
An attorney suing Uber, Lyft, GrubHub and a dozen California tech firms - jackgavigan
http://www.latimes.com/business/technology/la-fi-class-action-lawyer-20160124-story.html
======
100k
The most recent issue of Mother Jones also has an article about Liss-Riordan
and her employment law lawsuits. According to the article, she got her start
suing restaurants that were skimming tips from employees -- which Uber is also
accused of.

[http://www.motherjones.com/politics/2015/12/uber-lawsuit-
dri...](http://www.motherjones.com/politics/2015/12/uber-lawsuit-drivers-
class-action-shannon-liss-riordan)

~~~
SilasX
Oy gevalt! That again? It's the modern version of counting angels on a pin.

Uber said, "drivers get this percent from the fee, Uber gets this much". Uber
claimed "tip's included". Modern philosophers claimed this makes a difference
because the law prohibits taking a cut of tips.

But there is no difference! Any allocation of the fee can be rephrased as
being "with" or "without' a tip in such a way that the money flows are all the
same. There is no "fact of the matter" as to what part of the fee is a tip!
Any phrasing can be correct!

Let's say Uber took 25%. You can say that the fee breaks down as:

1) 25% to Uber, 50% driver payment, 25% driver tip

2) 25% to Uber, 75% driver payment, no tip

3) 25% driver payment, 75% tip to driver, which Uber takes a 1/3 cut off
(illegal).

If the law treats observationally equivalent situations differently because of
how they're labeled, that law is meaningless, and basically just taxing you on
angel pinheads. (I call the property of passing this test "nominal
invariance".)

(The exception of course is when a customer gives a cash tip on top of the fee
directly to the driver. But Uber definitely doesn't take a cut of that!

------
gpsx
And when it is all over I can see each driver getting a check for $2.37 and
Liss-Riordon getting a check for $60,000,000.00. (OK, this maybe a slight
exaggeration, but only a slight one.)

~~~
rayiner
In the Fed Ex settlement she won $223m for 2,600 class members. Even if she
gets a 1/3 cut that's, $60,000 on average per class member for mis-
classification over a seven-year period.

~~~
toomuchtodo
I assume that doesn't include back taxes and fines due to the IRS.

~~~
rayiner
Yeah, that's just the fund for claims from employees.

------
bluefinity
Uber is the world's most highly valued private company? Somebody better tell
Saudi Aramco.

~~~
mikeyouse
Or Koch Industries..

~~~
zzazzdsa
or Cargill, or Mars....

------
benbowden
If she does win the case then wouldn't Uber and Lyft simply give less of a
percentage of earnings per ride to their drivers to compensate for the change
of cost? Would Uber and Lyft make more if they had their drivers on a similar
model to a pizza delivery driver ($4.50/h + tips)?

~~~
toomuchtodo
> If she does win the case then wouldn't Uber and Lyft simply give less of a
> percentage of earnings per ride to their drivers to compensate for the
> change of cost?

Uber and Lyft would need to pay hourly wages, along with all of the associated
taxes due.

> Would Uber and Lyft make more if they had their drivers on a similar model
> to a pizza delivery driver ($4.50/h + tips)?

Uber and Lyft's entire business model is built on the independent contractor
model. I don't believe they could reach profitability in any scenario with
human drivers if they have to pay them as stipulated by IRS regulations.

~~~
SilasX
>Uber and Lyft would need to pay hourly wages, along with all of the
associated taxes due.

Not true. You can be an employee with a non-hourly pay structure. Just one of
many misconceptions batted around about the implications of driver
reclassification, along with (these aren't all false per se, just not-
necessarily-true):

\- Drivers would have to get the Uber-paid lavish health care plan that
developers there get.

\- Driver cash payments would remain the same and not be reduced.

\- Drivers would get fixed work schedules.

\- Drivers would value the compensation package that includes employee
benefits but has lower cash pay, over the compensation they get now.

\- Uber would have to provide the vehicles.

\- The economic incidence of FICA taxes would shift to Uber (not how economic
incidence works[1]).

Again, the employee/contractor distinction depends on a number of factors; you
can be classified as an employee without meeting all of criteria.

[1] Good explanation:
[https://www.reddit.com/r/badeconomics/comments/422av5/some_g...](https://www.reddit.com/r/badeconomics/comments/422av5/some_good_old_fashioned_101level_errors_on/cz73e8g)

~~~
toomuchtodo
I agree those are all things _that should happen_. But can Uber be profitable
in that configuration? I would argue not, but maybe they pull it off.

~~~
SilasX
My point was that the reclassification as employees does not imply that any of
those would be true (very unlikely for a few, false as a matter of law in at
least one).

