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California Labor Commission Pops The Uber Bubble, Says Workers Are Employees

Tyler Durden's picture




 

Submitted by Daniel Drew of Dark Bid

California Labor Commission Pops The Uber Bubble, Says Workers Are Employees

The California Labor Commission ruled that Uber is "involved in every aspect of the operation," which means drivers are employees and not independent contractors. Uber says it's "nothing more than a neutral technology platform." The shift to employee status for California drivers threatens Uber's obscene $50 billion valuation in the private market as they face increased labor costs. The ruling could also spark an avalanche of similar lawsuits across the country.

Uber is just one example of the exploitation business model. From Washio to Airbnb, companies in the so called "sharing economy" seek to avoid licensing, regulation, insurance, standard labor costs, and basic business responsibility. This trend threatens the average worker and fosters the development of a peasant class.

The misclassification of employees as independent contractors is one of the most widespread employer abuses. The Department of Labor published a report to summarize the employment relationship under the Fair Labor Standards Act. Here are the parts that Uber clearly violated:

The extent to which the work performed is an integral part of the employer's business. If the work performed by a worker is integral to the employer's business, it is more likely that the worker is economically dependent on the employer and less likely that the worker is in business for himself or herself. For example, work is integral to the employer's business if it is a part of its production process or if it is a service that the employer is in business to provide.

The nature and degree of control by the employer. Analysis of this factor includes who sets pay amounts and work hours and who determines how the work is performed, as well as whether the worker is free to work for others and hire helpers. An independent contractor generally works free from control by the employer (or anyone else, including the employer's clients).

Without its drivers, Uber wouldn't have a business. The drivers are the backbone of the enterprise. Uber, with its "God view" monitoring system and volatile, sky-high surge pricing, definitely controls pricing and how the work is performed. Once Uber starts acting like a real business and faces normal business costs, we'll see how profitable they actually are. Until then, they are just a millennial sweatshop.

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PS this clearly bad news for Uber is bullish for NYC taxi medallions, which have seen their prices tumble in recent years as a result of the Uber threat.

This might just be the second coming of the good, old, unsocial, unnetworked Yellow Cab. Interested readers can look at recent Medallion prices at the following website.

 

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Thu, 06/18/2015 - 05:05 | 6208430 Itchy and Scratchy
Itchy and Scratchy's picture

How about we do something crazy like let the 'market' decide. Uber is worth billions because it is a wildly successful and significantly better SERVICE! All the cab drivers I have spoken to prefer driving for Uber because it reduces their 'extortionate' costs by at least 50%. It is a far safer and efficient operation to use. I am very suspect there is such a fetish or desire to pay unnecessary licensing fees and overburden some taxes all of a sudden. This smells of burned medallion holders who have lost their comfortable controlled monopoly who can't compete and do not want to let the market set its price.

Thu, 06/18/2015 - 08:50 | 6208917 PapiBoboSeekusMulch
PapiBoboSeekusMulch's picture

The Labor Board's decision means absolutely nothing, since Uber has appealed. Under California law, the "appeal" goes to the superior court for a new trial, and the Labor Board's decision is disregarded.

Thu, 06/18/2015 - 14:52 | 6210783 Spectre
Spectre's picture

Fuck CA ! It's about time more citizens and businesses in that state stand up and say enough is enough or just exit CA all together.

Sat, 07/04/2015 - 14:26 | 6269417 derailedcapitalism
derailedcapitalism's picture

An interesting tidbit, they are not going after Uber in Toronto!

Jeremy Diamond

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