New Professional Member Special>>> Save $15 and receive a SHRM tote bag
HR professionals can play a key role in creating business efficiency—starting with their own department.
Save $15 on a Professional Membership and Receive a FREE Tote Bag.
Get the HR education you need without travel expenses or time out of the office.
We don't just visit a city, we take it over. Join us in NOLA -- June 18 - 21, 2017.
The debate over whether ride-booking service Uber’s drivers are employees or independent contractors is revving up. Uber and Rasier-CA LLC, a subsidiary of Uber that licenses mobile application technology from Uber, received an adverse determination on June 3, 2015, by California Labor Commission Hearing Officer Stephanie Barrett. But they appealed that ruling in a June 16, 2015, filing.
Businesses “are getting hit hard on the independent contractor classification,” said John Skousen, an attorney with Fisher & Phillips in Irvine, Calif. He said there are a “lot of cases” about this classification and that the litigation “is not going away.”
Barbara Ann Berwick drove for Uber from July 23, 2014, until Sept. 18, 2014.
California Labor Code § 2802 requires an employer to indemnify an employee for all that the employee necessarily expends in performing his or her duties. Berwick drove 6,468 miles payable at the 2014 Internal Revenue Service mileage rate of $0.56 per mile or $3,622.08. She also incurred toll charges in the amount of $256, and claimed she was due $274.12 in interest on the unpaid expenses. She also claimed she was due additional wages, liquidated damages and penalties.
The hearing officer awarded her $4,152.20, which included the reimbursable expenses and interest, but not additional wages, liquidated damages and penalties.
Barrett rejected Uber’s argument that it was not an employer and that Berwick was merely an independent contractor.
Uber held itself out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation.
Uber is a smartphone application that private-vehicle drivers and passengers use to facilitate transportation analogous to being driven by a taxi. The passenger signs on to the application and requests a ride. The transportation provider uses the application whenever the driver wishes to notify potential passengers that he or she is available to transport them. When the transportation provider accepts the passenger’s ride request, the model of the car and name and picture of the driver appear on the passenger’s device, so that the passenger can identify the driver.
Rather than Uber (and Rasier-CA LLC) just being a technological platform, the reality is that “the defendants are involved in every aspect of the operation,” Barrett found. “Defendants vet prospective drivers, who must provide to defendants their personal banking and residence information, as well as their Social Security numbers. Drivers cannot use defendants’ application unless they pass defendants’ background and DMV [Department of Motor Vehicles] checks.”
In addition, “defendants control the tools the drivers use; for example, drivers must register their cars with defendants, and none of their cars can be more than 10 years old. … Defendants monitor the transportation drivers’ approval ratings and terminate their access to the application if the rating falls below a specific level (4.6 stars).” Drivers also rate the passengers, with service to individual passengers cut off if their ratings fall too low.
Notably, Uber discourages drivers from accepting tips because that would run contrary to its marketing strategy.
In the case at hand, the hearing officer said that Berwick did not dispute that Uber paid her, and “presented no evidence of sufficient substantiality to support her claim for additional wages or minimum wage.”
Skousen said that while broad liability for Uber is uncertain at this point, there may be a number of copycat litigants who similarly bring their claims before the labor commissioner or directly in superior court.
He added that he wouldn’t recommend labeling those who perform the main core of a business as independent contractors. “I wouldn’t go there,” he remarked. “Look at the risk of litigation.”
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.
Up to Juries: Uber, Lyft Drivers’ Status as Employees or Contractors,
SHRM Online Legal Issues, March 2015
Classification of Sharing Economy Workers as Contractors Challenged,
SHRM Online Legal Issues, February 2015
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Join SHRM's exclusive peer-to-peer social network
SHRM’s HR Vendor Directory contains over 3,200 companies