You can't just assume that the change would achieve this state where workers
get strictly more benefits and Uber's profits are sucked out. You need to take
into account how much they can cut driver cash payments in that circumstance
(i.e. paying them via benefits), where the economic incidence of car costs and
FICA taxes currently lies, what the law says about piecework, etc.

------
Karunamon
One thing I never see addressed in these Uber stories is how, precisely, the
drivers got classified as employees.

The only test I'm aware of refers to things like set hours, dictated methods
of working, company equipment, payment, and so on[1].

Just by that those tests alone, I don't see how an Uber driver is
realistically anything other than a contractor.

So either a judge screwed up somewhere, or I'm really missing something. Would
anyone have some more information on the particulars?

[1]: [https://www.irs.gov/Businesses/Small-Businesses-&-Self-
Emplo...](https://www.irs.gov/Businesses/Small-Businesses-&-Self-
Employed/Independent-Contractor-Self-Employed-or-Employee)

------
eugenekolo2
Reminds me of Microsoft's contractor lawsuit.

[https://en.wikipedia.org/wiki/Permatemp#Vizcaino_v._Microsof...](https://en.wikipedia.org/wiki/Permatemp#Vizcaino_v._Microsoft)

[http://www.reuters.com/article/businesspropicks-us-
findlaw-d...](http://www.reuters.com/article/businesspropicks-us-findlaw-dont-
treat-c-idUSTRE53063S20090401)

------
secondtimeuse
Discounting the tripe "You go girl" tone of the article, there is no divine
law asserting that there ought to be only two forms of (W2/1099) employees.
The labor laws should change in tune with evolution in technology. However
given the current dysfunctional congress, and from experience with other
Patent/Immigration laws this won't happen any time soon. Had it been about
Patent/IP litigation and any other lawyer the tone of the article would be
different.

This is parasitic legal rent seeking at its worst, let's call a spade a spade.

Here is an WSJ article that calls for change in labor laws.[1]

[1] [http://www.wsj.com/articles/what-if-there-were-a-new-type-
of...](http://www.wsj.com/articles/what-if-there-were-a-new-type-of-worker-
dependent-contractor-1422405831)

~~~
zzalpha
_This is parasitic legal rent seeking at its worst, let 's call a spade a
spade._

Or, its someone fighting organizations profiting illegally by flouting labour
laws that have protected workers from corporate exploitation for decades.

But potato, potahto, right?

~~~
secondtimeuse
"Fighting organizations" is a rhetorical device used by lawyers to fool
general public and people like you.

The reality today is that there is a large lobby of litigators actively trying
to keep any change in labour/Patent laws from happening. [1]

I own no shares of Uber Inc. and any other companies involved in these
litigations. But the reality is that by framing this incorrectly as David (The
attorney) vs Goliath (Uber et. al.) fight the article is just pushing your
emotional buttons. At end of the day litigation is not going to magically
create jobs out of thin air. Uber will eventually shift to autonomous cars or
will go bankrupt or might end having chinese drive the cars via video
conference. It's easy to blame Uber for the mess that is the employer provided
insurance.

Its not the Uber which created that problem, its the legislative gridlock
which is at fault. But its cooler these days to hate Uber for all that ills
the hapless middle class in USA.

[1] [http://www.usnews.com/news/articles/2014/09/16/how-the-
tech-...](http://www.usnews.com/news/articles/2014/09/16/how-the-tech-lobby-
got-beat)

~~~
geofft
The way that inappropriate laws get fixed in the US is that new laws get
passed, not that people violate the laws that seem irrelevant to them. I have
no objection to Uber lobbying for laws to introduce a new class of employees
(and I have absolutely no objection to Uber or anyone else making life hard
for the taxi lobby). I do have a strong objection to Uber deciding to treat
employees in a way prohibited by law because they, on their own, think it
makes more sense.

"Legislative gridlock" is a weak excuse. Plenty of legislation gets through,
from PPACA (which had, and continues to have, widespread objection) to USA
FREEDOM (even if you claim PATRIOT's expiration was the result of "deadlock",
the replacement came a day later) to JOBS (specifically legalizing things that
startups wanted to do!) to allowing people to unlock their cell phones (not
really a Big Foo priority). If the people really want Uber and Airbnb -- which
they seem to -- why can't they just get a law passed? And why can't all these
innovative, well-funded startups figure out how to disrupt and fix something
as obviously dysfunctional as our political system?

My worry is not so much with these particular ways they're breaking the law;
it seems like this is probably reasonable (though I'd still like someone other
than Uber to consider it). My worry is with the loss of the rule of law, and
the precedent that we're not going to care about whether the law is followed.
It's certainly true that Uber et al. aren't the first companies to break laws,
but this seems like a qualitative change in what laws are being broken and
what the impact on society is, and a democratic society should be able to have
an opinion on it.

