From the IRS: "You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed."
>What matters is that the employer has the legal right to control the details of how the services are performed.
You can't just pick one bullet point and imply it's an open & shut case. It's a combination of factors.
If parents contract a painter to paint a mural in a child's bedroom and says specifically:
- I know you prefer acrylic paints but I specifically want latex paint
- I know your website portfolio had examples of light blue but I specifically want Pantone #2945 dark shade of blue
- I know you prefer to work 9-5 but I need you to work onsite from 5pm to 9pm because that's when I'll be home from work and can give live feedback as to how it's done
- I know that if I leave you to your own judgement, you'd prefer to paint Greek & Roman nudes but I need this room to be rated G so if you can paint a depiction of Mickey Mouse fighting Batman, that's what I'm looking for.
- ... and so on...
The homeowner can be excruciatingly specific about how & when the work is exactly performed but most reasonable people will not insist that the painter is an "employee." It takes more factors than just control of the work method.
Maybe Uber's combination of other factors does ultimately mean drivers are employees but your extraction of one IRS guideline is not convincing.
Right - the parent / painter job is going to fail on the "ongoing relationship" part of being an employee - once the painter has painted the room they go off to another job.
Uber on the other hand, definitely has an ongoing relationship with their drivers, as well as specifying how they work in fairly detailed ways.
>Uber on the other hand, definitely has an ongoing relationship with their drivers,
But Uber drivers can also have simultaneous business relationships with Lyft, and be a NY taxicab driver, and offer driving services on Craigslist, etc.
Employers such as Apple Inc or Microsoft would not tolerate an employee working simultaneously for Google Inc.
The folks contending Uber drivers are employees have valid points. However, Uber also has valid bullet points that the drivers are contractors. I don't know which way the scales tip. I guess all this dialogue in the media, the local governments, and maybe the IRS is trying to sort it out.
The actual product is arguably the "pizza" much more so than the "driving" evidenced by the fact that customers themselves will sometimes drive to Papa John's or Dominoes to pick up their own pizzas. In that framework, the standard would be for the pizza driver to also provide his own pizza dough, pepperoni, and baking ovens. If the pizza companies eventually figure out how to use flying drones to drop off pizzas and eliminate drivers, I'm sure the customers would be fine with it. The customers weren't really "buying the driver"; they were buying the pizza with the convenience of delivery.
With Uber/Lift, the "driving" itself is 100% the product.
And why does the discussion continue to be "one bullet point" at a time instead of a combination of factors?
If parents provide all the equipment & materials for the babysitter (infant formula, diapers, toys, Walt Disney DVDs, etc) along with the premises to do the work (the parents' home), does that make babysitter an employee?
If a dog owner provides the leash, the pet treats, and the back yard for the pet sitter to walk and exercise the dog, should the pet sitter be classified as "employee"?
The job description for a Pizza Hut driver is to drive no different to an Uber driver. Whether they are delivering pizza or people is irrelevant. It's all about the nature of the work.
No, it's not _all_ about the nature of the work. Again, that's just applying one-dimensional criteria. To re-emphasize: is the employee/contractor classification just one factor or a combination of factors?
The concept of "driving" does not automatically mean an "employee" relationship. Many (probably most) 18-wheel truck drivers are independent contractors. Many drivers of tour & charter buses are subcontractors as well. Those charter bus drivers transport people like Uber drivers too.
Likewise, the "nature of photography work" does not instantly categorize it as employee vs freelancer. Sports Illustrated had some staff/employee photographers. But National Geographic has freelance photographers.
Another most obvious example to HN would be the existence of both contract and employee programmers.
It isn't just about the "nature of work".
It isn't just about who provides the equipment.
It isn't just about who decides the hours of when the work is performed.
I buy my own notepads and pens that I use in my job. Does that mean I'm an independent contractor? Half the employee devs I work with use their own laptops out of preference.
Some form of BYOD policy is pretty much the standard at most companies outside of say finance or insurance these days. So surely this rule would be out of date.
The only reason you can't work at Apple and Microsoft simultaneous is because of the overlapping working hours.
I worked at Apple years ago and nothing was in my contract to say that I couldn't work for another company. Because we all do this when we are running startups on the side.
>The only reason you can't work at Apple and Microsoft simultaneous is because of the overlapping working hours.
I worked at Apple years ago and nothing was in my contract to say that I couldn't work for another company.
It is naive to think one can work at both companies simultaneously without repercussions if the manager(s) find out. The managers would not allow an employee to have a badge to the premises and access to the employees' email system at both companies. It would be legitimate grounds for termination. The employee can't sue for wrongful termination because the concepts of "protecting proprietary information", "trade secrets" etc are well-tested and upheld in court.
