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Uber Drivers: Caught in a Rat Race

Unlike independent contractors, nonexempt employee drivers are entitled to benefits such as overtime and rest breaks. Despite the recent ruling by the labor commissioner, Uber drivers should be classified as independent contractors. It is important to understand that this single ruling may be persuasive to other courts, but is not binding. Before Uber drivers rush to the courthouse to collect for unpaid overtime and other benefits, it may be wise to wait to see how the superior court rules.

California and federal law differ slightly as to the designations of employee versus independent contractors. Patrick Cotter and Tadj Correia recently brought a lawsuit against Uber arguing that they should be treated as employees instead of independent contractors. An article in The Ledger quotes Correia: “It seems lopsided to me…As a driver, I feel like I’m a lab rat. Disposable.”

While Correia is certainly entitled to his feelings, finding Uber and Lyft drivers to be employees would likely disrupt the entire system. Uber and Lyft would no longer be competitively priced against cab drivers. Riders will either be forced to pay a higher price for Uber or go back to long waits for a Yellow Cab despite repeated phone calls to the dispatcher. “The driver is on his way…” Yellow Cab users know that wasn’t always true.

Generally, however, the jury will need to consider the following three categories:

1. Behavioral Control. Behavioral control relates to how much control the owner has over the manner in which the hiree performs his or her tasks. The level of control an owner exercises has a positive correlation to the level of liability imposed on the owner. Some factors that weigh in favor of an employee relationship are that the employer provides training and mandates the use of that training. Factors that weigh in favor of an independent contractor relationship include the hiree maintaining his/her own insurance and license.

Uber drivers are not provided any training. Each driver must have his or her own license and insurance. The drivers must have a clean driving record. Uber does not tell drivers that they must carry water or snacks in their car. These luxuries are offered by the drivers because they choose to offer them. Uber drivers are not told when or where to work. They clock in and out at their leisure. They are not told what areas of the city to work. While their routes are monitored for payment purposes, they are not required to take mandatory routes. They are not told what to wear; there is no uniform.

2. Financial Control. Financial control relates to whether a hiree has an opportunity for profit and loss and to what extent they control it. An independent contractor should generally be one who: sets his or her own prices; gives his or her own discounts and refunds, and is generally responsible for handling his or her own money. This area is the weakest for Uber to argue their drivers are independent contractors. As Uber users know, Uber sets the prices of its drivers. It also dictates sales, promotions or surcharges. If this turns out to be a turning point issue for the Courts, Uber may need to rethink its pricing model.

3. Relationship of the Parties. The relationship of the parties relates to the parties’ intent. Despite the qualms of drivers like Correia and Cotter, many Uber drivers appreciate the flexibility offered by the independent contractor relationship. Without set schedules or locations, an Uber driver can “go to work” from his or her couch until requested for a pick up.

As shown above, the behavioral factors tend to weigh in favor of Uber while the financial factors weigh in favor of the drivers. It will be up to the jury to ultimately decide.

To see the complete article with Mr. Correia’s quote go to: http://www.theledger.com/article/20150510/NEWS/150519990/1178?Title=Uber-Lyft-Face-Legal-Test-to-Sharing-Economy.
For more information on the labor commissioners ruling see the LA Times article, Was this Uber driver an employee? Yes, says California labor office.

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