The rise of tech startups and innovative business models has several ramifications, most of which are positive. However, there is often little to no precedent in legal policy issues which come to the forefront. Uber, an international transportation network company headquartered in San Francisco, has been brought to court on several occasions in the last year. Uber connects drivers and passengers through the Uber app. Drivers are hired throughout the world, paid according to rates set by Uber, with their user ratings monitored. Uber appeals to drivers as a job allowing for autonomy and flexibility. The company classifies its drivers as independent contractors-which is fine, until issues regarding wages, benefits, and liability arise.
In a 2014 case against Uber, plaintiff Barbara Ann Berwick sought reimbursement for bridge tolls and mileage. The California court awarded Berwick over $4,000 in reimbursement and interest, and labeled Uber as an employer, as it is heavily involved in the employee's work; the emphasis being that drivers are an integral piece of the company's core purpose. This ruling echoes through multiple levels; other startups, such as Instacart and Shyp, are already looking to convert their classification of workers from contractor to employee. Uber will potentially lose more than the $4,000 they handed over to Berwick if the states continue to rule them as employers, as it has a $40 billion valuation.
Yet, why would these issues of classification matter to the government and Uber drivers? The government has a lot to gain if a slew of independent contractors become employees- especially taxing bodies such as the IRS. In addition, an employee has access to benefits and protections to which a contractor does not: worker's compensation, unemployment benefits, antidiscrimination laws, and policy on wages and hours. Uber has claimed from the start to be in a supervisory position: not controlling driver hours nor their clientele (drivers have the right to refuse a passenger), essentially serving as a neutral technological platform. But what happens when an issue of accident liability comes up? Or concerns about proper wages or reimbursement? Plaintiffs are calling for a class-action case, but Uber objects:
The "plaintiffs do not and cannot represent the interests of the thousands of other drivers who value the complete flexibility and autonomy they enjoy as independent contractors," Ted Boutrous, a partner in at Gibson, Dunn & Crutcher and Uber's outside counsel in the case, said in an emailed statement. Uber has sent out surveys, seeking a more representative opinion of all their drivers; the results appear to show more drivers than not prefer the contractor classification. Whether for the autonomy of the position, unaffordability of employee-employer relations, or flexibility of hours, an abundance of drivers are satisfied with the situation as it is now.
This issue is far from resolved, and will set precedence for similar cases in the future. If you work for a ridesharing company, and believe you have been misclassified, contact Glew & Kim Law Offices for a free case review: 866-416-2161
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