A federal court in Pennsylvania has handed a big win to employers in a case that hinged on whether Uber drivers are properly classified as independent contractors instead of employees.
Smart employers can study the case to see the kinds of tactics Uber used to minimize the risks inherent in classifying workers as contractors. In today’s gig’ economy, it’s crucial for employers to get the contractor vs. employee classification right.
Get it wrong, and employers may owe a large group of workers thousands or even millions of dollars in pay and benefits, plus face potential IRS scrutiny for failing to withhold and pay taxes.
Recent case: The case pitted Uber, the ride-hailing company that has shaken up the taxi business, against UberBlack drivers. The drivers contended that, while they had signed independent contractor agreements in order to drive in Uber’s premium product category, they were treated more like employees.
They sought hourly pay for all hours worked under the Fair Labor Standards Act, plus benefits that other Uber employees receive. The drivers argued that they should have been paid for all time they spend on the Uber app, whether carrying passengers or not.
Uber pointed out that drivers were permitted to take breaks whenever they wanted, could nap or run errands and generally were free to turn down rides as they saw fit. The company told the court that its business model is to serve as a platform to connect people who need a ride with a willing independent contractor driver.
Drivers are also allowed to subcontract out driving their cars, paying subs from the revenues received from Uber.
The court concluded that the drivers are independent contractors who control the way they perform work, are free to subcontract work, can turn work down and can take breaks as desired. (Razak v. Uber Technologies Inc., ED PA, 2018)
Afederal court in Pennsylvania has handed a big win to employers in a case that hinged on whether Uber drivers are properly classified as independent contractors instead of employees.
Smart employers can study the case to see the kinds of tactics Uber used to minimize the risks inherent in classifying workers as contractors. In today’s gig’ economy, it’s crucial for employers to get the contractor vs. employee classification right.
Get it wrong, and employers may owe a large group of workers thousands or even millions of dollars in pay and benefits, plus face potential IRS scrutiny for failing to withhold and pay taxes.
Recent case: The case pitted Uber, the ride-hailing company that has shaken up the taxi business, against UberBlack drivers. The drivers contended that, while they had signed independent contractor agreements in order to drive in Uber’s premium product category, they were treated more like employees.
They sought hourly pay for all hours worked under the Fair Labor Standards Act, plus benefits that other Uber employees receive. The drivers argued that they should have been paid for all time they spend on the Uber app, whether carrying passengers or not.
Uber pointed out that drivers were permitted to take breaks whenever they wanted, could nap or run errands and generally were free to turn down rides as they saw fit. The company told the court that its business model is to serve as a platform to connect people who need a ride with a willing independent contractor driver.
Drivers are also allowed to subcontract out driving their cars, paying subs from the revenues received from Uber.
The court concluded that the drivers are independent contractors who control the way they perform work, are free to subcontract work, can turn work down and can take breaks as desired. (Razak v. Uber Technologies Inc., ED PA, 2018)
Note: The drivers say they plan to appeal to the 3rd Circuit Court of Appeals.
The drivers say they plan to appeal to the 3rd Circuit Court of Appeals.
[icegram unknown-campaigns=”48301″ known-campaigns=”49320″]
