A San Francisco lawsuit pushing to make Uber drivers employees has gathered steam dramatically, thanks to a new ruling that the case against the dominant rideshare company can proceed as a class action.

A big issue

The hotly-anticipated decision by the judge hearing the case threw another log on the fire of controversy surrounding Uber, which has become a political football even as it has leveraged former Obama campaign officials to launch an unprecedented lobbying and PR campaign in California and other states. “Three drivers sued Uber in a federal court in San Francisco, contending they are employees and entitled to reimbursement for expenses, including gas and vehicle maintenance,” Reuters recounted.

“In the ruling on Tuesday, U.S. District Judge Edward Chen in San Francisco said California drivers could sue as a group on the question of whether they are employees or contractors, and over their demand for payment of tips that were not passed on to them. Drivers’ attorneys must submit more evidence to sue as a group for reimbursement of other expenses.”

But drivers who came on board as of May of last year had to specifically opt out of arbitration in order to join the action, Chen ruled.

The sweep of a class action suit would be eye-popping. As Wired noted, “as many as 160,000 Uber drivers in California could join the case seeking mileage and tip reimbursement from the company, presently valued at $51 billion.” Trying to head off the avalanche, Uber had asserted “that the idea of a typical Uber driver was a false notion, meaning that no individual plaintiffs could truly represent the interests of all drivers,” Wired added. That argument proved inadequate to sway Chen, although — to the surprise of few — Uber’s attorneys quickly observed that they were likely to appeal the decision.

Adding to Uber’s woes, a state judgment last month echoed Chen’s interpretation of the law. As Reuters reported, California’s Employment Development Department “determined that a former Uber driver in Southern California was an employee, not an independent contractor as the company has claimed, and the decision was upheld twice after Uber appealed by both an administrative law judge and the California Unemployment Insurance Appeals Board.”

Economic politics

Chen’s holding has taken on grand significance because of the potential economic impact on Uber’s relationship with its employees. Those on the left of the political spectrum tend to claim that Uber is harming the economy by depriving its drivers of the kinds of benefits and stability that are generally considered appropriate to workers formally employed at a company.

Those to the right, meanwhile, counter that Uber is helping the economy by opening up a once-cornered market to greater productivity and choice among consumers and producers alike.

Free-market and libertarian groups lashed out at the decision, holding up rideshare companies like Uber as more competitive, demand-based services than traditional cabs and liveries. Taxis’ “costly ‘medallion’ system limits competition and preserves the big companies’ market share regardless of poor quality and high prices,” FreedomWorks argued. “The use of technology to innovate and find new ways to solve old problems is one of the most beautiful things about free markets. It’s unfortunate that California wants to deny these benefits to its citizens.”

Further lawsuits

Adding to the rideshares’ legal woes, activists for disabled riders have also filed potentially significant lawsuits. Passengers and advocates have “raised concerns that app-based ride service Uber and its main rival, Lyft, aren’t doing enough to meet the needs of passengers in wheelchairs,” the Los Angeles Times reported. “Both companies are facing lawsuits across the country — in California, Texas and Arizona — alleging that their drivers discriminate against people with wheelchairs and seeing-eye dogs. Some say compliance with the Americans with Disabilities Act could become a stumbling block for the companies as they look to expand and solidify their role in the rapidly changing world of on-demand transportation.”

Lanier takes charge more than three months after the meltdown of the computers of the Employment Development Department.

CalWatchDog.com reported on those problems earlier this month. The problems are supposed to be fixed by Dec. 31. The fix already has cost California taxpayers $100 million.

In September, following the computer update, 150,000 jobless Californians were cut from unemployment benefits. The EDD blamed a computer glitch and said it would take weeks to fix. But according to claimants CalWatchDog.com spoke with, unpaid claims continue.

Research

Over the past month, extensive research on the Internet, on NexisLexis and from interviews, uncovered scant information about Lanier beyond his official biography and the governor’s press release. From 1993 until his first Brown appointment in 2011, he has been a professional staffer in the Legislature:

“[He worked] as special advisor to the Speaker at the California State Assembly Speaker’s Office of Member Services from 1999 to 2011. Lanier was chief of staff for California State Assemblymember Grace Napolitano from 1997 to 1998, consultant for the Joint Legislative Government Oversight Task Force from 1996 to 1997 and legislative director for California State Assemblymember Carole Migden from 1995 to 1996. He began working in the capitol as a legislative aide in 1993.”

Two Sacramento Bee stories from 2012 with information about Lanier have disappeared from the Bee’s website. CalWatchDog.com asked Bee columnist and editorial page editor Dan Morain to send me a copy of a story he wrote, but did not hear receive a response.

The Bee stories,still offline, were about legislative staff members who own and run side political consulting businesses. Lanier was named in both of the stories.

