars, which often they pay off by driving many hours per day. Once you limit that, they will lose everyone except the casual drivers.
The alternatives I see to this are not great for Uber: they either have to (1) buy and maintain their own fleet, or (2) accept competition so that drivers can fill up their daily schedule by working for multiple companies.
Hmnn, I think the fixed costs are only higher if you assume that most Uber drivers buy new cars to Uber -- is that true? If they don't then the fixed costs for an Uber/Lyft driver would be even lower than Walmart right?
I definitely agree with the rest of your comment -- but I think the affects of (1) and (2) might actually be net positives for Uber:
(1) More fleet for their self-driving efforts seem like not a bad thing, also I don't really want to do the numbers but the 10k spent in a year on the cars as capital instead of employee benefits might look at lot better on a balance sheet (especially tax wise).
(2) I think this is only true if the supply stays the same as now -- when people hear "oh uber pays more now", I think the supply might increase a little. The increased cost per worker will be spread over all the competition, and as long as the per-worker cost isn't too high for part-time vs contractor.
As an aside to all this, uber has also started (long ago?) charging people what it thinks they can afford so that's also a factor, it's not even a single consistent percentage anymore (if it ever was).
I think most buy/lease new cars, but it might be outdated; I think Uber used to have more restricted rules on the age of cars, but it seems nowadays they can be 10-15 years old.
(1) "10k spent in a year on the cars as capital instead of employee benefits" - Right, but nowadays they are spending on neither :)
(2) Right, but that means Uber can't take over the market. That's a pretty big blow.
Am I the only person that feels that places like Uber/Lyft/Etc are fighting the wrong battle? I think their money would be better spent instead fighting for a new classification of labor. One that defines exactly what a Gig (Hate that term) worker is and how the industry operates. Its clear to me that tons of people want a job like Uber offers. I think its time we make a law that represents that. Instead they waste their time fighting in courts to keep them as a contract employee, which according to the law is not what they are. But I feel they are also not a regular employee. I think adding a new classification for them is win win for both sides. It gives both sides rights under the law.
The problem is that people want the easy access of Uber (taking the term generically) jobs but when they get it, they also want the security and paternalistic perks of standard employment jobs. Of course, this can not exist together - the whole point of Uber jobs is that they are not standard employment, that's why they are so easily accessible and so easy to respond to demand.
It is a fundamental contradiction - the perks of standard employment is exactly what makes it more expensive and less dynamic. You can not solve this fundamental tradeoff by introducing some new classification - whatever classification you choose, you'd have to place it somewhere on the spectrum between complete isolation (like ads board having nothing to do with advertised businesses) and complete integration (like full-time union employee).
Whenever you place it, it would be a tradeoff between the interest of the employer, the employee and the consumer. In ideal unicorn-rainbow world, the optimal points would be decided by a free market. In real world the fixed points would probably be negotiated by courts, lawmakers, unions and brazen new companies like Uber finding new optimum spots on the spectrum not explicitly prohibited by the regulators. Of course, the regulators can prohibit those spots then, and that's what is smart for Uber to fight - without it, they're back to existing spots and then what's the point in them being there?
Perhaps the government could pay for unemployment insurance or benefits when there is reduced work for gig employees. The government can fill in the gaps to make sure business have access to a stable pool of gig workers with the ability to retool for different gigs.
There's a stable pool of gig workers right now, which success of Uber and alike demonstrates very vividly. So the availability of the workers is not a problem which needs to be solved.
Sorry for being unclear by my use of stable pool. I meant to say that the pool was stable in the sense that it was healthy and sustainable for people despite market fluctuations.
"I think their money would be better spent instead fighting for a new classification of labor."
But there's no need for it. These companies not wanting to pay people what the law requires is not a need.
"But I feel they are also not a regular employee."
Why not? Many of the things people cite (get to choose hours, use own equipment, etc) are things that many regular employees also have. How many of us here have flex time?
"It gives both sides rights under the law."
What rights would the employees have under this law? Would they get a minimum wage for the hours that they're logged into the app? Would they get vacation time? Would they get sick leave? Cause unless they get more than they get now, I don't see how this would benefit them.
I've used a number of the services over the years, and I agree. There are a visibly different category of work; a kind of blend of piecework employee and contractor - and should be properly classified as such.
Yes, making new laws is always yhe solution. The fight is more about is Uber drivers should get minimum wages when they are have a low day than status.
I don’t think companies who have profited from the declining power and wealth of American workers should be able to buy themselves a new labor classification that serves their interests. That’s not how a healthy democracy works.
In a healthy democracy the people get what they want, even if it's dumb. Prohibition is the first example that comes to mind that won't offend many people here.
If the companies can convince the people to want a new labor classification badly enough then they can get it. Of course things will swing back if it turns out to be crap that is bad for enough people and good for too few.
Companies don't "convince" people of this kind of stuff. They use their wealth and power to force it on workers with bought-and-sold politicians.
People sleeping in their cars in between working at an Amazon distribution center or driving deliveries don't want a new labor classification. They don't want to die in poverty and are just trying to survive this ceaseless assault.