An employee can certainly resign (or get fired) from one company and then work for the other company but it is unrealistic to say those companies would allow concurrent employee relationships.
Perhaps I should have been more clear as to have prevented assumptions. I do not think that ride sharing drivers are employees. The IRS's definitions are not clear, objective or definite. They're open to interpretation and abuse.
So you're saying the uber driver is an employee of the passenger? I often tell them which route to take. I guess passengers also have control over whether the driver keeps his job (via ratings) too.
Define 'controlled'. If I hire a plumber to come fix my toilet, I am saying, You are going to fix my toilet, and please do it this way. Does that make the plumber my employee?
The elephant in the room is that the tech industry is FULL of companies who are using contractor status to shift tax burden and avoid paying benefits. Almost nobody ever calls this out and those who do are likely to get blackballed.
If Uber is hiring drivers and treating them as employees while classifying them as contractors, that isn't special to Uber, it's just the application of the tech industry's way of doing things to taxi drivers.
Companies like Uber are much worse than that. They're a glorified web app profiting off of hundreds of thousands of people who do all the work and bear all the risk while the only people getting rich are the scum at the top and their reprehensible backers.
Uber, Airbnb, etc. should make their slogan "Loopholes 101: Exploitation on a global scale. You do the work, we make the money. Fuck you, we don't care!"
Your comment is filled with vitriol -- did you something happen to you? Why would Uber drivers be getting "rich" anyway? A decent living might be possible, but I don't think driving cars is valued as much in the economy as those creating jobs, nor should it be. And to say Uber bears no risk is completely false--people invested money into Uber without any guarantees. And I'm not saying that these companies are without criticism or that they don't exploit workers. I'm just more baffled that alternatives haven't come along to disrupt them -- say a completely open, peer to peer network of drivers using open source applications that get paid through Square, Stripe, etc.
Why would something need to happen to me to point out exploitation? Uber and Airbnb make money off people breaking the law. They exploit hundreds of thousands of people wanting to make a little extra money so that they can make a lot. They and their investors deserve to be singled out and condemned. That this _doesn't_ happen regularly should be more shocking than pointing it out in less than diplomatic terms.
> They exploit hundreds of thousands of people wanting to make a little extra money so that they can make a lot.
Turning a profit does not automatically equal exploitation. How do you think companies create new jobs or make capital investments? You must think that profits are direct-deposited into the CEO's bank account, and never re-invested into technology, new jobs, or into open source software that benefits the community.
And I don't think you should be using the word "exploit" so freely. Look at the sweat shops making designer clothes--that's exploitation. Taking a transactional fee off a house rented on Airbnb?--I don't think so. What was that house doing before Airbnb? It wasn't generating any revenue. Renters were not depending on that as a primary source of income. Save your outrage for real exploitation.
While I tend to agree with you on Über (as well as those food delivery services with "personal shoppers" which are "independent, but must work for us 8h/day"), why do you think Airbnb also qualifies as such?
Did you ever consider that maybe these contractors value a flexible work schedule more than company benefits? I assume if they become employees they will lose whatever contractor benefits they had, including the flexible work schedule. I guess what I'm saying is, you're only talking about this from one perspective. I know that as a contractor, I value my flexible hours more than I do the typical benefits packages at companies. It allows me time to care for my grandmother and take her to appointments.
No, you didn't understand. We are talking about people who are treated as employees, already required to show up at certain times, etc. They don't have "whatever contractor benefits." They are simply classified as contractors for tax purposes.
Wait, we're talking about Uber, right? On their website it states:
"As an independent contractor with Uber, you’ve got freedom and flexibility to drive whenever you have time. Set your own schedule, so you can be there for all of life’s most important moments."
Same in the UK as well. There are a load of rules, IR35, designed to prevent this sort of thing but they are pretty easy to bypass, and the only real benefit I've seen is accountants can now charge £300+ for a contract "review" to check you are covered.
As an example of how easy it is, a friend of mine is contracting long term for the government. In order to ensure he is covered and classed as a contractor, over his summer holidays he will be sub-contracting out to someone else.
One of the problems with classifying Uber drivers and the rest of the so-called "sharing economy" as contracting is that they're not allowed to subcontract out the work like your friend did.
I never see anyone discussing whether the IRS should change its classifications based on the world be live in now, as opposed to when they created those rules.
this is important. The law in the US as to whether one is an employee or an independent contractor is quite clear. Look up the "twenty factors"; sometimes they're referred to as the "twenty questions".
Among the factors is who shoulders the financial risk. If it's not possible for you to lose money, that's one of the factors that qualifies you as an employee.
Your title or contractual relationship have nothing to do with it.
