When is a driver an employee, and when is a driver just a contractor? This
question is at the heart of a class action filed against Uber, the popular
ride-sharing service. Uber recently agreed to pay about $100 million to
settle lawsuits in California and Massachusetts. Those suits claimed Uber
was improperly calling its drivers “contractors” rather than
“employees” to avoid various liabilities and expenses. It
is now facing a lawsuit in Florida based on the same argument.
Uber claims it just provides an app which puts drivers in touch with people
who needs rides. By calling itself a technology company, it avoids paying
unemployment benefits, workers compensation benefits, and many other expenses
for its drivers.
However, recent court rulings make Uber’s reading of our labor laws
highly questionable. FedEx tried to claim its drivers were independent
contractors until recently, but it wound up paying millions to settle
their claims. Workers won similar claims against Starbucks, airlines,
cleaning companies, and even strip clubs. In those cases, courts found
that workers were too tightly controlled and directed to be considered
Corporate employers and labor lawyers have paid close attention to these
developments because of the implications for payment of expenses and benefits.
However, the contractor/employer issue matters for personal injury and
death cases too.
Most people understand that an employer is liable for wrongful acts by
its employees. For example, Pepsi is liable if one of its employees causes
a traffic accident while driving a Pepsi truck. However, a corporate master
is generally not responsible for civil wrongs caused by an independent
contractor. The independent contractor defense gives the corporation a
defense to liability whenever a true contractor is involved.
Thus, the outcome of cases involving Uber and other “sharing economy”
actors is not just important to labor and employment law. It’s important
for everyone who’s involved in auto accidents, gets hurt at a job
site, or is accidentally injured by a skycap dropping luggage at the airport.
The ability to recover for serious injuries and other wrongs can rest
on the employer/contractor distinction.
While employers generally buy insurance to cover the negligent acts of
their employees, they do not buy insurance to cover independent contractors.
Independent contractors themselves may forego insurance and just “go
bare” in their business activities. This is particularly true for
people of modest means - like Uber drivers. In an economy where an estimated
21 million people work as independent contractors, the implications of
this are huge.
As the old saying goes, if it walks like a duck and quacks like a duck,
it’s probably a duck. No employer should gain a competitive advantage
by calling employees something they’re not. It matters not just
for the employees themselves, but for accident victims too.
Contact us today to speak with a lawyer in Clearwater about your rights.