Independent Contractor or Employee?

I became aware of Uber about 3-4 months ago while starting my journey of seeking employment. I had heard from my mother about the pay being really good (I see it advertised for $21 per hour on Indeed.com). There is currently a class action lawsuit against the company as all individuals are classified as independent contractors, and not employees. Uber’s employment posting states that independent contractors earn great money and can earn more the more they drive, make their own schedule be it day or night (flexibility) and get paid weekly.

Sounds like a pretty good gig, huh? The pay rate is set at $21.00 per hour on the website; however, I was under the impression the contractor sets their rates? Perhaps I misunderstood, but we will dig into this more. I picture an independent contractor as someone who has to provide their own equipment and supplies, works their own schedule, performs the work in the fashion they deem appropriate (independent discretion and managerial authority) and also someone who stands a risk of loss as much as the employer who has the contract with them. These individuals who are involved in the class action lawsuit with Uber wish to be recognized as an employee instead of an independent contractor. Obviously, as an independent contractor, one is not eligible for unemployment benefits, workers compensation benefits, health insurance from the company or any other employee related benefit associated with the employer/employee relationship.

The issue comes down to this, do these individuals who drive for Uber meet the criteria of an Independent Contractor? Let’s start by evaluating the Fair Labor Standards Act’s guiding documentation:

1) Is the work performed by the person an integral part of the employers business?

The answer is yes. Uber is a service for individuals who need transportation to and from their destination. Uber drivers are an integral part of this business. Without the drivers, the business could not take place. To me, its like a taxi service without the rented yellow-checkered car. 

2) Does the workers managerial skills affect their ability to either profit or loss from their decisions?

The answer is yes. Uber drivers drive in this case as they wish to make their own schedules and have the flexibility/freedom. Many arguments can say the drivers  do not utilize much independent discretion or judgment in all situations; however, they’re the ones steering the car and hitting the gas pedal. Also, the employee makes decisions whether they want to take a job or not; so the worker can technically profit or withstand a loss as a result of their decisions. I would say they whole-heartedly fit the description in this section.

3) Relative investments in facilities and equipment by the worker and the employer.

The Uber worker has to furnish their own 4-door vehicle, their own insurance and a drivers license as well as be 21 years of age. The employer does not furnish the vehicle, insurance or gasoline for the car. The employer just has a service where the consumer can make the employer aware of a need to get to a certain location. The employer then provides that information to the Uber drivers and the Uber driver can either accept or decline (someone else will most likely pick up the consumer needing transportation). The employer does not furnish any equipment to the worker.

4) The workers skill and initiative:

The FLSA mentions economically dependent. To me, this means the worker is depending on the employer to furnish them with work so they can make money. The worker also extends independent judgment and discretion in their work. They can utilize the routes they choose or they can also choose not to work at all. Each of these drivers operate as independent businesses as they can profit or lose from their choices. The routes they choose also vary in time and distance. 

5) Permanency of the workers relationship with the employer:

The worker can obviously choose not to work for the employer at any time. Uber can most likely terminate the contract if something bad happens; however, this most likely will not occur in the normal context. Independent  contractors can continue working; however, in an employee/employer relationship, the employer can prevent an employee for working for them (usually suspension). The FLSA states a lack of permance does not always mean the worker is an independent contract as some companies use staffing agencies often.

6) The nature and degree of control by the employer:

Obviously, we can say Uber drivers control whether they want to drive or not, or whether they wish to take certain routes or not. The employer does not control the manner in which the driver executes the route or distance. I would have to sign up for Uber to see how pay rates are set, as it would seem to me the worker would need to set the pay rate. The worker must also be able to work for others and not just Uber. The employee also picks their own working hours as well as which assignments to take. 

In my opinion, these workers are considered independent contractors, and not employees. Just because they’re labled independent contractors by Uber does not bear any weight. This class action lawsuit will delve into all the specifics of the work the drivers are doing and whether they’re considered independent contractors or employees. I can also see from the other side of the fence how these workers are not given insurance, mileage reimbursement, unemployment insurance and any other service or entitlement from any employer/employee relationship. Independent contractors choose this line of work because most wish to be their own boss and choose their own hours. This freedom means they will not get health insurance from the employers they work for, or unemployment/workers compensation benefits. 

It’s hard for me to agree if they’re right or wrong because I do not work for Uber. I may end up signing up to do some assignments just to see how it works. It never hurts to try. What are your thoughts?

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2 thoughts on “Independent Contractor or Employee?

  1. Gas should be reimbursed and so should mileage. Either that or increase the pay rate because it’s too low. Also, at the current rate, 20% of the fare is kinda ridiculous for Uber fees.

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    1. Thank you for the comment, Philip! I’m still waiting on my background check to clear with Uber, but I knew there would be some fees taken out of the pay for Uber. I know if you’re an employee, you generally get reimbursed for mileage or a gas card to pay for the gas (depending on the employer). The mileage is also used as a tax write-off in the end. I suppose there will be somewhat of a learning curve for me if I start driving as an Uber driver. Looking forward to learning the in’s and out’s of the process. Thank you for reading, sir!

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