Monday, June 22, 2015

What’s next for Uber after independent-contractor loss?

In March, I reported on a lawsuit filed against Uber by a class of its drivers claiming that the taxi company mis-classified them as independent contractors. Apparently, that is not the only claim pending against Uber on this very issue. Earlier this month, a California Labor Commission hearing officer concluded that Uber had mis-classified one of its drivers. Uber has appealed the ruling. Frankly, I think Uber has a pretty good argument on appeal.

Here’s the full decision [pdf].


The hearing officer relied on the following factors to conclude that Uber’s drivers are employees, not independent contractors (with my critique in the parenthetical).
  • Drivers must provide Uber their personal address, banking information, and social security number. (Doesn’t a company want contact info for anyone providing services for it, and doesn’t it need other information so it can pay its contractors?)
  • Drivers cannot drive for Uber without a background check. (If a background check is the standard for an employee, then we might as well get rid of independent contractors all together.)
  • Drivers must register their cars with Uber, which cannot be more than 10 years old (Cannot a company set reasonable standards for its contractors?)
  • Uber monitors drivers’ ratings from passengers, and terminates the relationship if the rating falls below 4.6. (Contractors are not guaranteed contracts for life; if a contractor falls below certain standards, a company always has the right to terminate the relationship.)
  • Uber requires drivers to use its app to drive, and they cannot drive without using it. (How is this different than a taxi company tracking its drivers via GPS and directing routes; if anything, Uber drivers have more independence because they can turn down the fare at any time.)
  • Drivers are paid a set percentage of the total cost of each ride. (Isn’t this the hallmark of an independent contractor—pay by the job, not by the hour?)
Last week, I called for a “duck” test for independent contractors. Dear readers, Uber drivers absolutely look, swim, and quack like independent contractors. They control when and where they work; they are paid by the ride; they drive their own cars and are responsible for their own expenses; Uber does not supervise the drivers, but merely holds them to reasonable performance standards. If Uber’s drivers are employees, then what is left for independent contractors? Or, is this the beginning of the end of the ability of companies to use the services of contractors?