Uber Drivers Seek Resolution of Workers’ Compensation Issue

Uber fareUber, the fabulously successful “rideshare” service that’s sweeping the nation, faces a potentially catastrophic legal challenge—at least two lawsuits have been filed against the company seeking to identify drivers as employees rather than independent contractors. If the lawsuits are successful, Uber and its competitors, such as Lyft, will be required to provide workers’ compensation benefits to thousands of drivers across the country.

Both lawsuits were filed in California and both seek class action status, allowing attorneys to represent Uber and Lyft drivers from coast to coast. Thus far, class action status has been granted, but only with respect to California drivers.

Under the workers’ compensation laws of most states, private employers must either purchase a policy of workers’ compensation insurance for employees or must self-fund a plan to compensate employees who are injured on the job. These requirements are not applicable to independent contractors.

According to a recent press release by Uber, more than 150,000 people drove at least four times for the company in December, 2014. Workers’ compensation premiums for that many workers could cost millions.
In determining whether a worker is an employee or an independent contractor, courts typically look at three factors:

  • What is the behavior of the worker and the company? Does the company exert control over the duties and functions of the worker? Are there restrictions on time or assignments?
  • How is the worker paid? Are expenses reimbursed? Who provides supplies, tools and information?
  • What is the legal relationship between the parties? Is there any type of a written contract? Are any additional benefits paid, such as retirement, health or disability?

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