It’s interesting how even within companies a hard set social hierarchy has taken place between employees and contractors. The contractors tend to perform the exact same duties as employees, but are usually paid less, have worse future prospects (companies tend to like to hire from full time to full time), worse benefits and generally don’t get most of the perks of being an employee.
For coders, is this because they’re objectively somehow worse programmers? Given all the emphasis in hiring on avoiding “bad” hires at all costs, it seems like there’s a conflict between paying for people who are “worse” than a FTE but still accepting their contributions. I realize it’s a strategy that gives the companies more leeway to expand and retract their workforce, but then stigma that is attached throughout the industry around contract workers shouldn’t exist, right?
I'm not sure this is a very good read, especially in the startup scene.
I have been in a position (for which I'm super grateful) in which young startups didn't have the funds to pay me my full-time rate, and so instead chose to pay me a weekly rate to work one week out of the month. I like to believe that I provided substantial value in that configuration - usually landing to review code, mentor newer programmers, and help chart direction for the subsequent three weeks (during which I'd be absent).
In this case, I was being paid quite a bit more than the full-timers, not less.
In time, they grew to be able to afford a more complete full-time cadre, and they people I worked with weren't so junior anymore.
I did this... I think half a dozen times. It was a great work config for everybody. If you can afford to travel to the work and you can really bring the fight for 5-8 straight days, I highly suggest it.
That's a very solid case for contractors and almost nobody will have a meaningful problem with it. I've done similar things in the CAD / data management space.
A person with outside perspective, rare skills, experience, and most importantly, is the outside voice able to bring real options to the table along with production proven, time tested ways and means, is worth every penny.
The full time peeps should be taking you out for a lunch or two to network and gain some easy, high value mentoring, contacts...
I would in a second, and have had others invite me for this kind of thing. Some have remained in touch for years, and as they grew, have helped me as I did them.
If we had more of that going on, it would benefit nearly everyone.
But we don't.
The majority case boils down to head count quotas, and cost of labor factors. Often, these are both under specified, leaving managers to find contractors to fill gaps. The larger companies do this and it's chronic.
> A person with outside perspective, rare skills, experience, and most importantly, is the outside voice able to bring real options to the table along with production proven, time tested ways and means, is worth every penny.
Such a contractor would likely meet the new "ABC" standard in the linked article, though. Those aren't the positions that are in danger of being eliminated, it's the "grunt contractor" folks who are contractors only because the employer wants to keep a buffer of positions that are active but can be terminated easily.
My thoughts exactly. Some people seem to be reading this ruling as though no "tech company" could hire any "tech contractor". However, I read it: if a hypothetical company doesn't for example design databases as their bread and butter they could hire someone else to.
In the UK contractors tend to get hired as temporary stop gaps at a much higher rate than perms (like double).
Either to cover a need for a project that won't last long term or to fill the demand for more fingers on keyboards right now.
Is that not how the US uses them? Then again UK programmers seem to earn much less than US programmers. Outside London it's like £50k for a senior dev ($70k?).
Not these days, I'm constantly getting emails offering £45-50k for East Midlands jobs, up from £40-45k the year or two before. 4 years ago I got offered 3 jobs in the East Midlands at or close enough to £40k, with one having bonuses too.
You can go check on any job site, indeed, cwjobs, whatever. CWJobs claim the average is up to £62k for London now, and that's of all dev jobs, not just senior ones:
How so? if you sign a contract for several month's as a plc your better off than a regular employee with only 2 weeks notice is easier to hire as they have no contract.
Legally, but not socially. If a company eliminates contractors well the contract was over. If they eliminate employees that is bad for moral. (except for the rare employee who could be gotten rid of "for cause" in even the strictest system)
Hahaha, I saw someone in the hallway wearing a contractor badge and a MIT hoodies. I am an alum so I asked about their time there. They said they graduated in 2003 but started in 91. I said, "Woah that's one helluva of a PHD." Turns out, they took a 10 year gap to play blackjack. Now they just work for fun every couple of years because they otherwise get bored.
Sounds like "casuals" vs. "contractors". Casual staff are often on very similar terms to contractors, apart from the rates of pay, but are seen as interchangeable rent-a-crowd rather than outside expertise.
There were casual workers at the last place I worked some had been there 20 year or more. One day (literally on one day) they were all told they were not needed, no severance, no thanks just let go. Disposable human workers.
The former are typically a group of second-class employees companies use as a way to "trial" someone before hiring them for real, or simply to skirt the requirements of employing someone full-time. They also tend to work for some shell company you've never heard of, at least on paper.
The latter tend to be older folks, and often experts in various fields. They also have little trouble finding another "gig" almost immediately after their current one dries up. These people are usually self-employed.
Contractor are paid more, since they have to factor in the health insurance, taxes, unpaid vacation, perks, their own laptops, no need for office space, no 401k match. There is no reason they would ever get paid less. Maybe those with H1B visas who can get taken advantage of or outsourced contractors in Ukraine? Those contractors definitely get paid a fraction of US salary.
Contractors are almost always paid less in my experience after taking into effect stock grants and bonuses. The contracting agency probably gets a nice portion of the takehome though (for having the political capital of being on a preferred vendors list), so to the company they probably pay more than salary.
