[deminature]

AB5 imposes an ABC test on businesses after the precedent set by Dynamex [1]. The specific point of contention the judge has is the B of the ABC - that is whether drivers 'perform work that is outside the usual course of the hiring entity’s business'. Uber argues it is a technology company first, and drives/delivers second, whereas the judge argues the opposite. Convincing arguments can be made for both sides.

The modifications discussed in the top-level post address the A and C portions of the test, but not B unfortunately. The B clause is very broad, so likely has ramifications for many tech companies.

Taken to its furthest extent, AB5 makes Airbnb hosts Airbnb employees, Amazon marketplace sellers Amazon employees, eBay sellers eBay employees, Twitch streamers Twitch employees, etc.

[1] https://www.californiaemploymentlawreport.com/2019/03/unders...

[gamblor956]

Taken to its furthest extent, AB5 makes Airbnb hosts Airbnb employees, Amazon marketplace sellers Amazon employees, eBay sellers eBay employees, Twitch streamers Twitch employees, etc.

Airbnb: no, because hosts aren't being paid for providing services, they're being paid for providing access to their accommodations. Its a subtle distinction but one that matters legally since it means there isn't a compensation-for-work arrangement. (A host can choose to voluntarily go above and beyond, but that's not required or expected.)

Amazon Marketplace and eBay: No. The Amazon marketplace acts like a real marketplace, so sellers transact with the buyers for AM purchases and Amazon acts as an agent of the seller in that transaction. Sellers determine what they sell on Amazon, how much they charge for the products they sell, and are largely responsible for acquiring sales traffic on their own. Sellers independently acquire and own the inventory they sell on Amazon, and can sell on their own websites or on competitors' websites. Crucially, Amazon isn't paying AM sellers for their labors in selling products. They only receive payment for goods actually sold, meaning again, there is no compensation-for-work arrangement.

Also, for Amazon and eBay: AB5 carves out exceptions for direct sales, in this context defined as any sales not made through a retail store, so direct sales salespersons may continue to be treated as contractors or employees as the business so chooses.

Twitch: Possibly! Twitch and streamers are in the business of streaming live video. Streamers are usually exclusive to a particular streaming service. And generally, except for the biggest streamers, they are unable to set or negotiate their own rates for streaming.

BUT...Twitch doesn't actually pay streamers for streaming; most of them do it for free. When it does pay streamers, it pays them commissions and marketing fees for any ad revenue, sales of digital products, or subscriptions tied to their channels (even if not actually arising from streaming), and marketing services and commission-based arrangements are largely excluded from AB5. And generally, for the bigger streamers, it pays them through personal companies so that AB5 does not apply (since AB5 does not apply to contracts between two legal entities).

[Retric]

Twitch streamers also retain ownership of their content which is often repackaged for revenue on YouTube.

Twitch is really the least employee vs employer relationship as payment is essentially independent of specific actions preformed by the streamer. It’s not like a streamer is paid to beat a boss, or even play a specific game it’s a question of entertaining people.

IMO it’s the closest to a ‘new economy‘ out there, though sharing roots with earlier real time online performers (porn).

[pishpash]

The sticking point is Prong B and here you're talking about Prong A. Re-evaluate with respect to Prong B. What's Airbnb's customary work or business? What's Amazon's and Ebay's? Do "people" "think" of Airbnb, Amazon, and eBay as "technology" companies or "hostels" and "stores"? Can they survive without hosts or sellers? (All these arguments were made against gig companies.)

[gamblor956]

The prongs don't matter for AM or eBay, since AB5 exempts them from the analysis altogether.

But on that note, a lot of people seem to be ignoring the crucial differences in the transactional relationships between the parties for websites like eBay.

Sellers use eBay to conduct auctions and sell their goods. They have control over inventory, pricing, starting and ending auctions, accepting final bids, etc. eBay as acts the seller's agent and provides services to the seller with respect to transactions similar to how an employee or contractor would. IOW, eBay is acting as a contractor to the seller.

Similarly, for AirBnB, hosts use AirBnB as a marketplace for provider hoteling services. AirBnB is acting as their booking agent and payment collections agent for the host. IOW, AirBnb is acting as a contractor to the host. To the extent that AirBnB itself is paying the hosts (and is not merely passing along money from guests), it isn't for providing hoteling services on AirBnB's behalf, rather it's an incentive for making a property available on the AirBnB marketplace. (I know this because my former employer got paid $$$ to make certain beachside properties it owned available for booking on AirBnB, and these payments were separate from payments we received related to AirBnb-booked stays.)

For Uber/Lyft, the relationship is reversed. The driver is acting as an agent for Uber/Lyft: Uber/Lyft assigns them a ride, and they must provide the ride to get paid. Moreover, in contrast to actual marketplaces, the amount drivers get paid by Uber is not directly tied to the amount charged to the passenger; indeed, driver's generally do not know how much riders actually pay for a trip unless they ask the rider what they're getting charged. This indicates that the transactional relationship for both the driver and the passenger is with Uber, not each other. (Further explanation would dive into principles of contract law, so I leave it to you for further research if you want to go down that path.)

