Ridesharing Service Blurs the Line Between Employees and Contractors

 Posted on August 21,2015 in Employee Misclassification

As a business owner, you are most likely very aware that the misclassification of your workers as either employees or independent contractors can have a dramatic impact on your company. If done incorrectly, you could be facing serious fines and penalties imposed by the IRS. Rarely, however, do such concerns get played out on a national stage, but over the last few months, the ridesharing provider Uber has faced a large concerns regarding the employment status of its drivers.

In early June, the California Labor Commissioner’s Office found in favor of a former Uber driver who claimed that the San Francisco-based tech company owed her more than $4,000 for unreimbursed business expenses. The ruling, although limited to the driver’s case alone, essentially declared that she was employee of Uber, and therefore, eligible for the reimbursement. Uber maintains that those who drive for the company are independent contractors.

As a software development company, not a transportation carrier, Uber holds that it is merely providing a marketplace in which riders and drivers can be connected. A driver uses his or her own vehicle, may use a personal cell phone or lease one from Uber, and sets his or her own hours. While a driver may be limited to the city in which he or she has been approved, Uber has no requirements regarding where within the city a driver must work. Based on the company’s claims, it would seem like drivers are independent contractors.

Petitioners in pending class action lawsuits, however, claim that Uber maintains strict control over much of a driver’s day-to-day operations. The contracted drivers rely heavily on the technology provided by Uber and are subject to seemingly arbitrary rules and deactivation policies. From this standpoint, it is understandable that drivers would appear to be employees.

While the limited California decision supported the idea of drivers as employees, claims in other states have resulted in rulings determining drivers to be contractors. Perhaps the best solution would be government action creating a sort of middle ground to reflect the values and the needs of 21^st century workers. In the meantime, there are sure to be new developments in the ridesharing dispute in the coming weeks and months, and it would be pointless to speculate about a potential end-result.

If you have questions about the classification of workers as it applies to your company, contact an experienced Illinois employment law attorney. Our knowledgeable team will help you understand the regulations and ensure your company is fully protected. Call 847-995-1205 today to schedule an appointment.