Steven, I totally disagree with this analysis.
Tim O'Reilly

Tim, thanks for your thoughts. You make some good points, I’m not sure we are disagreeing. The overarching point of my article was to dispute Uber’s claim that its drivers would automatically lose flexibility if they became W-2s instead of 1099s. If a court finds that drivers are in fact employees, there would be nothing in that decision or in the law that would force Uber to get rid of flexibility for drivers and go to a scheduled system. If Uber did that, it would be the company’s choice for reasons related to its business model, and what it thinks is good for the company’s bottom line, despite what it’s drivers want.

I’m not at all suggesting that going to W-2s would automatically be the best deal for drivers, because as you and others have powerfully pointed out, many part-time W-2 employees have become subject to a host of other loopholes and bad business practices, such as just-in-time scheduling, caps on hours to avoid paying for benefits (like Instacart’s recent cap of 29 hours for many of its newly W-2'ed employees), anti-union organizing harassment and more. For many regularly employed part time workers at places like McDonalds and Walmart, being a W-2 worker has done little to elevate their status over 1099 workers like Uber drivers.

I AM however suggesting that one of the reasons companies prefer a 1099 model, if they can get away with it, is because it saves them around 30 percent on labor costs. For 1099 workers, employers aren’t subject to payroll contributions for Social Security and Medicare (in fact the 1099 worker must pay the employer’s half, which is 6.2% of wages for SS and 1.45% for Medicare — almost 8% extra out of a 1099 worker’s paycheck, not an insignificant amount). Employers of 1099 workers also don’t have to contribute to injured worker or unemployment compensation, not to mention health care or paid vacation/sick leave, or pay overtime or provide rest breaks. In many states, even part-time W2s do at least enjoy those benefits, and that is an improvement on the condition of 1099 workers. And some humane employers have chosen to provide for their W-2 part-timers health care, as well as a few days of paid vacation and paid sick leave. We rarely see any examples of employers of 1099 workers providing that level of benefits for their workers. So for some part-time W-2s — not all, but some — they enjoy an elevated status above 1099 workers.

But yes, it depends on the employer, and how each employer decides to treat its W-2 part-timers. Which again puts the ball back in Uber’s court — if a judge ultimately decides that the drivers are employees and not contractors, not only does Uber NOT have to get rid of the flexibility, but it also could decide to be one of those employers who actually treat its employee-drivers, both part- and full time, in a decent fashion. OR, it could decide to be one of these employers that treats its W-2 employee-drivers in the way that you and others have exposed as horribly exploitative. Given what we already have seen from Uber, and how it has acted in so many ways, which of these types of employer do you think this company is likely to be?