[e12e]

> Airbnb: no, because hosts aren't being paid for providing services, they're being paid for providing access to their accommodations.

Hotels aren't classified as a service in the US? Or is this going along with the fiction that Airbnb is different from hotels (and not subject to regulations etc) the same way uber isn't a taxi service?

[Retric]

Different meaning of service. Many hosts have automated the process so they hand off entry remotely and employ an independent cleaning service. It’s hard to classify someone as an employee when some have been paid for ‘work done’ after they died.

[e12e]

Well, I'm pretty sure receptionists and booking (sales) people at hotels are service workers too - not just the maids. But interesting point about there being sub-contractors all the way down re: this thread (who is an employee).

[abduhl]

I'd just like to point out that while Uber may argue that they are a tech company first and driver/delivery second, the judge ruled that they are the opposite. The judge isn't arguing anything.

[novok]

So if Adorama sells on amazon.com, does adorama the corporation become an employee of amazon?

If the separation on that mindfuck is 'register a corp / LLC', then what prevents drivers making an LLC to drive for uber?

[lkrubner]

I think you might mean this as a "gotcha" but it is the correct way to move forward, for both individuals and the nation. Incorporation allows the kind of formalization that the government prefers, and that point the government is much more willing to recognize an independent supplier.

[jmwilson]

There's the $800 California LLC annual fee, which is the highest in the country, and applies before you make a dollar in revenue.

[paul_f]

You don't need an LLC to run a business. Plenty of sole proprietors do this along with filing self employment taxes without ever forming an LLC.

[kadoban]

Does something prevent incorporating in another location that allows it? Doubt it.

[jmwilson]

Of course they could do that, but any corporation or LLC that does business in California [1] (surely a Uber driver operating in California would be considered as such) has to pay the fee. Incorporating out of state would just mean a second set of fees and more forms to file.

[1] https://www.ftb.ca.gov/file/business/doing-business-in-calif...

[kadoban]

Ah, I did not know that. Thanks

[gamblor956]

No, because Adorama is a company, and companies can't be employees...

Nothing prevents drivers from registering LLCs to drive for uber, and that is in fact what the CA DOL website says is a bare minimum for satisfying another part of AB5.

[Keyframe]

That’s exactly how they operate in, for example, Croatia. Every driver owns an LLC.

[omnipugent]

Couldn't Uber allow other operating companies to use its service along with Raiser/Raizer LLC as long as they follow certain platform terms?

[Retric]

The people absolutely required for Amazon to function are actual employees. Remove drivers and Uber’s business instantly shuts down literally that second, but Amazon can keep selling until their inventory runs out. Amazon.com sells inanimate objects or intellectual property which can’t be employees. Uber sells rides which require a physical person to preform them.

So, I really don’t understand what your trying to convey.

[chx]

> Uber argues it is a technology company first, and drives/delivers second, whereas the judge argues the opposite. Convincing arguments can be made for both sides.

Uber is a mess.

It clearly needs to be a franchise.

You have Mother Uber that develops the app and sells the franchise and Uber SF, Uber LA, Uber Seattle etc that hires the drivers. It's utterly unclear to me what efficiencies can be found for having one company doing all that.

[SrslyJosh]

> It clearly needs to be a franchise.

Think bigger. Why should transportation infrastructure (which is a public good) be controlled by a private, for-profit corporation?

[brianwawok]

Because that’s how innovation happens in the US? How are passengers trains innovating over the past 60 years?

[SrslyJosh]

Yes, the US sucks at investing in public infrastructure, especially transit. Obviously we should do nothing to try to change that. =)

[TheColorYellow]

Not the GP, but what would you suggest is a realistic alternative in the current state?

Reforming public institutions to more effectively build public transportation infrastructure seems to be incredibly difficult. Local institutions seem to have maxed out their ability to improve beyond what exists.

So why not let the private market innovate and improve? If the public institutions where smarter they'd be taking advantage of these innovations the same way as has happened in reverse when public institutions have had success with innovation.

[cycomanic]

Well one alternative is to not vote for parties which have a history of gutting government services to make them unviable and then saying "look here this must be run private" giving private companies a license to print money by offering less service for more money. Just look at what is happening with the USPS right now.

[canada_dry]

> Uber argues it is a technology company first, and drives/delivers second

I can see Uber desperately looking for non-obvious applications for its core software to strengthen its argument.

Suggestions?

[bhupy]

Uber already re-uses this type of supply/demand matching platform for Uber Freight[1] to match shippers with "haulers".

They also have a vertical agnostic "Uber Works"[2] that lets contract workers find jobs, sort of like Fiverr or TaskRabbit.

They also partnered with the Thames Clipper to allow passengers to book tickets on the ferry in London[3]. You'd have a hard time arguing that the Thames Clipper staff would be considered Uber employees, even under the AB-5 test.

[1] https://www.uber.com/us/en/freight/

[2] https://www.uber.com/blog/chicago/uberworks/

[3] https://www.independent.co.uk/news/uk/home-news/uber-boat-lo...

[freediver]

> Uber argues it is a technology company first, and drives/delivers second, whereas the judge argues the opposite. Convincing arguments can be made for both sides.

