By: Maital Savin, Associate
Last month, Uber settled two class action lawsuits with its drivers in California and Massachusetts for $100 million, allowing Uber to continue treating those drivers as independent contractors. Of course, the settlement left the million-dollar-question (or more accurately, the billion-dollar-question) of whether its drivers are employees or independent contractors unanswered. Uber now faces yet another class action brought by its drivers in other states, challenging their classification as independent contractors.
Whether Uber drivers are classified as independent contractors or employees make a huge difference. If they are employees, they are entitled to overtime, expense reimbursement and workers’ compensation benefits, among other benefits. If they are independent contractors, they are not entitled to any of these benefits. Worker classification is an issue that every business faces, but is more critical for businesses in the “gig economy” that are modeled around non-traditional work arrangements.
While there have been no court decisions settling the employee vs. independent contractor dispute, there have been some limited administrative level decisions regarding Uber driver classification. Of course, these decisions are limited in scope. For example, last summer, a California Labor Commissioner ruled that an Uber driver seeking expense reimbursement was an employee. Similarly, last winter, Oregon’s Labor Commission issued an advisory opinion asserting that Uber drivers are employees. In contrast, last winter, the Florida department in charge of unemployment benefits announced that it recognized ride-sharing drivers as independent contractors. For now, we will just have to wait and see how the courts decide on the multiple suits pending – if they ever make it to trial. Stay tuned.