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Bill outlines when drivers for companies like Uber and Lyft can be classified as independent contractors
Florida lawmakers recently approved a bill that would make it easier for ride-hailing companies like Uber and Lyft to show that their drivers are properly deemed independent contractors.
Ride-hailing drivers have filed lawsuits in many states over the past few years claiming that they are misclassified as independent contractors. The drivers argue that they are employees and are entitled to receive minimum wages, expense reimbursement and other employment benefits that aren't afforded to independent contractors.
Notably, Lyft agreed to settle a class action for $27 million, which received final court approval on March 16 (although there are still pending appeals in the case). Uber had also agreed to settle driver claims for $100 million, but the judge in that case rejected the settlement agreement and put the case on hold while the 9th U.S. Circuit Court of Appeals decides whether certain driver arbitration agreements are enforceable.
The Florida bill creates certainty for ride-hailing companies and allows growth for a service that is in high demand across the entire state, said Brett Owens, an attorney with Fisher Phillips in Tampa, which represents employers. In addition to independent contractor status, the bill addresses insurance, fare transparency, and investigations into the drivers' criminal and driving histories.
[SHRM members-only toolkit: Employing Independent Contractors]
The state Senate approved the bill on April 19 with a 36-1 vote, and it passed the House of Representatives earlier in the month. Gov. Rick Scott, a Republican, has also said he supports the measure.
"I look forward to signing the @uber/@lyft bill," he tweeted on April 24. The new legislation would take effect on July 1.
H.B. 221 focuses on drivers working for a transportation network company (TNC) that provide a digital platform to connect drivers and riders for prearranged rides—not rides hailed on the street or arranged through taxicab companies.
Under the bill, TNC drivers in Florida would be properly classified as independent contractors if:
To some extent, the language of the bill codifies the legal requirements for what constitutes an independent contractor, said Donna Ballman, an attorney in Fort Lauderdale who represents employees and is the author of Stand Up for Yourself Without Getting Fired (Career Press, 2012).
Although the new measure is generally pro-employer, Ballman said, there are some provisions that could help drivers argue that they are employees rather than contractors in some cases.
"The statute actually puts in some specific legal conditions for classifying drivers as contractors that are a bit different from federal law, so in that respect it might actually give the drivers some ammunition to argue they are employees if the company they work for doesn't meet those specific conditions," she said.
The state legislature can't change the federal Fair Labor Standards Act and tax laws, she added, so if a driver is found to be an employee under federal law, the Florida statute won't make much of a difference for rideshare companies in the state.
She noted that a state appellate court in the Miami region recently ruled that Uber drivers are independent contractors and reversed an unemployment decision saying otherwise.
"The gig economy is continuing to rapidly grow and slowly garner acceptance from state legislatures," Owens said.
Arizona, for example, enacted legislation in 2016 that makes it easier for employers to prove workers are independent contractors if they sign a declaration that contains certain language about the work relationship.
The regulatory issues that ride-hailing companies face have been widely reported; the Florida bill allows them to operate effectively in the third most populous state in the country, Owens said. "If ride-sharing companies operate successfully under the law, we can expect other states to draft their own form of legislation to alleviate concerns regarding insurance, fare transparency, the independent contractor status of the drivers, and the criminal history and driving history of the drivers."
Employers will want to stay up to date with any potential developments in each state where they operate to ensure that they are taking advantage of—and complying with—laws relating to the classification of workers, he added.
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