Lawsuits against Uber have been springing up for some years now, though many of those cases have been dismissed, current rulings seem to be leaning in the opposite direction.
Since the beginning, Uber has classified their drivers as independent contractors, rather than employees. Several states, including New York, Texas, and Georgia have held for Uber’s classification practices, but California did not follow suit.
Since then Uber has been ordered to pay out over $100 million in settlement amounts, and the lawsuits keep on coming. However; as part of the settlement, Uber continues to categorize drivers as independent contractors, rather than employees.
Also, Uber will give more information to drivers relating to their quality rating, will allow them to assess it against fellow drivers, and will outline specific conditions in which a driver will be deactivated. But why is Uber so motivated by the use of independent contractor's in their employment provisions?
What is the Difference Between Employee and Independent Contractor?
Why was California’s decision so important? Before clarifying the details of California’s ruling, it’s important to understand why a company classifies a worker as an employee or independent contractor. Well, one significant difference is workers rights to a multitude of protections and benefits that independent contractors don’t necessarily have the luxury of using, including:
- Wage and hours laws
- Anti-discrimination Laws
- Payroll withholdings, including both state and federal tax withholdings
- Workers’ compensation benefits
- Unemployment benefits
If a company misclassifies an employee as an independent contractor, they are likely cheating these workers of numerous benefits they have rights to by law. This can precede to claims for unpaid wages and penalties.
California Labor Commissioner Awards Uber Employee
Uber driver, Barbara Ann Berwick filed a wage complaint with the California Labor Commissioner on September 16, 2014. Moreover, Berwick desired reimbursement for outstanding business expenses, specifically gas and toll expenses. Uber rebutted claiming Berwick was not an employee thus not entitled to reimbursement for business expenses. The California Labor Commissioner disagreed and ultimately awarded Berwick over $4,000 in business expenses and interest.
The Labor Commissioner concluded in their decision by applying the eleven-factor “economic realities,” test for determining whether a worker is an employee or independent contractor.
To give you a general idea, the test addresses questions including:
- How the employee is paid
- Whether by the hour or by the job
- How long the services are to be performed
- Whether the work requires a particular skill
- Whether the worker is engaged in other occupations separate and distinct from that of the principle
Click Here, for more information on how government agencies make the call on employment status
Uber’s arguments went on to say that they didn’t exert much control over their drivers—for example, drivers could set their hours, were not supervised on the job, and could refuse to accept customers. Be that as it may, The Labor Commissioner wasn’t buying it. The Commissioner still found that Uber had a solid hold over their companies operation as a whole, and when examining the nature of the work having precise control over the drivers was unsuitable. So it was decided, Berwick was an employee and not an independent contractor.
How Does The Independent Contractor Analysis Impact Uber?
The Commissioner’s Ruling for Berwick doesn’t necessarily categorize all Uber driver’s in the state of California as employees, but it does have the potential to start off similar claims. If Uber treated its other drivers the same way as Berwick, it could have hundreds, if not thousands, of similar lawsuits. As one might conclude, Uber has appealed the Commissioner’s decision.
Uber Continues To Face Major Lawsuits
- Major Class Action Suites. In 2013, Uber faced a class action lawsuit on behalf of about 385,000 current and former Uber drivers in the states of California and Massachusetts. Attorney Shannon Liss-Riordan argued that Uber is obligated to give their drivers the kind of pay and benefits usually awarded to employees. Not ending in Uber's favor, the company forked out an $84 million settlement, to be paid out to operators based on how many miles they had driven.
- Never Ending Employment Classification Suites. It seems every other week a new employment classification lawsuit appears. As one gets resolved, another seems to appear. A group of 5,000 Uber drivers in New York filed a lawsuit arguing that drivers were misclassified as independent contractors; a week prior, yet another driver in Boston filed a similar suit, and at least eight different employment classification cases are pending in Texas and Indiana.
- Background Check Suit. A Boston driver files a class-action suit against Uber in San Francisco, arguing that the company had administered illegal background checks and then ended drivers from its platform after collecting consumer background reports without authorization.
- Misleading Rider Safety. Uber faced allegations of misleading riders about the quality of its driver background checks; the company expended $10 million to settle the claims. Additionally, if the company failed to comply with the settlement terms aimed at improving safety within two years, they were to pay an additional 15 million. Not long after a similar litigation was filed, brought by customers, driving Uber to change its “Safe Rides Fee,” to a “Booking Fee,” in the app.
- The Austin Suit. In Austin, Texas, Uber and Lyft fail to reverse city rules requiring drivers with ride-hailing services to be fingerprinted, shortly after drives revolt with a lawsuit alleging that the companies are in violation of the federal law by improperly notifying drivers of the shutdown. The suit, brought against Uber in California, could force both companies to pay wages and benefits to drivers that they would have potentially earned during the legally required 60 day notice period.
With more than $9 billion in investment funds leading up-to-date, the company is destructively functioning in the red, losing nearly $1billion just in the first half of 2015. This likely explains the companies’ adamancy that drivers continued to be treated as contractors, not as employees. Uber’s foundation to success depends on it; if drivers were found to be employees, the additional costs in expenses, taxes, and over time would drive them further into the negative, charging them financial hits they simply may not survive.
It’s hard to predict the future outcome for Uber drivers, but it seems the luck of the draw is leaning towards the company, not the drivers. However, if the decision of drivers to be classified as employees wins over contractors, this could begin to affect other traditional ridesharing businesses and their employment policies.
If you have been denied workers' compensation benefits or you feel your employer has denied your rights you are entitled to, contact a Work Injury Attorney today, that is experienced in Georgia's employment and workers' compensation laws. We offer no-risk free consultations, Click Below to Start today!