You also have to factor in the amount of responsibility for pay. A contractor with decent negotiation skils may net out slightly less than a FT senior dev at a company, but they often have less responsibility than even the FT junior and mid-level devs. Not to mention that they never get dragged into internal company politics or loyalty games.
Factor in overtime, or the lack thereof, and you can make more or have far more work/life balance than FTs. That weekend app release? There's an extra $500-$1k that the FTs aren't getting. Company doesn't allow contractors to work over 40 hours for budgeting purposes? Leave at 5 everyday without anyone complaining.
It's way more than 1k. I did a contract with a company once and looked to move to FTE. My rate was about $70/hr with an informally enforced cap at a bit over 40hr per week.
They submitted a total cost of employee as part of their employment request to HR. Their bog standard expenditure for an employee sitting right next to me was 50k/yr higher than I was making (my 1099 rate was the official standard for the position and not negotiated). $15/hr less (given unofficial hour cap), but with good insurance (group rates are also lower for the same insurance compared to individual), bonuses, vacation, 401k, etc.
Most companies simply refuse to pay out the same for a contractor as they would for an employee.
A large programmer union could do wonders for the industry.
Let's say the average developer works 45 hours a week at a company and makes $15/hr more than a FT senior dev (with salary calculated at 40 hours). That's $2500 more a year, which sounds bad when you factor in all the FT benefits.
But, the FT senior developer spends a quarter of his/her time in meetings, is expected to be a "team player" in regards to internal politics, and can't do any side projects without running it by the business.
Both sides working 45 figure is kind of a fairy tale too. Having been on both sides, usually either FT or contractors are working all the extra hours. If it's open-ended contracts, then the FT are working many extra, unpaid hours and the contractors get a work/life balance (worth multiple $10k, IMHO). If it's short term contract, the contractors work 50+ hours a week, within the project window, make out like bandits, and go on to the next gig.
It's all preference. Neither side is objectively better.
That's not a self employed contractor is (which is the focus of the question) just some one working through an agency - just ban w2 status or force them to convert to cheap umbrella companies as is the case in the UK.
I think you're using a very overspecific definition of "contractor". At least half of my contract work has been doing the same job in the same office as the full-time employees, just for less pay and less job security. (And I did get health insurance, through the contracting agency.) A couple of those gigs even came with a company laptop.
Well if you consider that the actual tax rate that contractor
in Ukraine pays is like 4% and cost of living is 1/10th of Bay area also it's pretty hard to take advantage of people in a country were it takes about 1 week from starting to look for a job to getting one with good $ and decent perks. To put things in perspective a decent Senior java dev will make 55K-75K after tax in USD and pretty much 70-80% of that will be dsiposable income.
Back when I worked at Boeing, contractors got paid about double what the full time employees did. But, they received no employee benefits (worth about 40% of the employees' salary, if I recall correctly) and could be let go at a moment's notice.
So in the end it worked out about the same.
If the law requires contractors to get the same benefits, etc., the result will be the contractors will get paid less. The ones I knew wanted the higher pay / no benefits circumstance, and they'd lose that option.
> The contractors tend to perform the exact same duties as employees, but are usually paid less, have worse future prospects ...
There was a very interesting NY Times article last fall about that issue. They contrasted janitors at Apple, who work for a contractor and have no prospects for advancement in Apple, and Xerox's janitors in the 1980s who were employees, and one of whom is now Xerox's CTO:
To veer off on a tangent, I suspect it's connected with a new elitism in the U.S. What used to be the celebrated 'Land of Opportunity' where anyone could live the "American Dream' through hard work, regardless of where they started (even if very poor immigrants), is now a place where the children of the wealthy go to college, those of the working class are encouraged to go to trade school, and immigrants are more commonly discouraged.
You are so wrong I don't know where to start. The percentage of Americans with college degrees has never been higher. For decades, the message from authorities has consistently been to encourage youths to go to college as much as possible, and the number of students has kept increasing beyond all reason. We are well past the point of diminishing returns, and into pure and simple harm, where millions of Americans go into debt to get pointless degree just so they'll be considered for jobs that shouldn't need a degree in the first place. It's a disaster.
Those claims are trendy, but the parent provides no basis for them and I've never seen one. There's plenty of reason to believe otherwise:
The 'youths' want to go to college, and in a free country and a free market, it's believed that they know and decide their own best interests.
Businesses in fact highly value college education; they pay people with college degrees much more than people without them. The incomes of people without degrees has been stagnant for decades, and there's concern among economists that their job prospects will become more difficult due to automation. If it had reached a point of diminishing returns (really, small marginal benefit), then the wage differential would be small.
As I pointed out above, it's really economic discrimination: Education depends, more than anything, on family wealth. So the outcome of what the parent advocates is that the wealthy classes go to college and the lower classes don't get that opportunity. Usually it's wealthy people with college degrees that say college isn't needed; but tell them that their kids shouldn't go to college and you'll get a much different response.
> The percentage of Americans with college degrees has never been higher.
That's great. We want people to be better educated, more productive, and live better lives. That's the 'American Dream'. We don't want the economy stuck in the 1980s, but to move forward.
