The fascinating aspect of the UBER case in the Ninth Circuit (California) is how driver’s greed cannot see that they are altering the entire basis of UBER and putting the company out of business. Drivers who sued UBER contend they are employees and should be reimbursed for expenses, including gas and vehicle maintenance. The judge is allow them to actually alter the contract. Just unbelievable. The drivers currently pay those costs themselves and altering their status to be an employee has huge problems.
Once the court rules in the driver’s favor, as more-likely-than-not, UBER is finished and should just close its doors. Next will come benefits and if the court rules they are employees, guess what. In will come the Justice Department and prosecute them for violating Obamacare for any company that has more than 25 “employees” owes huge taxes. Plus, if they are employees, UBER would have to match all their social security payments. Drivers themselves will be targeted by the IRS.
I would simply announce that UBER is closing down and the drivers are out of a job. If the court rules they are employees, the company will not even be able to declare bankruptcy on taxes. They will be royally screwed and the lawyers will most likey destroy another innovation. The lawyers are cleverly taking the idea of a part-time fill-in job to make extra money and using judges to declare they are effectively full time employees. This undermines the entire concept of UBER, but what the hell, the lawyers will get rich putting the company out of business and the drivers out of a job. Total insanity.
Good riddance
Fucking liberal morons want their cake. They don’t get that the reason the product/price of Uber is good is because it’s not saddled with all the bullshit overhead tied to urban taxi services.
And this is a damn fine example of why the abstract idea of Voluntaryism will never work ,and one of the reasons I’ve moved on from Libertarianism, because human nature being what it is, there is always someone wanting to use whatever political force available to fuck his fellow man over. the nature of the beast will never tamed.
There is nothing inherently proprietary in Uber. Any number of small companies can replicate Uber. All it is is a very simple ride sharing app. I’ve used it. I for one hope they go out of business, because it is foolish for a company with no actual real IP to have such crazy valuations. The sooner we get away from this constant need to monetize and financialize ride sharing, the better it will be. In other words, get wall street’s hooks out of it, and it will fly under the radar and it wont attract attention from the media or the courts.
Uber is a piece-of-shit company – all of it should go away – including the concept.
There is no way a person can be a permanent ‘contractor’. It’s not allowed in any industry.
I think the real motivation is that there aren’t any jobs (or shitty jobs), and in the short term the Millennials think this will work cause they get to drive around, when ever they want, be their own boss, and pick up a couple of bucks. But in reality the business model sucks.
Besides, these Millennials are just plain stupid: Driving a cab is not the way to make a decent living. The wear and tear on your car – extra mileage depreciation, tires, brakes, maintenance, insurance, fuel, extra FICA and Medicare tax, plus the risk of being robbed / assaulted – how much do Uber drivers think they will net – per hour? Then additionally they will need to buy their own health insurance, keep records, file taxes quarterly, no sick leave, no vacation, no holidays, no 401K – no nothing. Why do they need Uber?
Looks like they are buying a job. Reminds me of Huck Finn.
@ Flash, just curious: have you adopted any ideology to replace libertarianism?
@ Dutchman, so people want to drive for Uber, and others want to use it. How is that affecting you? What the fuck do you care? “It’s not allowed in any industry”…what kind of statist shit is that?
Right on flash!! Not allowed? Driving a cab for a few
bucks is a way to earn as you go. We have way too many
lawyers.
Opened my credit card bill last night and found about 20 charges from an Uber driver in California. I live in NH and have never used Uber in my life. Whatever I thought about Uber before I’m even less favorable towards them now. An hour on the phone with the credit card company mostly resolved the issue from my point of view, but still the whole issue was very irritating.
Once again government directing what companies can and cannot do. Socialism at it finest. Freedom and free market died a while back. Nobody noticed.
@Rdawg: ” “It’s not allowed in any industry”…what kind of statist shit is that?”
Statist shit? Are you clueless? There is something called a ‘wage tax’. It is FICA and medicare. The employer pays half (about 7.5% of your wage), and the employee pays the other 7.5%. Whether you agree with social security or not – this is the current law.
If every employer declared all the employees were contractors, they could avoid paying their 7.5% But this has been ruled on, a long time ago – and workers cannot be long term contractors.
I don’t care what Uber drivers do, however, with a simple analysis, it’s obvious they aren’t going to make the money they think they will.
Oh and guns are next. Are you rally going to die to keep them. We gonna find out. My bet is nothing really happens. Basing that on recent events and Americans response to horrendous government actions and decisions. No protests or resistance in any real form.
