Employee-contractor quandary deepens
THIS question of whether an Uber driver is an employee doesn’t matter just to Uber. As you may have heard, the on-demand car-service juggernaut lost a case early this month before the California labour commissioner on whether a driver was an independent contractor or an employee, and thus eligible for expense reimbursement.
Uber is appealing that ruling in court, but it already faces a class-action lawsuit over the same issue in federal court in California and similar fights in Florida and Massachusetts.
These legal battles have actually become pretty common lately for car services and taxi companies, not just Uber.
Sometimes the issue is that drivers who clearly are employees (they don’t own the cars, they only drive for one service) are treated as independent contractors by skinflint car service owners. More often than not, though, it is cases like Uber’s, where drivers own their cars, can drive for other services and can set their own timetables – all attributes of an independent contractor – but are dependent on the service in ways that make them seem not quite independent.
Litigants
It isn’t just car services, either. Drivers of larger vehicles are also frequent litigants in what are called “independent contractor misclassification” suits – FedEx settled one last week with 2 000 California pickup and delivery drivers for $228 million (R2.7bn) and has similar suits pending in other states.
I asked Richard J Reibstein, a New York-based partner at the law firm Pepper Hamilton who represents employers in such cases, to reel off some other industries in the crosshairs of plaintiffs’ attorneys and regulators. His list: “construction, janitorial, staffing, internet services, landscaping, cable companies, security, health services, educational services, performing arts, publishing”.
In many of these disputes, there are reasonable arguments for both sides. In a March ruling that a class-action lawsuit against Uber rival Lyft should go to trial, for example, US District Court Judge Vince Chhabria wrote: “At first glance, Lyft drivers don’t seem much like employees… But Lyft drivers don’t seem much like independent contractors either.”
This quandary isn’t a new one. Here’s Supreme Court Justice Wiley Blount Rutledge in 1944: “Few problems in the law have given greater variety of application and conflict in results than the cases arising in the borderland between what is clearly an employer-employee relationship and what is clearly one of independent entrepreneurial dealing.”
Classification
This was in the majority opinion in National Labor Relations Board v Hearst Publications, in which the court backed up a board decision that, for the purposes of collective bargaining, newsboys who delivered or sold newspapers should be classed as employees.
Three years later Senator Robert Taft tried to make it clear with the Taft-Hartley Act that no, they were independent contractors. But he did not make it quite clear enough – newspaper publishers are still losing lawsuits.
Along the way, the focus has shifted from collective bargaining to benefits and worker protections. Only 6.6 percent of US private sector workers were union members in 2014 – down from 24.2 percent in 1973.
But those classed as employees now enjoy a wide variety of federal, state and local protections, from minimum-wage and overtime laws to unemployment insurance, that aren’t available to independent contractors.
Most of the lawsuits and regulatory enforcement actions, then, are about wages, expenses and benefits that workers would have had, had they been treated as employees rather than contractors.
While legal wrangling over these matters is, as noted, not at all new, Reibstein said it had really heated up during the past six years. That’s partly because the Obama administration has been much more interested in the subject than the Bush administration was.
But it’s also because such semi-independent work arrangements seem to be on the rise, and are definitely getting new prominence as fastgrowing companies such as Uber, Lyft, Airbnb, TaskRabbit and Upwork make them central to their business plans.
The great forerunner of all these companies is online marketplace eBay, and its experiences illustrate some of the issues at work here. “Employee” doesn’t seem at all the right term for those who sell their wares on eBay – infrequent sellers are equivalent to somebody holding a yard sale; ”PowerSellers” are simply merchants. Yet eBay sellers are dependent on the company’s platform and the rules it sets in ways that a yard-seller or a Main Street merchant are not. The result: lots of class-action lawsuits about the terms eBay imposes on sellers.
Still, eBay is at least at no real risk of having its sellers deemed employees. Reibstein says Uber could lessen its legal risk a lot “by exercising less direction and control” over its drivers. – Bloomberg
These legal battles have become common lately for car services, taxi firms, not just Uber.