A Decentralized Uber (gig economy) is coming
On Wednesday, California’s state legislature passed a bill that changes the criteria for independent contractors.
Now, for a company to classify a worker as an independent contractor, it must prove three things (you may hear this being called the “ABC Test”). If they can’t, then the worker is treated as an employee.
Companies must prove 3 things
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work.
- The worker performs work that is outside the usual course of the hiring entity’s business and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
In other words, companies can’t manage contractors the way they would employees. As an example, if Deliveroo contracted a delivery biker to deliver food, but giving a strict schedule for delivery and incentivizing its adherence and penalizing the non adherence, and instituting standard procedures — they would likely not satisfy the test.
Second, a company like Uber has to prove that driving users from location to location is outside the company’s usual course of business. Good luck with that!
Third, Uber must prove its driver would be in the business of driving people around without its existence as a platform. It’s unclear if ride sharing or meal delivery companies will be unable to clear this bar.
The gig economy has provided the backbone of countless startups’ business models — hence the much-used “Uber for X” tagline. Under this new law, all of these contractors could earn employee status if the companies can’t satisfy the ABC test — which greatly increases the company’s overhead. Worker’s comp, benefits, tax implications — it would be a serious blow to these companies’ finances.
If California’s law inspires similar legislation across the world , it could deal a serious blow to the entire gig economy.
However water always finds its lowest level, the cat is already out of the bag.
Many of us rely on Uber and its likes, the gig economy is here to stay.
When the state tries to censor certain activity people find ways to do it regardless. Prohibition did not work out and neither will censoring the gig economy will work in the long run.
Enter Blockchain.
The promise of blockchain is to build censorship resistant platforms and unstoppable applications.
An Uber style dAPP would work very well and would prove to be unstoppable. It is probably the best suited application for a decentralized play given the clearly established use case and the looming regulatory restrictions.
The underlying software of Uber or an Airtasker is fairly simple and easy to replicate. With well incentivized onboarding mechanisms a decentralized Uber would be quick to emerge and pick up the pieces.