If you agree to a contract with another party. The exchange is between the two parties. How the contractor goes about paying their taxes is between the contractor and the government. The contractor performing the service is acting as a company not an individual. So the responsibility of the company falls on the one person company. But I guess not any more.
They get themselves classified as employees and they loose all the advantages they started driving for in the first place.
Including tax benefits and control of their working hours and locations.
Makes them just another cab company driver, and the other cab companies are longer established so they would be doing better to seek employment with them first.
Perhaps this is the beginning of the end for subsidized internet businesses. Too many internet initiatives rely on little more than exemptions from the societal obligations imposed on their competitors to have any competitive advantage. There is a big difference in contributing to creative destruction on the one hand, and skirting regulations for profit on the other.
UBER was, is and always will be a bad deal for its drivers as it is designed. Its business model is shameless exploitation. The only way UBER could be fair to the drivers would be to allow them to negotiate fares with customers – not control the whole transaction. Of course, this would turn UBER into an Angie’s list equivalent, and they would never go for that.
@Dutchman, if in fact they are employees I get your point. But that’s a pretty big if. I believe they are not.
@RDawg I’m pondering the position of National Libertarianism at this point .Free trade, but severely restricted immigration policy…along these lines.
On Free Immigration and Forced Integration
By Hans-Hermann Hoppe
All land is privately owned, including all streets, rivers, airports, harbors, etc. With respect to some pieces of land, the property title may be unrestricted; that is, the owner is permitted to do with his property whatever he pleases as long as he does not physically damage the property owned by others. With respect to other territories, the property title may be more or less severely restricted. As is currently the case in some housing developments, the owner may be bound by contractual limitations on what he can do with his property (voluntary zoning), which might include residential vs. commercial use, no buildings more than four stories high, no sale or rent to Jews, Germans, Catholics, homosexuals, Haitians, families with or without children, or smokers, for example.
Clearly, under this scenario there exists no such thing as freedom of immigration. Rather, there exists the freedom of many independent private property owners to admit or exclude others from their own property in accordance with their own unrestricted or restricted property titles. Admission to some territories might be easy, while to others it might be nearly impossible. In any case, however, admission to the property of the admitting person does not imply a “freedom to move around,” unless other property owners consent to such movements. There will be as much immigration or non-immigration, inclusivity or exclusivity, desegregation or segregation, non-discrimination or discrimination based on racial, ethnic, linguistic, religious, cultural or whatever other grounds as individual owners or associations of individual owners allow.
Note that none of this, not even the most exclusive form of segregationism, has anything to do with a rejection of free trade and the adoption of protectionism. From the fact that one does not want to associate with or live in the neighborhood of Blacks, Turks, Catholics or Hindus, etc., it does not follow that one does not want to trade with them from a distance. To the contrary, it is precisely the absolute voluntariness of human association and separation – the absence of any form of forced integration – that makes peaceful relationships – free trade – between culturally, racially, ethnically, or religiously distinct people possible.
Bob,
If Uber’s that bad why does anyone drive for them?
I’m thinking they’re filling a niche for a lot of people that would otherwise go unfilled by anyone.
It’s a voluntary thing on the part of the drivers, they aren’t forced into anything.
“The wear and tear on your car – extra mileage depreciation, tires, brakes, maintenance, insurance, fuel, extra FICA and Medicare tax, plus the risk of being robbed / assaulted – how much do Uber drivers think they will net – per hour?”
People are shit at analyzing hidden costs. They completely ignore something if its not right under their nose. Then they cry when their car breaks down because “who can plan for this?”
I can, and I have. During college our vehicle suffered multiple issues that were completely aside from our treatment of the vehicle. But, it was older, and we always kept an emergency car fund, so we could get the damned thing fixed when it broke down.
People don’t understand preventative maintenance and rainy day funds, they all think that once the money is spent on something it will continue to live on in pristine perfection with absolutely no input from themselves.
The people who drive for Uber unfortunately fall into this category, they think they have sound fiscal sense while completely ignoring the long game. Uber drivers make fuck all nothing. Thats when you just look at the hourly basis. Once you adjust for the loss of time when they could be looking for a real job, or building a real skillset, its a complete loss.
Yet when it inevitably goes out of business, people will be screaming about their lost jobs and wanting a hand out.
@Rdawg:” if in fact they are employees I get your point. But that’s a pretty big if. I believe they are not.”
This is what I’m telling you – in the US you cannot declare workers as contractors.
For instance you could hire a waiter, for a week or two, and declare him a contractor – however you cannot keep him on staff for weeks / months / years on end and declare him a contractor – it is not legal.
In my industry – software development – the IRS put an end to long term contracting in the 80’s. This is why there are temp agencies. The ‘contractor’ is an employee of the temp agency, and the temp agency pays the 7.5% FICA, workman’s comp, unemployment, and passes it on to the employer who needs a temporary person.
