Uber Technologies Inc. and some of its drivers are disagreeing on one major thing: their employment status.
Uber views its drivers as independent contractors for various reasons, such as the drivers’ freedom to control their own schedules. Other factors that Uber controls, such as how they do their jobs and how they are paid, are reasons that drivers think they should be classified as employees.
So the question is… is Uber getting the best of both worlds? They see their drivers as
According to an article in TIME, companies such as Uber save huge amounts of money by not being on the hook for employee-related expenses ranging from payroll taxes to workers compensation.
However, Uber CEO Travis Kalanick defends his company’s stance citing that 50 percent of Uber drivers drive less than nine hours per week.
“The current definitions of employee and independent contractors are ambiguous and difficult to discern in the growing sharing economy space,” Tim Schendt, Legal Counsel at IST said. “This has made it much more difficult for companies to ensure proper classification of workers as either employees or independent contractors.”
Some Uber drivers in the San Francisco area are taking a stance against their employment status. An article in Fortune states “one group of drivers has filed a high-profile lawsuit against the company that accuses it of illegally classifying them as contractors to shortchange them millions of dollars in expenses. A judge in San Francisco granted the plaintiffs class action status due to evidence proving Uber’s control over their work. The trial is set for June 2016.
The Legal Intelligencer says the line between employees and independent contractors is being re-evaluated by the courts and the U.S. Department of Labor and suggests any business with independent contractors must keep an eye on these developments.
Schendt also said that maintaining and utilizing a wide base of W-2 employees exposes companies to much less risk as compared to contracting independent contractors through online and third party platforms.
There are many potential liabilities involved with contracting or outsourcing a company’s work. These could include quality, customer trust or control. Companies don’t have the right or ability to closely supervise or manage independent contractors compared to W-2 employees, which could lead to potential issues in the field.
There are multiple potential issues at stake – including how the contractor represents your company. Having no control over the contractor sets you up for unprofessionalism and you risk disappointing your customers if the contractor is late or doesn’t show up. Naturally, you aren’t able to trust contractors as much because they aren’t actual employees of your company, which in the long run could hurt you.
It’s also very important to make sure your contractor has general liability insurance and workers compensation insurance, or else your company could be held liable if something happens.
As there is still a regulatory grey area between employees and contractors, it’s important to be extra careful when contracting out work.