Uber drivers buy a car, pay for insurance, gas, etc, and certainly run the risk of losing money. They also have total control over their time and work. They can switch on or switch off anytime they like, and choose whether to accept each ride request.
There are lots of reasons to criticize uber. Classifying the drivers as contractors isn't a reasonable one.
I agree that "classifying the drivers as contractors is not a reasonable criticism" of Uber. But strictly in terms of the operation of classification, they are in a somewhat grey area. In my opinion, on balance, Uber drivers are more like ICs than they are employees (and by a very wide margin). The problem is the 20 point test is totally ridiculous and doesn't give clear guidelines as to how much to 'weight' each of the criteria and thus gives great leeway for anyone to make a 'strong' claim in either direction by selectively ignoring the points that don't fit their preconceived opinion.
The federal tax code has to work for literally hundreds of millions of people and billions of situations. The presence of grey areas is a design feature not a bug, IMO.
Yes, it can be annoying and frustrating to not know with a bright line test of executable English law code the outcome, but I can only imagine how much worse it would be if we tried to reduce every situation down to exhaustively testable 0/1 pure-white/pure-black codification.
The disambiguation is lazily evaluated (sometimes at significant expense) by the tax courts, or you can request an evaluation ahead of time in a private letter ruling (at very reasonable expense). I believe this is still better than eager/greedy evaluation of all situations.
Almost irrelevantly, I also think that Uber drivers are significantly more ICs than employees.
That's creative from Uber, offering their car loan plan, so that their drivers have the opportunity to lose money and are no longer classified as employees as far as the tax man is concerned.
There are a mass of articles and discussion about this that shows your 'reasonable' classification is in fact 'highly contentious'.
Whatever else you say about Uber, it's pretty obvious that the contractor/employees are in a grey area where they have some traits of contractors and some traits of employees.
No, not if they're on the clock. Too many rejections and they get shown the door. In any case, this particular activity is rife in the taxi industries, with taxi drivers often refusing to pick up crappy fares.
Uber are testing out a new scheme where they penalize people for not working full-time hours by charging a much higher commission for the first few rides they take every week: http://www.wsj.com/articles/uber-tests-30-fee-its-highest-ye... They obviously don't want people to work for them part time. Lyft are doing the same.
The article also provides an explanation for this: "Uber, which started its business taking a 20% commission on all rides, has raised and lowered that rate in different cities depending on the supply of drivers and rider demand."
It seems that one way to deal with over-supply of drivers is to lower rate the rate even further, but they probably don't want to screw around with rates too much. Lowering them drastically might discourage drivers long-term, to the point where they find a different full-time job and swear off Uber.
It's super possible to lose money as an Uber driver... Say you drive around in circles in a place where you don't get rides. You will burn gas and lose plenty of money and make none at all.
The problem is that these drivers fall on both sides of the questions. Another question is if Uber drivers are employees of Uber in Florida, are taxi drivers now also employees? Many of them (that do not own their own car) are ICs too.
>> are taxi drivers now also employees? Many of them (that do not own their own car) are ICs too.
I spent a few months as a dispatcher in a taxi shop, and drivers weren't ICs, they were more like part of a b2b transaction. They rented the car and medallion from us for a flat rate for 12 hours, and could pick up whomever they wanted off the streets. When we got calls to arrange pickups, I went down the list contacting drivers until someone would take the fare. We only made money from renting the taxis to drivers.
So the distinction is that Uber handles the money. I see. Since Amazon handles money in a b2b transaction, does that make people putting things up for sale on Amazon ICs or employees?
What value do you expect to get out of demanding that people analyze these random situations? Ultimately, it's the government bureaucrats and legal system that make the decisions, so even if someone gives you some relatively definitive answer, it could still turn out to be wrong.
It's also sort of hostile to take the anecdote based on personal experience and characterize it as "the distinction" (when it is just as easy to read as a description of some differences).
Medallion cab companies don't have a rating system where unpopular drivers are dismissed. Uber spends a lot of effort monitoring and controlling how their drivers do their jobs, which is not something I've ever heard of a cab company doing.
> It's super possible to lose money as an Uber driver... Say you drive around in circles in a place where you don't get rides. You will burn gas and lose plenty of money and make none at all.
I'm not trying to be contentious but why does your hypothetical Uber Driver have to drive around in circle?
Can't they park somewhere, or do their daily routine and wait for the app to announce a possible passenger? Cause I've met two uber drivers before from what they've talked about they just chill around, do their daily business and if there's a lead they decide if they want to take it.
The problem is that the law really isn't very clear. The weighing of the factors is based wholly on context and, in most situations, it's fairly easy to come up with arguments for either side.
