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The end of Uber and Lyft’s business models? Good.

[BUSINESS NEWS] Uber and Lyft must reclassify their drivers as employees, which could spell the end of the sharing economy as we know it. Here’s why that’s great news.

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Here’s a pitch you’ve probably heard before: “It’s like Uber but for…” Then fill in the blank with whatever concept you want.

There’s a new problem with that line, besides how meaningless it is. According to California’s courts, Uber’s model – and by extension, much of the gig economy – is built on a labor rights violation.

Superior Court Judge Ethan Schulman ruled that rideshare drivers could no longer be considered independent contractors, under California’s Assembly Bill 5.

The majority of rideshare drivers work full-time, but are not provided with benefits that would ordinarily be guaranteed to a full-time employee, like healthcare and worker’s compensation. AB5 was passed last year in order to hold gig companies, namely Lyft and Uber, responsible for providing those benefits to their workers. But when the law took effect earlier this year, the companies refused to comply with it.

Judge Schulman asserted in his ruling that for Uber to consider its tech workers to be employees, while relegating drivers to a contractor status, “flies in the face of economic reality and common sense.”

“Were this reasoning to be accepted, the rapidly expanding majority of industries that rely heavily on technology could with impunity deprive legions of workers of the basic protections afforded to employees by state labor and employment laws […] it bears emphasis that these harms are not mere abstractions; they represent real harms to real working people,” wrote Schulman. “To state the obvious, drivers are central, not tangential, to Uber and Lyft’s entire ride-hailing business.”

In a statement about the ruling, Lyft claimed that providing these benefits would really go against the interests of their drivers: “[They] do not want to be employees, full stop. We’ll immediately appeal this ruling and continue to fight for their independence.”

(Rather bold of them to speak for all of their drivers there, but I digress.)

Either way, the ridesharing model appears to be on its way out. Uber and Lyft have historically struggled to turn a profit, with UberEats actually generating more money for the company than their taxi service does. COVID-19 has not helped matters, either.

As Brian Merchant wrote for One Zero, ridesharing relied on “a constellation of fantasies” for its success.

When Uber and Lyft were launched, they promised to ease demand on crowded city streets by encouraging customers to carpool to their destination, thus reducing the number of individual cars on the street.

But as Merchant highlights, the reality of ridesharing is very different: Solo riders and full-time drivers are the norm, and the rideshare business has contributed to congestion and increases in carbon emissions in major cities. None of this has been good publicity for the industry, either.

Will either company survive this?

The final verdict on whether rideshare companies will be able to continue operating through independent contractors will be left to California voters on the 2020 ballot, in the form of Proposition 22.

Desmond Meagley is an award-winning writer, graphic artist and cultural commentator in D.C. A proud YR Media alumn, Desmond's writing and illustrations have been featured in the SF Chronicle, HuffPost, Teen Vogue, The Daily Cal, and NPR among others. In their spare time, Desmond enjoys vegetarian cooking and vigorous bike rides.

Business News

Missing office culture while working remotely? This tool tries to recreate it

(BUSINESS NEWS) This startup just released new software to help you reproduce the best parts of in-person office interactions while you work from home.

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Loop Team product page, trying to create an office culture experience remotely.

Are you over working from home? Feeling disconnected from your co-workers? Well look no further: The startup Loop Team just released a tool that reproduces the office culture experience virtually.

“We’ve looked at a lot of the interactions that happen when you’re physically in an office — the visual communication, the background conversations, the hallway chatter,” said Loop Team’s founder and CEO Raj Singh in an interview with TechCrunch. “[W]e built an experience that effectively is a virtual office. And so it tries to represent the best parts of what a physical office experience might be like, but in a virtual form.”

Singh’s company, founded pre-COVID, is posed as a solution to feeling “out of the loop” while working remotely. During the pandemic, where virtually all of us are working from home, this technology is needed more than ever.

How it works is by essentially recreating an office experience on a virtual platform. Somewhere between Zoom and Slack with some added features, Loop Team lets you know who’s free to chat, who’s in meetings, and allows you to have private discussions using audio, video, and screen share. It’s ideal for working on projects together.

Loop’s layout is unique in the sense that it is designed to show you conversations in a clear, direct way – exposing relevant items and hiding the rest. Also, employees who miss meetings have the ability to review what they missed, making it perfect for companies that hire across time zones.

The platform was made available December 1st free of charge, but Singh is hoping to introduce a paid version next year. Pricing will likely reflect team size and should remain free for teams of 10 or less.

I’m a big fan of software that allows you to feel closer and more connected to your co-workers. Do I think anything will ever compare to a true, in-person office experience? Definitely not. That being said, I value this kind of progress, especially since I don’t think office culture en mass will make a return any time soon, regardless of vaccinations.

