Uber Drivers: Employees or Independent Contractors?

The economy is doing better than it has in years. One of the main benefits of a stronger economy is a lower rate of unemployment.

As it turns out, employment is up in California and across the nation. This will in turn drive the economy further, as people will have more disposable income to spend on consumer products.

applestuffHowever, this recent upturn in the local and national economy is somewhat different than previous periods of economic prosperity. One major difference has to with an increase in the type of employment we are seeing. In the past, greater production lead to more manufacturing jobs. When the economy shifted to outsourced production and services in the 1990s, we saw more sales and marketing jobs and other service-based forms of employment.

As our Los Angeles employment attorneys understand, many workers in our current economy are earning a living by participating in what economists have come to call the on-demand economy. One of the major examples of these news jobs is in the ridesharing industry. Companies in the Silicon Valley have created apps for smartphones, where customers can hire an employee for a single service with a single click.

If you are staying late at work one night and need a ride home, you no longer have to stand out on the corner hoping a taxicab will drive by. You simply open your Uber application on your smartphone and request a driver. The driver arrives, calls you when he or she is outside, takes you to your destination, and the app handles withdrawing the money and tip from your bank account. All you have to do then is rate the driver, and he or she also gets a chance to rate the customer. The driver is obviously not your employee, as he or she is providing a service on behalf of ridesharing company. However, according to a recent editorial from the LA Times, the question is whether he or she is the ridesharing company’s employee or an independent contractor. The difference does matter for a variety of reasons.

First, it should be noted the company always wants to classify the drivers as independent contractors and not employees. The reason is because they do not have to pay benefits, nor do they have to pay overtime, or adhere to many state employment laws, because, in their mind, the driver is not an employee. The company can also disclaim liability in the event the driver causes an accident and the passenger files a claim for personal injury.

Ridesharing drivers have recently filed a series of lawsuits in federal courts in the State of California, and the ultimate outcome may have a major effect on the ridesharing and on-demand economy in general.

While ridesharing is an obvious example, and while there is potentially a lot of litigation in the form of traffic accidents, there are various other examples of this type of employment in our modern economy. We have services where people will make personal deliveries, including deliveries of medical marijuana, cleaning services, handyman services, and variety of other app-based jobs.

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 714-937-2020.

Additional Resources:

Is your Uber driver an independent contractor or an employee? It makes a difference, June 5, 2015, LA Times

More Blog Entries:

Adams v. CDM Media USA – Age Discrimination Lawsuit to Proceed, March 12, 2015, Costa Mesa Wage and Hour Lawyer Blog