It also makes the economy more productive. For example, Silicon Valley can't get enough talented developers, yet the United States (and world) is filled with kids with no access to education, many of whom probably could fill that talent gap. We need more education. High skill, high-paying jobs will go where there are more highly educated workers; if the U.S. cuts college education, it will go elsewhere. New businesses and industries that we haven't yet imagined will arise when they have that resource of educated people.
Education also makes people healthier, better citizens, better parents, etc. HN celebrates knowledge; it's hard to suddenly discount it in this case.
> It's a disaster.
By what measure? The only disaster is that education is too expensive and not available to people without money.
Given all the emphasis in hiring on avoiding “bad” hires at all costs ...
I suspect that a small portion of companies use grueling interviews as more of a hazing ritual, and many of the rest follow because, well, that’s just what everyone else seems to do.
Make that no benefits. In my 35 years in the tech industry I've never seen a contractor that got benefits, since it's the primary reason contractors exist.
I think this can vary a lot. Contractors often charge very high rates, but then they're called a consultant even if theyre there to do/create rather than consult.
That would seem NOT to be to whom this ABC criteria applies, specifically on the "independently established role." This seems to most address those who have less power in the employer-contractor relationship.
Do companies whose primary employees are programmers also employ contractual programmers? According to my observation, computer technology companies may have contractual workers, but only for other roles.
From personal experience (and admittedly stale by some 8 years), IBM had lots of contractors doing software development alongside full-timers. It was a pretty insecure position to be in because they would take the brunt of layoffs, and many I knew were gone by the time I left, with a couple of exceptions. Many were ex-employess who had been previously let go or were retired. Some were not, and all were basically indistinguishable from regular developers... they just happened to fill a req that merely funded a contractor instead of a full-time employee, depending on how the money was handed out to departments.
Yes, absolutely. I've had several clients like that. Usually, the work centers around something that isn't their core business or a technology that their full-time programmers aren't very experienced with. Sometimes it's just a matter of fluctuating workload where hiring another person full-time wouldn't make sense.
Most companies that I've worked for have had them, usually for specific purposes (billing system related) but they've also had them as more general cases, for less than full time work usually (the people also contracted out to multiple companies). I don't know how common this is though since it's only a few companies and the people involved are all semi-related (Perl programming community).
> Do companies whose primary employees are programmers also employ contractual programmers?
Yes, e.g., firms whose main line of business is contracting out employees who are programmers hire programmers as subcontractors in addition to regular employees to round out special skills needed in contracts.
Yes, all the time. Often in key positions or on strategic initiatives where expertise or specialist skills are needed. I've also seen short contracts used while a company ramps up hiring FTE as a velocity optimization to get the ball rolling on something new.
I couldn't tell you the reasoning, but I've worked at a couple of places where there were contract programmers alongside FTE programmers. In one case, that contract programmer became a FTE, but in either situation, most of the programmers were FTEs.
In my experience, contractors are almost without exception worse than full-time employees in terms of the quality of their work. The contractors who stand out get selected for full-time work relatively quickly and consistently.
Ouch. Some of my favorite gigs I've ever performed aren't possible under this standard. I question whether this will actually benefit contractors, but I have no doubt that it will benefit bigger, established players who already have full-time cadres.
> Some of my favorite gigs I've ever performed aren't possible under this standard.
Let's not assume that because the cost to the employer goes up, they will drop all the former 'contractor' positions. Employee rates are based on what the market will bear, subject to law and regulation; they are not based on 'cost-minus' - cost to the employer, minus a profit. Using a very simple case of the cost and benefit: If the employer can hire you for $10/hr, they will, regardless of whether they make $20/hr or $200/hr from your labor; if the law increases your rate to $15, they still will employ you. Of course, if they only make $9/hr from your labor, they won't hire you at $10/hr in this simple theoretical case. Reality is more complex: They may be happy to absorb the loss for other reasons, such as completing a major project, pleasing an important client, acquiring or maintaining market share, developing talent, your compromising photos of the boss, etc.
It's similar to the mistake people make about pricing: They assume goods are priced at 'cost plus' - the seller's cost plus a profit - and that therefore if the seller's cost increases then the price must also (businesses encourage this misconception - 'if regulations increase our costs, then everyone will have to pay more!'). Really goods are priced based on what the market will bear. That is, goods are priced as high as possible (i.e., at the level which maximizes profit). If they can charge you $10,000 for an item costing them $100, they will. If they have to charge $50 for it, they will do that too; $50 is better than nothing. If their costs change, it doesn't change what the market will bear.
I'm not sure what you mean by that. Could you flesh it out? To me a "sunk cost" is something you've already paid for and can't get back - like your investment in that boat that sunk to the bottom of the ocean. Hiring is about future costs, not past ones.
I'm based in California, and we eliminated all contractor positions about 5 years ago due to the risk. The CA EDD has broad powers which can be triggered by a single phone call from a disgruntled employee or contractor.
I actually couldn't hire someone once because they required a contractor relationship.