“David Lanier, a former Assembly consultant who now works for Gov. Jerry Brown, disclosed in 2010 his role as owner and partner of Priority Political,” the Sacramento Bee reported Nov. 7, 2012. “The firm earned between $10,001 and $100,000 that year, according to his statement of economic interest.”

The second story, “California legislative staffers moonlight in campaign jobs,” still has a link on the Internet, and is listed on the Sacramento Bee’s blog, but the link is no longer any good.

AllGov.com, which usually has good information, merely repeated the official bio and included a tiny, low resolution picture of Lanier.

FPPC

CalWatchDog.com also requested the Fair Political Practice Commission Form 700 Statement of Economic Interests for Lanier, going all the way back to his legislative staffer days when he worked for Democratic Assemblywoman Grace Napolitano and Democratic Sen. Carole Migden in the mid-1990’s.

The FPPC is typically very good about responding to these requests. But this time, CalWatchDog.com has not received a response after more than a week.

CalWatchDog.com contacted Kurt Schuparra, assistant secretary for research and policy development at the California Labor and Workforce Development Agency. Schuparra was appointed by Gov. Jerry Brown in 2012. CalWatchDog.com told Schuparra it was concerned about the lack of information about California’s newest labor secretary, asking if there was more about background. “Should anything happen to Jerry Brown, he’s not taking over for the Governor,” Schuparra said.

“He decided to do the same thing his predecessor did, with a brief bio online, and no picture,” Schuparra added.

Specifically, CalWatchDog.com asked Schuparra what Lanier’s job entailed as “Special Advisor” to assembly speakers. He said he would reply though email, after speaking with Lanier about my request. Schuparra has yet to respond.

California Labor and Workforce agency

The labor secretary heads up all of the state’s labor agencies. Lanier replaced Marty Morgenstern, 78, a longtime Brown aide who will become a senior adviser to Brown, who is 75. Morgenstern was Brown’s labor negotiator during the governor’s first stint in the office in the 1970s. Lanier is 46, indicating a changing of the generational guard.

The California Labor and Workforce agency was created in 2002 by former Democratic Gov. Gray Davis, who was recalled by voters in 2003.

The Labor agency has an annual Budget of $14.8 billion, and has 12,859 employees, according to AllGov.com.

The cabinet-level agency is the parent agency for eight state agencies:

Agricultural Labor Relations Board

California Employment Development Department

California Public Employment Relations Board

California Unemployment Insurance Appeals Board

California Workforce Investment Board

Department of Industrial Relations/ Labor Commissioner

Employment Training Panel

Three months after a California Employment Development Department computer crash cut off tens of thousands of Californians from their unemployment benefits, the EDD’s system does not function properly.

EDD by phone

The EDD offices officially are now only open four hours a day, from 8:00 am to noon, according to their website.

I called the EDD hotline, 1-866-333-4606. It’s an information-only recorded message, which eventually tells the caller to file for unemployment benefits on the EDD website; or call 800-300-5616, the designated phone line for filing for unemployment benefits. I called that second number. The recorded message says, “We are currently experiencing more calls than we can answer.” It refers the caller back to the information-only recorded message phone line.

Ironically, the recorded message on the EDD phone line for filing for unemployment claims recommends claimants only call after 5:00 pm, before 8:00 am, or on Saturday or Sunday – that is, after hours and on weekends.

The recorded message tells callers the fastest way to file an unemployment insurance claim is through the EDD website, and tells callers to allow 10 days for processing online, or by phone.

Then the message abruptly says, “Goodbye,” and the call is terminated. There is no opportunity to file an unemployment claim on the phone.

The recorded phone messages provide a smorgasbord of general information, most of which I found unreliable as they just refer to phone messages that disconnect, or to the website which also is largely a dead end.

Software contracts

Updated software was designed and installed by EDD Contractor Deloitte Consulting to create more online access for existing claims. EDD representatives said at a November 6 Assembly hearing that a computer “glitch” delayed the payments for tens of thousands of Californians. According to News 10, Deloitte “has already been paid at least $46 million” for the project.

Deloitte Consulting also was awarded a contract for another malfunctioning government computer project. The IRS gave the firm $12.9 million to “deliver world class implementation” of the Affordable Care Act, usually called Obamacare.

The Deloitte contract was awarded two months after the Government Accountability Office found serious fault with the way the IRS was handling the implementation of the ACA, when the IRS could not account for “$67 million that was set aside in a slush fund to help pay for Obamacare,” Forbes Magazine reported. The GAO link no longer works, but the Treasury Inspector General for Tax Administration addressed the IRS mishandling in a September report.

Permanent fix

Jason Salzetti, Deloitte’s company’s California principal, told the Los Angeles Times the company hoped for a permanent fix in “the next few weeks.” But that was a month ago and there’s still no permanent fix.