The entire basis of Uber is to skirt the law and any kind of employer liability.
If uber is a bad business model it will fail eventually. The government does not need to be involved unless there is a breach of contract. The Drivers who entered the contract are in breach by going to court. Perhaps they are unable to understand the English language. Granted they don’t have lawyers to sift through the legal language but the is their own mistake. Perhaps uber is predatory. If the drivers do not like what they got into stop.
@TPC: ” Once you adjust for the loss of time when they could be looking for a real job, or building a real skillset, its a complete loss.”
Yes, waste your life driving around for minimum wage.
@Hollowman: “The government does not need to be involved unless there is a breach of contract.”
Do you read any of the posts? How many times have I said you can’t be a permanent / long term contractor.
It happens all the time. Consulting in the oil field and politics. Long term contracts and contractors
The lawsuit was probably stealth orchestrated by the taxi lobbies; that industry is intent on continuing to operate a 1950s business model. Providing slow, spotty, and overpriced service with half retarded non English speaking drivers. Those guys are arm in arm with the criminal racket known as city government, paying protection money called “licenses” or “medallions” to keep competition out.
Uber essentially operates on a franchise model. They provide the framework and quality control to individuals who want to drive part time. They have streamlined the process by vastly improving reliability and politeness of the drivers, and by taking cash and tipping out of the equation. TPB readers are slipping. If you can’t see the value in such a service over the alternative you are living in the stone age.
“How many times have I said you can’t be a permanent / long term contractor.”
Of course you can. It happens all the time in many industries.
The basic division between a contractor and an employee is control of the way and when you do your work, providing your own work related equipment in many cases, and if you also offer your services to the general public or are working exclusively for only one company.
The IRS has guidelines on this that are available on line or in publications, so do most States since there is a further restriction on what constitutes a contractor by some of them.
” Providing slow, spotty, and overpriced service with half retarded non English speaking drivers. ”
—————- the tumbleweed
Yea, as opposed to getting some snot-nosed punk who’s not a professional driver. And so you can wonder if it’s a safe car. Are the brakes good? So you can wonder if the guy has a DUI. Or, just got out of prison. And a hundred other questions ….
That being said, I believe HZK got us an Uber driver at our NYC extravaganza. It was FABULOUS!!
What a fatal flaw in a business plan that was bound to fail. Kinda reminds me of Napster in a twisted way.
@Flash
I like what you posted about land ownership. But I honestly don’t see how it conflicts with libertarianism as I understand it. Not trying to be a dick, but where’s your beef with the libertarian perspective? It seems to align with what you are saying.
Bob, that’s a great post.
RDawg and Anonymous, please focus on what TPC is saying. Uber is assuming the role of an employer by dictating the terms of the work performed. Their angle is that the drivers decide when they want to be available. However, once drivers sign on, Uber controls every aspect of the transaction. This fails the contractor smell test.
In addition, as TPC so ably points out, driver compensation, as controlled by Uber, is horribly mispriced. It covers only the actual transportation costs from point A to point B, and give the driver no say. And, Uber also charges drivers for the privilidge of being Uber drivers!
Yes, someone who wants to make extra cash can drive for Uber — but they need to understand clearly that they are mainly driving for Uber, and not themselves.
As the article discusses, absent the advantages of driver exploitation, Uber is not a viable business as they currently operate. Their choices are to retreat into a referral role (for a small fee), or operate as a wireless version of a taxi service.
flash says:
“And this is a damn fine example of why the abstract idea of Voluntaryism will never work ,and one of the reasons I’ve moved on from Libertarianism, because human nature being what it is, there is always someone wanting to use whatever political force available to fuck his fellow man over. the nature of the beast will never tamed.
Rdawg added:
“@ Flash, just curious: have you adopted any ideology to replace libertarianism?”
I have! I’m rooting for complete extinction of the human race. We’re a plague on this planet AND each other. The nature of the beast will never be tamed. The planet deserves better.
@TPC, nice to see you back. Great comment as usual. I wonder who sells these UBER drivers insurance? My insurer cancels my policy if I’m engaged in any commercial activity and I’m sure they wouldn’t insure commercial activity unless I had all the proper govt forms and licenses in place.
If an UBER driver gets in an accident involving your car or you are injured in their car, good luck making a claim!
Rdawg, IMO Libertarianism only works if everyone subscribes to it otherwise some group of non-Libertarian asshats will always be wanting tax/take from you. It’s hard to be a Libertarian while being robbed at gunpoint.
Probably cab drivers behind the suit.