There are many types of work outside of Tech and Gig-worker (the two that most comments here focus on) in which workers are inappropriately classified as contractors in order to reduce carried risk and cost to the employer, but where the employer also exerts significant control over the time, place and manner in which the work is done.
My own familiarity with this (through family who have experienced it) is in the healthcare field, where new graduates who are hungry for experience have little leverage vs established employers, and don't push the issue of how they are incorrectly classified as contractors.
Their only alternative would be to report the misclassification to state employment authorities, but again, they are often not in a position to make that worthwhile.
I was talking with someone recently, and they told me that all new Kaiser doctors are contractors. I was shocked. I don't know if it is true. If it is, I hope this decision reverses that trend. Can you imagine coming out of medical school, passing the boards, doing your time as a slave as some hospital, to get an offer as a contractor? And all that, with an amazing amount of debt, that you assumed you could pay off easily, but now you're not so sure? Wow.
AFAIK (have a friends who are Kaiser docs), they are employees, and eventually partners, of the Kaiser Medical Group (a distinct business entity from Kaiser Permanente the nonprofit health system, that contracts exclusively with it), which comes with excellent benefits - including large home loans that are forgiven after several years of service and a generous pension. Perhaps they contract out some hyperspecialist roles.
But neither of those scenarios is really comparable to the ones low wage contract workers find themselves in.
Does this affect "contract to hire" positions, where companies "try before you buy"? Further, can companies still get contractors through a contractor agency, assuming the workers are employees of that agency?
Do you think you know why the position was structured like that? And did you have other non-contract job offers? Not trying to put you on the spot, just wondering about the details.
I don't know that I have ever used contract for hire in the definition of California, but it is the preferred way to do. If I have an opening for direct hire I get to read some resumes, check your references, have an interview and hope that tells me how well you will write code. Of course how well somebody interviews tells me nothing about how they code, and references are chosen and coached so they are not reliable.
The alternative is hire somebody for a few weeks of contract, and if they are good give them an offer. Note that I specified two weeks. One of my past bosses said he knew faster than the new guys co-workers: when he asked the rest of the team how the new guy was doing, if the guy was good on the 3rd day you could see the mental shift as the team realized the guy hadn't been on the team for years (even though he was asking the teammate who had come to ask when the new guy's computer would arrive). If the guy wasn't good there would be several weeks of he is "getting up to speed".
I doubt it'll affect agencies, since generally there's not a contract with the person but with the agency. No idea about the first case, this is definitely going to result in a lot of billable time for lawyers.
I am going to assume agencies will be the biggest benefactor here. Would be interesting to see if companies like uber/lyft don't spin off agency type setups to isolate the company from the service providers.
Similar store with me, except I was 4 months into a layoff when I took a 6 month contract-to-hire position. They made me permanent after about 3 weeks (it is amazing how easy it is to impress an employer when you've had a 4 month forced vacation), and been there 8 years. Never would have applied if I had been working full time somewhere else though.
An agency would be a "corp to corp" contract, so that should not be affected by this ruling, provided the person is an employee of the contracting corp.
MM I just though isn't this going to kill Hollywood as the entertainment biz is run off "contractors"
I think A & B would catch most film tv and theater professionals the gaffer gets told what lighting effect to go for also everyone on a show gets told when and where to show up on the call sheet.
IT contractors or contract-to-hire is likely dead as well. And good fucking riddance.
I contract out work from my company. You know what I don't require? Them to come and work at my office from "core hours". I don't have a dress code. I only have specs on what they're creating and the tools, which they provide.
They bill per job and do it at their leisure as well.
Just like when I built homes, my contractors provided everything they needed and I provided materials. I scheduled them but they showed up whenever it fit in their schedule based off their other contract jobs.
They're also required to carry their own GL and Worker's Comp if I hire them or go through their own LLC/Corp.
But if your expecting me to provide kit to your required spec that increases my day rate :-) though that does help with fending off the tax man.
You confusing say a brickie, sparks or a chippie who can use the same tools from job to job - with an it job where you might have to buy new software / hardware.
I don't think so. The gaffer is told what lighting effect is desired, but they are the one that has control over how it's achieved. Same for the propmaster; the director says, "We need something that does this", and it's up to the propmaster how to achieve that. That industry does also have some pretty strong unions, so I think they'd be ok regarding labor standards.
Just like if you hired someone to paint your fence, you do have control over how you want it (what color, for example), but not necessarily over how it gets done (if they end up tricking a bunch of other painters to do it because they say how fun it is).
Courts interpret laws when their application is unclear or illegal. Sometimes as a matter of course they develop a rules system for interpreting the laws. Then that rules system can get reused in subsequent cases and itself becomes a standard. There are many examples of “tests” courts have developed over the years.
The legislative process is slow. In an ideal world, the constitution and the parliament define the laws in general terms that do not need to be adjusted for every new technology or economic development. In Switzerland, there is even a law that says that if a law is obviously missing, judges are free to judge as if that law existed. So the judicative clearly also has a law-making role, but at a much lower level. It’s like the system architects and the programmers in software development: in the end, both engage in a design activity, just at a different level of abstraction.
Yes, I guess so. Thing is, that legislation is often slow, so courts have to decide matters.
