Uber and the Battle over Contractors
One of the biggest questions in employment law currently is the difference between an employee and a contractor. It’s an important question for many companies because it determines employee benefits and protections. Often the hiring of independent contractors saves companies an enormous amount of money because they don’t have to make benefits available.
In a decision made in early June, the California Labor Commissioner’s Office announced that a driver for Uber (a ride-hailing service with 26,000 independent contractors in New York City alone), should be considered an employee, not an independent contractor. This follows a decision made in Florida in May where another independent contractor was designated an employee. Uber is appealing both rulings. Uber is also caught in individual workers’ classification cases in at least five other states including Pennsylvania, Texas and Georgia.
In the California ruling, Uber was ordered to reimburse Barbara Ann Berwick over $4,000 in expenses and other costs for the eight week span of time she worked for them last year.
Why Independent Contractor and Employee Designations Matter
If an independent contractor is ruled an Uber employee, that person is now eligible for rights such as unemployment, overtime, and even potential reimbursement for job-related expenses such as gasoline. For a company that is adding over 100,000 contracted drivers a month (globally) that’s a big payout.
While these rulings have only been applied to individual cases and do not affect the full Uber workforce, there is a class-action lawsuit pending in California asking the state to declare Uber drivers employees. If this happens, we can expect Uber’s drivers in other states to take notice filing suits of their own. A ruling like this would have application to all driving services, like Uber’s smaller competitor Lyft. What was once a viable business model may become less so when the company realizes the cost of having employees.
The classification of contractor or freelancer is in dispute across a number of industries currently. As the amount of independent employees continues to rise and online opportunities increase, we can expect to see a growing discussion on the topic.
Many people choose the designation of freelancer, or independent contractor, for the freedom to control their own schedule and achieve more of a work/life balance. They often don’t think about the employment protections that are no longer afforded in a contractor role. The courts, and law firms like Wenzel Fenton and Cabassa, P.A., will continue to monitor these companies who employ independent contractors to ensure they are adhering to the law and not taking advantage of hardworking people.
As we watch how this case unfolds over the next couple of months or years, we may be on the brink of a very important employment law precedent.
If you are an independent contractor and are wondering if you’re correctly classified, . We’ll make sure your rights are protected.