UBER could theoretically function without the technology (a taxi service) but it could not function without the drivers, yet. If the fleet was driverless, then of course, they wouldn't have these problems in the first place.

[tfehring]

Whether Uber's business is providing taxi service or just providing a platform for independent drivers to connect with clients, intuitively it seems like the work drivers do is clearly within the usual course of Uber's business. What would Uber's counterargument look like here? Am I just reading it too literally?

[gamblor956]

No, you've just described Uber/Lyft's problem in a nutshell.

[pishpash]

Please first define what is "work in the usual course of business". What work that any contractor does, given that it is work contracted for a necessary economic purpose within the business of the contracting party, isn't within the latter's usual course of business?

Gig companies are market makers. By their very nature they are sitting in the middle of transactions and would be without a job without the transacting parties. Are all transacting parties therefore employees of market makers?

[sidlls]

> What work that any contractor does, given that it is work contracted for a necessary economic purpose within the business of the contracting party, isn't within the latter's usual course of business?

There are existing, relatively easily identified examples: tech companies hiring (on contract) workers to provide janitorial or cafeteria services, retailers hiring contracts to fix plumbing or install fixtures in their stores, landlords hiring individuals to paint homes, and the list could go on.

The "usual course of business" has a clear legal definition under California law: "the regular and customary work of a business, performed within or upon the premises or worksite of the client employer."

In the case of Uber, "software development" and "drivers" clearly are required in the "ordinary and regular and expected course of dealings" in their marketplace. The company's entire premise is built on connecting drivers to passengers via a software platform: they don't have a business without both of those things. One might argue over whether drivers' cars count as a "worksite", or whether remote workers working from home count as working from a "worksite" or "on premise"--but those arguments would be thin and shallow.

[pishpash]

Already the landlord hiring a painter example is getting tricky. That is required upkeep of the property. What about hiring a manager? What distinguishes that from hiring a painter?

Regardless, I see you specifically haven't addressed the market maker question. Please articulate a standard by which eBay's on-premise customary work is software development but a gig tech company's isn't. That's literally their regular and customary work of business that is performed on premise at HQ by a workforce that they can actually control (call to work and dismiss). There is no difference between those employees and drivers, huh? None at all? No market maker would have a business without participants doing their own work. The argument is neither thin nor shallow. It gets to the point of whether you can be in the business of making a market for contract labor or services. You seem to argue that that cannot be a business at all, and for what reason exactly?

[jlarocco]

> Uber argues it is a technology company first, and drives/delivers second, whereas the judge argues the opposite.

That argument reminds me of the George Costanza quote, "It's not lying, if you believe it."

Regardless of what they consider themselves, everybody else thinks of them as a big taxi company.

> Taken to its furthest extent, AB5 makes Airbnb hosts Airbnb employees, Amazon marketplace sellers Amazon employees, eBay sellers eBay employees, Twitch streamers Twitch employees, etc.

I don't think it does, and that sounds like FUD. Do you have any references of those businesses actually being required to reclassify vendors as employees?

[pishpash]

It's clear to me that Prong B of AB5 is broken and it's not fixable, except by arbitrary exemptions galore. Rather than admitting this, the state seems hellbent on shoehorning this law into something politically motivated against gig companies.

All the actions on the state's part points to bad faith.

[9nGQluzmnq3M]

Or maybe the state is acting in good faith on behalf of gig workers, and it's the gig companies tying themselves into knots trying to avoid legislation who are acting in bad faith?

[pishpash]

No, that's delusional. The state is at most interested in recouping revenue because it's out of money due to Covid. There are proposals on the table that would realistically improve the environment around gig work, but the state doesn't appear to care about those.

[9nGQluzmnq3M]

So altruistic Good Guy Underdog Uber fighting in good faith to stick it to Big Bad Government is not delusional?

Also, the legal wrangling over this started long before Covid.

[unishark]

To first order, both Uber and drivers were willingly choosing to work together. The state is outlawing a money-making venture consenting adults wanted to do. You don't know that the second order effects will be what you want. Government is a blunt instrument and many ordinary people will be upset and perhaps completely screwed by this. As the story says, for the next several months at least, the state may have cost people their source of income. Owners of taxis and shuttle services should be thrilled though. Were they the little guy here?

[freeone3000]

Yes, the state's actual goal is to end gig work, by forcing gig work companies to actually treat their employees like employees. I'm for it. (It also seems weird to dismiss government action as politically motivated - of COURSE it is, it's literally political action! It's not going to be motivated by the tides!)

[pishpash]

Then just come out and make a clean law against gig work. That's not what's done though.

It's fine to be politically motivated, however it's not good faith to be motivated against specific businesses while pretending to be following a broad principle that then needs exemption holes poked all over it to make work. It indicates there is no principle being followed, or at least they don't know what it should be, a situation which everyone should agree is dangerous.

[freeone3000]

What is "gig work"? It needs to be very specifically defined. It needs to include Uber and Instacart but exclude beekeepers and software developers. So, as with most practical laws, it ends up as a very long list of do's and don'ts, so it actually covers the thing to outlaw while interfering minimally with others. This isn't unusual.