In Germany also the legislation oftentimes is not competent. Many laws are made, that are without value, after they where on trial. So, at least in Germany, courts are oftentimes a second law maker, because they have to check, how all these rules fit together (in the best of all worlds, the legislation should do that beforehand).
It's worth pointing out there are different legal foundations. The United States is on something called Common Law [1], in which courts are generally supposed to follow precedent and not make up new stuff or function as de facto legislatures. Obviously, this is one of those plans that doesn't necessarily survive contact with the enemy, but under common law it is reasonable to criticize the court here as potentially overreaching. A mitigating factor in that criticism is precisely that many other peer jurisdictions have adopted the same standard on presumably similar bases of legislation, so there is some precedent in favor of using this same standard.
Germany is built on a foundation called Civil Law [2]. In this system, judges are encouraged to uphold principles and rule on the specifics of a case, regardless of previous cases that may have found in some way or another. Just as with common law, I'm sure judges may consult precedents as they find useful, but they aren't bound to them, and are, I presume, much less likely to mention them in judgments as they are not anywhere near as relevant.
This also applies in a fairly obvious fashion to Hermel's post that is a sibling to what I'm replying to. In Civil Law, which Switzerland also operates under [3], instructing judges to imagine reasonable laws is a reasonable thing to do. In Common Law, judges just imagining laws to be the way they believe they should be strikes at the foundation of the system.
(Perhaps ironically, it's probably easier for Common Law courts to function as de facto legislatures precisely because of the respect for precedential law, despite the fact they are nominally not supposed to. A certain court can make a decision and apply some test like this, and it tends to spread around the country unless some legislatures take explicit action to prevent it. It can even spread between countries, because common law courts can look at other country's common law courts and consider their precedents as well, though more weakly than their own. By contrast, while a civil law judge at first seems to be taking a legislative role when they make some decision based on laws that essentially only exist in their head, they are binding the future far less and the decision carries less global weight, making it much harder to truly "legislate from the bench" in the way we complain about in the US. Second order effects can be pretty twisted!)
> The United States is on something called Common Law [1], in which courts are generally supposed to follow precedent and not make up new stuff or function as de facto legislatures.
Even while linking to Wikipedia articles, you manage to get the common law / civil law distinction almost completely backwards: the common law is a body of judge-made law resulting from judges acting as “de facto legislatures” (which is the source of the respect for precedent, as the prior decisions are themselves incorporated into law), whereas civil law is a system in which the law is strictly created by legislative bodies, and thus courts are expected to look exclusively to the acts of the legislature, and not prior court decisions.
How does the "B" in ABC affect me as someone who does software engineering contracting on the side sometimes for tech firms? I've got a decent network out here in SV, and sometimes a startup facing an urgent deadline will hire me to do some code writing for a couple of weeks. This is work I do outside of my normal 9-5. But now it seems I can't do this without being classified as an employee. That really sucks.
I think it's about the service that the contracting company does. The idea being that the company should only contract for things that are different than what it normally does. IOW, if you have a 100 SW developers in SV that are employees, you can't also have a bunch of contract SW developers in SV.
For you, and others in this type of role, it likely makes the most sense to form a LLC or other corporation, and do a corp-to-corp contract. If this ruling holds, companies may even start to require that.
Unfortunately for those in California, CA requires an $800/year minimum fee for a corporation. It’d be nice if these changes forced a change in that law.
(By the way, just to head off a common misconception: You cannot just “incorporate somewhere else” to avoid the $800 fee. If you are a California resident doing work in California, even if you have a “foreign corporation”—California’s term for corporations from other states—you must register it in California and be subject to the $800 fee.)
How will this affect the tax? The main difference between a 1099 contractor and a W2 employee is in the payroll and social security/medicare tax requirements. But these tax requirements are federal and this is a CA only decision.
Bingo. The IRS uses a different test, so workers could end up as "employees" for the purpose of state law and "contractors" for the purpose of federal tax withholding.
It doesn’t make a difference if everyone (including the government) agrees on the classification in advance.
It makes a huge difference if you can retroactively change the terms of the original agreement (“because I wasn’t classified right”) and get the other party to have to pay you back for (half of) those taxes.
For me it would be interesting to see, if this also sparks remote work for software development contractors, since of test criteria B.
Else, when a software developer freelancer is working directly in a company with software developer employees, the criterion will be difficult to fulfill.
In Germany we have a similar situation, because we also have this discussion, who is an employee (for social security matters). One big criterion is remote work, but still many employers are holding back, since they fear to loose control over the contractor, when he can not look over his shoulder.
The change seems immaterial to me except that it’s much clearer. The article author injects a social justice angle without describing any specific impact.
Who is really affected by this? Any concrete examples?
FedEx, UPS, Amazon Logistics, basically every delivery company. Everyone in delivery these days is an "independent contractor" with no control over their route or hours, working for a business that does nothing but deliveries.
FedEx, UPS, Amazon Logistics, basically every delivery company.
I don't know about the rest of them, but your information is totally wrong about UPS. The "delivery" people are most definitely employees. Union employees, Teamsters in fact. Which means that UPS doesn't get to push them around all that easily. But which also means that the relationship is occasionally more confrontational than it should be.
