The Uber Chronicles: Who is an Employee?
We have been following the employment status of workers in the Gig economy. From FedEx to Uber and Lyft, innovative companies are challenging conventional concepts of employment. By defining their workers as independent contractors, these companies avoid roughly 35 percent of added costs for unemployment insurance, workers comp coverage, Fair Labor Law standards (minimum wage), along with retirement and health benefits. In terms of the cost of doing business, this is a big deal.
Some of these matters are being hammered out through class action lawsuits, but in the current legal environment, much of the action is individual and case by case. Which brings us to New York, where two Uber drivers filed for unemployment benefits. Normally, an application for UI is resolved in a matter of days. These cases took months, but in the end, the NY Department of Labor determined that the drivers were, for the purposes of unemployment, employees. These limited rulings did not address the broader issues of Fair Labor standards (federal law) and workers comp benefits (state law).
Work for the Attorneys
Here's just how complicated this issue has become: the federal government is deeply involved, through application of the Fair Labor Standards act and through the National Labor Relations Board. State governments often have their own definitions of independent contractors (with MA being among the most stringent) and they administer UI, workers comp and their own standards for minimum wage. Individual cases begin with administrative decisions and then move quickly into the courts - both federal and state. And given the absence of a definitive ruling on a class basis, individual cases wend their way through, often with contradictory findings: some plaintiffs prevail as employees, others do not. The devil is in the very particular details.
The new business models call into question long-standing notions of employment that have been in place for many decades. Society has traditionally defined employment in a way that is intended to protect the interests of individual workers. The new business models contemplate a workforce that is predominantly independent contractors. On the one hand, you have companies striving to stay competitive by reducing the cost of doing business; on the other, you have individual workers struggling to support themselves and their families. It's a recasting of the old labor-management struggle, with no end in sight. Meanwhile, this conflict has become a virtual full employment act for labor law attorneys.
Senior Workers Compensation Consultant