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Business News

MIT report reveals serious flaws in US unemployment system

(BUSINESS NEWS) In the wake of COVID-19, the US unemployment system is floundering to cover all who need the aid but it comes with serious flaws.

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Stressed couple discussing options during unemployment in dimly lit room.

Last week alone, nearly 1 million Americans filed for unemployment benefits. Now that it’s urgently needed, this safety net is full of holes, leaving many Americans in freefall.

A newspaper from the Massachusetts Institute of Technology has highlighted several of the critical weaknesses in our country’s unemployment social safety net.

The report outlines how benefits fall short in three major ways: Duration, eligibility, and payment amounts.

The historical purpose of the benefits system was to replace half of lost wages for 6 months while they looked for another job. (The MIT paper even suggests that a more appropriate “replacement rate” would be higher than that.)

As of 2018, unemployment payments only cover Americans for one-third of their lost wages on average.

The income caps for these benefits have stayed fixed while wages have increased over time. That’s bad enough without considering that wages haven’t nearly kept up with worker productivity in the US, meaning those caps haven’t kept up with the real worth of those workers at all.

Compared to other developed nations, the US has lagged behind in public benefits since well before the pandemic.

In 2014, the Organization for Economic Co-operation and Development compared the duration of unemployment payments around the world. Out of 34 developed countries, the US ranked 33rd— offering less than every country on the list but Hungary.

To quote the research brief for the paper: “Even aside from changes driven by technology and trade, employers’ increasing reliance on contract workers and on-demand scheduling rather than on permanent employees who work predictable schedules has added to the precariousness of many workers’ jobs.”

And those economically vulnerable groups who need the support most are more likely to have jobs that aren’t covered under federal unemployment eligibility.

This includes gig workers (thanks to prop 22), part time workers, and the self employed: People often work these jobs due to constraints like parenthood or disability.

The CARES Act, which passed in April, temporarily allowed certain groups who would usually be ineligible, like the self employed (who are poised to grow in numbers as the job shortage persists) to collect unemployment benefits.

But CARES and HEROES are going to end in December, taking the extensions to unemployment, the eviction moratorium and the COVID sick leave requirements with them.

And instead of extending them, Congress may soon be looking to cannibalize those programs and their unused funds for another round of corporate stimulus spending.

But if the coronavirus relief acts are allowed to expire, nearly 14 million Americans will lose the aid that they provide.

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Business News

Tis the season for employment scams – here’s what to look out for

(BUSINESS NEWS) Fueled even further by COVID unemployment numbers, seasonal employment scams are back on the menu. Here’s how you can avoid them.

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A serious man considers a clipboard in potential employment scams.

With the sheer amount of desperation people are feeling these days, it’s only fitting that employment scams would see a resurgence this holiday season. Thanks to the Better Business Bureau, there are some clear warning signs that can help you spot and avoid seasonal scams this year.

The typical crux of any employment scam revolves around a prospective employee’s willingness to pay for something upfront, be it training or some other kind of quasi-justifiable item (e.g., a uniform). However, other iterations of the scam actually involve an “employer” overpaying for something at the onset—albeit with a fake check—and then asking the recipient to wire “back” the extra money.

Either way, these scams can leave you jobless and with less money than you initially had, so here are some things for which you should watch out.

Firstly, employers shouldn’t ever charge you before hiring you. Some industries do require employees to make small purchases on their own dime (i.e., the aforementioned uniform), but payroll will usually deduct the cost of these materials from the employee’s first paycheck—not require payment upfront.

As a general rule, it’s probably best to avoid companies that charge you at all. Aramark, for example, is known for requiring employees to buy company clothes—and they’re no peach to work with. But desperate times may warrant an exception in this regard.

It’s also to your benefit to avoid postings that boast an “interview-free” experience. Put simply, no one is hiring sans an interview unless it’s nepotism or a scam. If you aren’t related to the poster, that doesn’t leave much up for interpretation. Similarly, advertising a large sum of money for disproportionately low amounts of work is a pretty big warning sign–again, in this economy, people aren’t shelling out for packing or wrapping jobs.

Finally, watch out for jobs that ask for a work sample before hiring. While this is common for internships, most entry-level positions aren’t going to require you to complete a project for free before determining whether or not you’re good for the job. At best, this is a tactic to get free work from you; at worst, your application information can be stolen.

It’s sad to think that people would stoop to the level of scamming others amidst the dumpster fire of a year it’s been, but if you avoid these red flags, you should be able to keep yourself safe during this holiday season.

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