Interestingly enough, at least around here, UPS is also the best delivery company. Decent prices, can get daily pickups, delivers on time, drives a company truck.
Half the time with FedEx you have no idea why a random truck is stopping to drop off a package. We also at my office always have to call them to do any pickup, the UPS guy just grabs outgoing when it delivers the incoming.
The material part is that it's clearer. That means most such decisions don't require litigation. The result will be that blatant violations of the law get resolved fast.
Not exactly. The prior test used in California already looked at who had the right to control or direct the work of the putative contractor. The new test requires the company to prove that it does not fundamentally control or direct the performance of work, as well as prove that the other 2 factors of the ABC test also do not apply.
That's a good question. I think it is widely assumed that contractors would prefer to be employees, given the number of court cases where contractors have sued employers. (I don't remember a court case where an employee sued to be a contractor.)
I still remember the huge Microsoft settlement[1]. Well, huge for the time.
Employers want to commoditize the jobs they offer. It's in their best interest to be able to hire/fire with as little risk as possible. The dream for many companies would be "all employees are contractors" and no one gets benefits. Except, of course, management. They'll get huge salaries and great benefits. (I'm an officer of a 35 yr old corp.)
Can you explain why that's the case, when this is apparently a standard that already existed in other states, before California (according to the article)?
Can you explain why California is thriving when people incessantly predict the imminent collapse due to every employer moving out of state?
This test has been the standard in other states for a while - New Jersey for example. But I don't think it has been an issue for Uber/Lyft classifying drivers in NJ as contractors. I wonder why not?
Sorry, rant coming. (I assure the mods this is impromptu and not copy-pasted; verify yourself.)
I don't see a lot of productive progress being made on this question. Judges constantly try to apply conflicting standards of whether someone is "really" an employee, but you can't make progress on that question until you can measurably answer why you're asking that question to begin with.
For another context, take "is alcoholism really a disease?" If we don't want to be stuck in unproductive talking-past-each-other, we have to transform that into a more concrete query, like, "are alcoholics responsive to social pressure?" or "does the urge to drink stem from a chemical imbalance?"
Those questions, you can actually -- in principle -- make progress on. Maybe you find some chemical under which alcoholics stop drinking because it doesn't appeal to them anymore. Or maybe you find that shunning changes their behavior, and the appeal to "alcoholism being a disease" maps to a specific game-theoretic strategy.
Or maybe shunning just turns out to make alcoholics miserable and resort to more expensive, covert techniques to get their fix. Or maybe the evidence is perpetually ambiguous. But at least you can make progress on those questions.
What are the corresponding criteria for the question "is this Uber driver really an employee?" How would you know you got it wrong? What are you really optimizing for when you legislate a distinction between contractor and employee?
For example, let's say you proposed a new test A, under which every purchase of labor makes someone an employer and employee. You buy a haircut? Great, you need to send this amount to this fund to pay for their unemployment insurance. And you need to give them this notice about their rights as a worker. And you need to pay into this worker's comp fund.
Or let's say you proposed a test B under which the buyer is the sole decider of how to classify, and every employer/buyer in the world elects to classify the provider/worker as an employee, and screams in glee as they offload all the liability and expenses onto the worker. By what standard, concretely, do you know you erred?
It doesn't work to say "that's absurd". What's important is to say the specific desiderata that make that situation absurd.
I have yet to see someone propose a (satisfying) standard/desideratum to ground the employee/contractor distinction in law. The closest I've seen is "we want to make sure workers don't get oppressed" (or some equivalent expression), but that doesn't suffice -- there has to be some reason you don't go with the A test above. What is that?
Transaction costs for one. It sounds like an incredible mess to actually implement. And why shift that burden to the customer? In a haircut scenario, the person getting the cut is unquestionably a customer and not an employer. So why make him/her shoulder the administrative and legal burden?
Think beyond wage and hour. Customer #2 gets cut by scissors, suffering serious bodily injury. Who does she sue? The barber, sure. But these actions were performed during the course and scope of employment. So now (per 400+ years of common law) the employer — aka previous customer - is now on the hook for those damages.
I’d certainly never get my hair cut there. It might cost me $100,000.
Ok so change that law, but now you’re ditching a few centuries of agency law and getting exactly what in return? A system no more efficient than what it’s replacing.
>And why shift that burden to the customer? In a haircut scenario, the person getting the cut is unquestionably a customer and not an employer
That's exactly the reasoning I said doesn't work. You can't just say that a situation is "absurd". Why is it absurd? What's the standard so you can derive the boundaries?
>Customer #2 gets cut by scissors, suffering serious bodily injury. Who does she sue? The barber, sure. But these actions were performed during the course and scope of employment. So now (per 400+ years of common law) the employer — aka previous customer - is now on the hook for those damages.
No, Customer #2 would be a second employer.
>Ok so change that law, but now you’re ditching a few centuries of agency law and getting exactly what in return? A system no more efficient than what it’s replacing.
I don't know what that's responding to. I wasn't ditching anything. I was asking for what grounds the distinction.
