Uber drivers are generally considered independent contractors. As independent contractors, they are not entitled to certain benefits that employees generally get. There are certain lawsuits that they cannot file against their employers, they are not subject to minimum wage or overtime requirements, and lastly, they are not entitled to unemployment. However, New York State has issued Uber a major blow, ruling that their drivers are entitled to receive unemployment benefits.
A similar ruling issued in June of 2017 held that three Uber drivers (and those who were in a similar position as them) were considered employees by law.
The Basis for Designating Uber Drivers as Employees
The State of Missouri uses IRS guidelines for determining whether or not an individual is an employee or an independent contractor. Guidelines include:
- Whether the individual uses his or her own or an employer’s capital,
- Whether the individual can establish when and how the work is completed,
- If the individual earns the majority of his or her money working exclusively for a single business,
- Whether the employer supervises, directs, and controls how the work is performed.
The ruling from the New York State judge leaned heavily on the last criterion mentioned above. She determined that because Uber supplied its drivers with training, its drivers fit the definition of employee more closely than a contractor. This judgment was not simply designed to fit the three individuals mentioned above, but all Uber drivers driving in the State of New York.
Misclassification of Employees
One of the most common sources of labor disputes involves the misclassification of employees. In this case, the judge ruled that Uber had misclassified its drivers as contractors when they were really employees. This happens in a number of different industries, but those involved in transportation are the source of a large majority of the disputes.
Taxi services that have been forced to compete with rideshare companies lauded the decision. They have suffered a major hit to their profit share thanks to companies like Uber and Lyft. Part of the difficulty of competing with rideshare companies is that they often do not have to pay employees for full-time wages. Uber’s employees are paid per ride, and Uber takes a cut for playing the middleman and connecting prospective riders with drivers. Now, a company like Uber will be forced to ensure that their employees are getting paid at least minimum wage, overtime, and that they can collect unemployment, as well.
Naturally, Uber drivers who use the service as their primary source of income are ecstatic, but it could also have a major impact on Uber’s business model if other states follow suit. It is also unclear how it will work for part-time drivers who simply offer rides to earn extra money on the side.
One thing is for certain, however, the modern “gig” economy has blurred the line between contractor and employee under the law and as happens so often, the law is scrambling to catch up with emerging technology.
Contact a Kansas City Employment Attorney
If you have been misclassified by your employer, you have a right to sue. Call the Kansas City employment lawyers at HKM Employment Law at 816.607.4691 and we can begin working on your case immediately.
