Uber Confusion: We Misclassify, We Misclassify not… | DCR Workforce Blog

Uber Confusion: We Misclassify, We Misclassify not…

We have discussed the issue of misclassification on the DCR blog, repeating again and again that misclassification of workers as independent contractors presents a significant risk to employers. This is especially true of the technology-based gig platforms like Uber, who classifies their drivers as independent contractors…and face class-action lawsuits in different locations and jurisdictions. The demand for these services is high, as consumers around the world can’t get enough of their ability to connect directly with service providers.

Now we find companies fighting multi-state courtroom battles, with each state applying a different test to determine this question of misclassification in the demand economy, as represented by Uber. Uber’s computer programs only enable the drivers to decide every aspect of the rides they provide to customers. Uber drivers use their own vehicles and are permitted to work at their own discretion and can sign on with Uber’s direct competitors. Uber drivers are treated as 1099 independent contractors and merit no fringe benefits such as medical insurance or retirement pay.

Florida rules: Early in February, an appellate court in Florida considered Uber’s classification of its drivers as independent contractors for purposes of benefits under Florida’s unemployment insurance statute. Taking Uber’s lack of control over the driver into consideration, the bench unanimously ruled that an Uber driver’s contract and employment relationship confirms that the driver is indeed an independent contractor and not an employee. Therefore, the court ruled that the driver is not entitled to benefits under Florida’s unemployment insurance statute.

Legal disputes over the classification of Uber drivers are widespread, with lawsuits being tried in courts across the country. California and Massachusetts have both ruled against Uber as well as Lyft, a similar ride-sharing platform, in class action suits leading to multi-million dollar settlements and misclassification charges against them.

Square pegs in a round hole: The court took note of the issue of worker classification in the demand economy and referred to it as a need to decide “whether a multifaceted product of new technology should be fixed into either the old square hole or the old round hole of existing legal categories, when neither is a perfect fit.”

The court raises some pertinent questions to substantiate its decision that Uber does not enjoy the role of a traditional employer in its dealings with the drivers, as long as they have their own car:

  • The drivers enjoy complete autonomy
  • There is no direct supervision of their activities
  • They work only when they wish to work
  • They have no set demands or the need to do any particular work
  • They can let a customer go unserved, if they wish
  • Their interaction with the customer is free and unsupervised
  • They’re allowed to offer their own assessment of customers
  • They’re allowed to work for anyone, including Uber’s direct competition

Whether this ruling makes life easy for all those businesses that offer new and innovative services using functionalities offered by high technology in industries such as transport, food delivery or lodging services is a question only time can answer.

Uber across the globe: Offsetting this victory in Florida, Uber was just told by a court in Brazil to consider its drivers employees and not independent contractors. And recently, Britain was in the midst of deciding whether Uber drivers should be paid minimum wages per hour from the minute they log into the Uber application on their phones, as well as considering matters such as their holiday and vacation entitlements, job security issues and pension payments.

Of course, it’s not just companies like Uber that fall into misclassification woes. As the rules change from state-to-state and country-to-country, you can count on one thing: knowing where your company stands in the face of misclassification is more imperative than ever, and a Vendor Management System can help you avoid penalties. If you haven’t looked at Smart Track lately, now may be a good time to check it out, and avoid the legal ramifications of misclassification.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.