I have yet to see someone propose a (satisfying) standard/desideratum to ground the employee/contractor distinction in law.
Read the actual decision.[1] The discussion of this issue starts at page 62. The Court discusses why there should be a distinction, and why it needs to be less ambiguous than the "multifactor test".
The stuff on page 62+ only explains why a quick, unambiguous test for how to classify is a good thing. I don’t think anyone was disputing that, and my comment certainly wasn’t.
The closest it comes to addressing my points is when it talks of “evading wage and hour” laws. But that’s my point: Why do you count it as “evading” anything when you buy labor from someone who offers it as a freelancer, and that rate is under the minimum? What desideratum does that violate? Why do you let anyone offer services, at all, in any capacity (including as a business) when they might earn less than minimum wage, or even negative amounts?
> “evading wage and hour” laws. But that’s my point: Why do you count it as “evading” anything when you buy labor from someone who offers it as a freelancer, and that rate is under the minimum?
Working for less than minimum wage is against the law. Are you actually suggesting that minimum wage is a bad idea, and so of course the rest wouldn't hold up. In this case, a minimum wage is considered a premise of the entire decision.
I cannot see an issue about gifting people something. I do see an issue with allowing paid work at less than the legal minimum wage, which I expect is why this was framed as an evasion of the wage and hour laws.
To go very off topic, my quick reason for why minimum wage laws are desired is as follows (note I don't think any of this works as follows in real life, but this is the reasoning I can come up with):
We as a society do not actually want to subsidize businesses where they shunt the cost of their employees to the public but privatize the profits - i.e. if Walmart only "makes money" because the local governments have to pay 1/2 the employee wages in poverty avoiding benefits - we don't want Walmart to succeed. So we set a wage minimum in law where if you make that amount society thinks you wouldn't need welfare etc. It may also be seen as a moral value that an employee should make enough to survive at a job. I.e. we should treat employes "this good" in a developed country.
>Working for less than minimum wage is against the law.
No, it's not. You can absolutely set up a proprietorship, and sell labor, such that the pre-tax proceeds per hour of labor are less than the minimum. That is legal. It's just not legal for an "employer" to be the payer of that income, hence begging the original question.
That's my whole point: why does this distinction exist?
It's pretty trivial to defend any tiny part of the system in isolation. The problem is to explain why you have this employer-contractor boundary. That needs more (as justified in my original comment) than "I don't want workers to be oppressed" or "I don't like businesses shunting costs onto the public".
There's a simple reason the decision does not provide the explanation you are looking for: that's not the role of the court. The California legislature, by statute, and the Industrial Welfare Commission, established that there needs to be a distinction between employee and independent contractor. The courts have the role of setting forth a rule consistent with California statutes and IWC wage orders that courts (and, by extension, the public) can use to determine whether someone falls into the "employee" or "contractor" category. It does not matter to the court WHY that distinction exists, except to the extent that why informs what test to use to determine who is and who is not an employee under state law.
Courts commonly rule on intent, and laws generally have an intent discernable from the language of the legislation or the records of is legislative debate. This gives courts a way to disambiguate unclear cases like this one, and it's typically vital to have some intent to fall back on, since laws don't make sense otherwise.
These confused rulings are exactly what you expect in the absence of such a mooring. They can't give a reason why my rules A or B are absurd, except for whether they match some hard-to-parse guidelines.
Example: If the employer requires you to bring your own tools, that somehow makes you more of a contractor, even though that's a greater burden on the worker, but someone decided that such instances "feel" more like contractors. Exactly what confused governance and legislation look like.
The main idea for contractors was to have them work flexible, typically shorter time in which case being paid a specific fraction of minimum wage is allegedly ok. (Not really, it is too low.)
It is being abused though to offer full time jobs for reduced pay or for tax benefits to the company.
Maybe it's time for the legislature to create a new classification of employee: an independent employee, to conform to the nature of the new gig economy.
I don't know. The purpose of the law is not to confer benefits on one class or another. It is to accurately describe the rights and duties of relationships.
As a foreigner I hate when English headlines are semi-cryptic lines of text that make absolutely no sense to me without a few extra words. They transform... What?
#/media/File:Map_of_the_Legal_systems_of_the_world_(en).png){kind=link}
> If A, B, or C isn’t present, the worker is considered an employee.
> A. Freedom from control over how to perform the service
> B. Service is outside the business' normal variety or workplace
> C. Worker is engaged in independently established role
So if any one of those conditions isn't the case, you are an employee under the law. I see people in this thread wondering how it'll affect companies like Uber/Lyft/whatever -- and I think it will actually be good for them, because now they'll use some of that warchest to hire the the best lawyers to figure out exactly how to best navigate the law (in california at least), and write their contracts in whatever way that best makes sure all 3 are present and they still get a healthy supply of drivers. Other smaller gig economy companies will then follow that lead so they can stay afloat and not purchase the legal work done by Uber/Lyft.
If I was invested in Uber/Lyft, I would welcome this, because it removes an avenue of risk, stabilizing the lawsuit risk.
[EDIT] - In the article there's a link to the decision from which the test comes from:
https://www.bloomberglaw.com/public/desktop/document/Hargrov...