~~~
hollerith
>The way that inappropriate laws get fixed in the US is that new laws get
passed,

Fixed a lot of inappropriate laws, have you?

~~~
1stop
... It was a statement of fact.

I know how a plane flies without being a pilot.

Obvious troll is obvious.

------
la6470
Millenials are unknowingly signing up for slavery and throwing away all the
hard earned labour rights in the name of being more agile.

~~~
aggieben
...or simply trading those "rights" for the freedom to be responsible for
their own lives. One gives up a lot of freedom to be an employee. That
tradeoff might be worth it for some people, and not as much for others.

~~~
skrause
> _One gives up a lot of freedom to be an employee._

As an employee I can walk away from my job any time I want and just get
another. If I had my own business that would be _way_ harder.

Because of that I feel actually more free and independent as an employee. You
just need to make sure to have a good financial buffer so that
losing/switching a job won't hurt very much. Then your employer also can't
pressure you too much.

~~~
aggieben
I feel exactly the opposite: I'm independent now, and I can walk away from my
current gig without all that much disruption in my life because I don't depend
on an employer for benefits or what have you. While I'm not walking away, I've
got more flexibility than I might with an employer (depending on the
employer).

You're 100% right about having a buffer, though. That's a pretty immovable
prerequisite no matter what your professional situation is.

------
steven2012
I don't think they will win. Every single uber driver I talk to loves it. They
love that they can work whenever they want, that they can choose to work for
Lyft or uber, etc. I don't know how you can say they are anything like an
employee. There is no negative consequences for not working except less money.

~~~
toomuchtodo
> I don't think they will win. Every single uber driver I talk to loves it.

That's not quite how the law works. Whether you enjoy being subjugated or not
doesn't effect if the law can be enforced against the entity violating the
law.

~~~
steven2012
How are drivers being subjugated and what law is being violated. What evidence
is there that they are actually employees besides the fact that lawyers and
union activists want them to be?

~~~
toomuchtodo
> How are drivers being subjugated and what law is being violated.

Drivers are being paid as independent contractors. Under the current Uber
model, they are not independent contractors as defined by labor law (nor the
IRS). Ergo, Uber is in violation of both labor law and tax regulations; if
they are found to have violated IRS employee classification rules, they'll be
liable for back taxes, penalties, and officers of the company can be held
personally liable.

> What evidence is there that they are actually employees besides the fact
> that lawyers and union activists want them to be?

You must be blinded by some sort of belief that Uber is the victim here; my
apologies. Employee vs independent contractor classifications can sometimes be
difficult, but the gist of it is:

If you tell someone how to do the work, and you set the price, they're an
employee; if you give someone the work, they set their prices, and they have
control over how the work is performed, they're a contractor.

Guess which model Uber uses?

~~~
steven2012
You are wrong. They are independent contractors. They are not employees as
defined by current labor laws.

I think it is you that are blinded by your beliefs. They are not told how to
do the work. Each driver chooses when they want to work and how long they
work. They are free to work with whomever else they want, including other ride
sharing companies at the same time.

Uber is a marketplace that brings drivers and riders together. It's not an
employer because drivers have complete freedom.

~~~
timwaagh
although i think most people would agree with this the local laws apparently
say everyone who does something central to the core business of a company and
gets paid for it by the company is an employee. it's in the article.

~~~
pfarnsworth
Except for taxi drivers.

------
gnodar
It would have been nice if this article addressed the negative consequences of
these companies skirting labor laws. The only mention of this is here:

 _" she alleges that these firms exert the kind of control that employers
would have over employees — without providing any of the benefits employees,
by law, are entitled to."_

But it doesn't explain what specific benefits are being withheld from
employees, so I don't know what bad thing she is trying to prevent, or the
magnitude of the problem, if there really is one.

~~~
100k
W2 employees have all kinds of protections that 1099 contractors don't. Paid
sick time, FMLA leave, retirement plan contributions...A big difference is
that 1099 contractors must pay their own self-employment taxes (15%) to cover
Social Security and Medicare whereas W2 employees have half of that paid for
by their company. (Economists would say that comes out of wages, but it still
means $15/hour W2 is not directly comparable to $15/hour 1099.)

~~~
ProAm
>still means $15/hour W2 is not directly comparable to $15/hour 1099

of course not that is why contractors get paid more than salary employees. If
contractors dont ask for more money per hour then its their own fault.

~~~
toomuchtodo
Can you show me how "independent contractor" Uber employees can ask more per
hour?

~~~
zzalpha
Which is, incidentally, one of the points this case will hinge on. Being able
to set your own rates is one of the key differentiators between contract and
employee labour, and Uber drivers clearly do not have that ability.