The emails obtained by the News 10 exposé show it was two weeks before managers at EDD even realized there were problems with their software upgrade, according to testimony at the November oversight hearing.

When the newly updated taxpayer-funded system was released, it created a massive backlog of unpaid unemployment payments. When EDD tried to catch up on the payments, the U.S. Department of Labor even blamed EDD for boosting the national unemployment rate, labor Recruiter.com reported.

I contacted News 10 reporter Thom Jensen by email, and asked if the EDD had ever responded to the News 10 Public Records Request. But I did not hear back from Jensen.

EDD website

On its website, the EDD claims: “The EDD promotes California’s economic health by providing information to help people understand California’s economy and make informed labor market choices.”

On the EDD Facebook page, some frustrated claimants said they have contacted their Assembly representatives and have had some success getting through to the EDD with the legislative help. However, even that can take weeks or months.

One EDD claimant told me she contacted Gov. Jerry Brown’s office out of frustration when her repeated requests for help from EDD for ongoing claims went unanswered. She said a governor’s office representative revealed they are aware of the problem, but told the woman she should not expect a response from the EDD in less than 30 days.

“The Employment Development Department said Friday that about 185,000 of the state’s nearly 800,000 people receiving benefits had been affected, with the department having yet to clear about 80,000 of those cases.

“Frustration flared as the week dragged on, with jobless residents repeatedly dialing the department’s customer service line and failing time after time to reach an agent.”

What a gang of incompetents.

The state government forces people into a government-run unemployment system.

Then state government cases high unemployment with its policies of sky-high taxes, incredible regulations and incompetent bureaucracy.

Then the state's own computers that are supposed to cough out checks to those unemployed by state government policies break down.

What we really should do is fire everybody in government. With those incompetent functionaries out of the way, we wouldn't need unemployment checks because everyone would be employed.

Even the unemployed government functionaries would get honest jobs in the private sector and for once contribute something positive.

By Joseph Perkins

A new report by Wells Fargo Securities Economics Group declares that “California’s economic recovery has gained considerable momentum over the past year.”

It cites the decline in the state’s jobless rate, increase in sales of existing single-family homes, growth in social networking and gains fueled by international trade as evidence, in the words of Herbert Hoover — the Stanford graduate, the nation’s Depression-era president — that “prosperity is just around the corner.”

“The progress made to date,” states the Wells Fargo report, “probably surprises many people who have been mesmerized by all the headlines surrounding municipal bankruptcies and the seemingly never-ending state budget battles, but California’s economy has made significant strides.”

Yet, for every silver lining Wells identifies, there is a corresponding dark cloud suggesting that the report’s authors, economists Mark Vitner and Sarah Watt, are decidedly more upbeat than the data warrant.

Indeed, while the state Employment Development Department reported last week that California posted three straight months of job growth between May and July, nearly 2 million California workers remain idle almost three years after the state’s economic recovery began, and the Golden State’s 10.7 percent unemployment rate remains the nation’s third-highest.

Meanwhile, the Wells Fargo report predicts that, even with recent job growth, California“will need another two and a half to three years simply to recover the jobs lost in the Great Recession.”

Distressed sales

Home sales were nearly 14 percent higher last month than in July 2011, according to the latest report from San Diego-based DataQuick. However, “distressed sales,” sales of foreclosed homes and “short” sales of homes facing foreclosure, accounted for 41 percent of the state’s resale market.

Social networking companies like Twitter, Pinterest, Yelp, AirbnB have moved into more spacious offices here in California to accommodate their expanded operations. Yet hanging over the still-maturing industry is the specter of Facebook’s post-IPO meltdown, which has seen its stock price plummet nearly 50 percent.

Indeed, warns the Wells Fargo report, “lingering questions about the long-term potential for social networking and interactive entertainment might set the state for a letdown along the lines of what was seen following the dot-com crash a decade ago.”

As to foreign trade, while California remains a net exporter, rather than importer, exports to many of the state’s major trade partners — including China, South Korea and the Eurozone — have declined on a year-over-year basis. That could be a harbinger of state trade deficits to come and a net outflow of trade-related revenues.

Finally, the Wells report seems to suggest that the public is unduly “mesmerized” by news reports of fiscal crises facing the state government as well as local governments.

Yet, the report’s authors, themselves, expressed concern that the state closed fiscal year 2012 with revenues falling $1.4 billion short of spendingl and that the current fiscal year, which began on July 1, got off to a disquieting start with revenues coming in 10 percent lower than Gov. Jerry Brown and the Democrat-controlled Legislature projected.

Vitner and Watt conclude their report stating, “We remain relatively optimistic about California’s near-term outlook.”  However, their sentiment is not shared by the overwhelming nine of 10 state residents, according to a recent Field Poll, who describe theCalifornia economy as being in bad times.