If you followed most of last week's news about a ruling by by the California Labor Commission that a Uber driver was an employee and not a contract worker, you'd think the 1099 economy will soon be dead.
But, of course, it won't be.
My first thought was to write a long article listing the reasons. But I decided it would be easier to reference the articles already out there that present a balanced view of this decision.
Could a Legal Ruling Instantly Wipe Out Uber from Forbes point out:
A legal decision that could instantly cripple Uber would be years off and would likely only apply to part of its operations — and in the meantime, Uber would have time to lobby for new regulations or tweak its business model to stay afloat, legal experts say.
Uber Driver Case Poses Questions for the Sharing Economy from the Financial Times quotes me pointing out Uber can make changes to reduce the risk of being seen as an employer:
For its part, Uber seems set to fight. Its loss in California only came to light this week when it filed its intention to appeal the ruling. And Mr King believes that, with relatively minor changes to the way it handles drivers, it could reduce the risk of being seen as an employer.
CNET's Uber Driver is an Employee Not Contractor, Says California explains that Uber can make a number of adjustments and be just fine:
"These costs can be allocated across all parties involved in the work arrangement, from the employer to the worker to the consumer," said Gene Zaino, CEO of MBO Partners, a management services company for independent professionals. "For Uber, it does not mean that its business model is invalid. It just needs a good system to allocate these costs accordingly, apply a surcharge to passengers and remit the taxes. It certainly is a change, but these are all solvable issues."
Uber Finalizing $2 Billion Line of Credit from the Wall Street Journal shows that despite all the negative press, Uber can still raise money. They were looking for a 1$ billion line of credit but moved it to $2 billion because so many banks wanted in.
While this ruling will not kill Uber or the 1099 economy, it will increase the pressure on regulators and elected officials to clarify America's antiquated and byzantine methods for classifying workers.
A couple of articles highlight this issue:
Asking Tough Questions About the Gig Economy is an op-ed in the Washington Post from Virginia Senator Mark Warner. He makes a really good point about not leaving this issue to the courts:
... while while litigation about whether on-demand workers are independent contractors or employees, this question is too important to leave to the courts alone. As policymakers, we should begin discussing whether our 20th-century definitions work in a 21st-century economy.
Fast Company Co. Exist's Could Creating a New Class of Worker Solve the Sharing Economy's Labor Problems makes the case for a new class of worker, the dependent contractor:
Today, all employees are either full-time or independent contractors. For many modern workers, the definition is somewhere in between.
Re/Code's It's Not About Uber: Beyond the W2 Versus 1099 Debate covers similar ground. Written by the folks from the Institute for the Future, they say the world of work is changing and our ways of classifying labor need to change with it:
.. the danger is that we will use old classifications, like W-2 and 1099, to solve problems that are unique to this new landscape, laying groundwork for polarization and years-long legal battles. More importantly, we may miss a once-in-a-century opportunity to address long-standing inequities and build a labor economy for the future that is fair, creative and suited to the tasks of the 21st century.
We expect to see legislators at both the Federal and state levels to start to move on creating new laws around workforce classification.