The list of lawsuits against Uber is long, and appears to be growing. From rider safety and information security to employee misclassification, the legal team over at Uber has its hands full! Back in September, California drivers for Uber were granted class-action status over the company’s failure to pay for necessary benefits in an employment relationship.

Currently, all Uber drivers are classified as independent contractors, which means that these self-employed drivers are responsible for paying for gas, insurance, and car maintenance – expenses which would typically be covered by the company in an employment relationship. The issue with Uber’s classification appears to be mostly over the issue of “control of work.” Uber’s independent contractors are required to log their hours, comply with performance standards, and are subject to at-will termination and investigation.  Yes, the drivers have the right to control when they work, but they also contribute to the company’s regular business processes. The nature of their relationship is certainly in a gray area. This class action lawsuit is confined strictly to California drivers, however the decision over this suit will likely influence judgments in other states. Stay Tuned!

Uber isn’t the only company under the spotlight for misclassification issues! A number of On-Demand and Sharing Economy companies are under fire. Other companies with pending litigation include: Grubhub, Lyft, Postmates, Homejoy, DoorDash, Washio… to name a few!

So what’s a business owner to do? Deciding whether to classify a worker as an employee or independent contractor can be critical. The Labor Department has issued this 6-question test to identify contractors that should potentially be classified as employees:

1. Is the Work an Integral Part of the Employer’s Business?
2. Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss?
3. How Does the Worker’s Relative Investment Compare to the Employer’s Investment
4. Does the Work Performed Require Special Skill and Initiative?
5. Is the Relationship between the Worker and the Employer Permanent or Indefinite?
6. What is the Nature and Degree of the Employer’s Control?

If your answer is “yes” to any of these questions, it could increase your liability should a question over classification arise. When in doubt, consult an expert! Give Peoplescape a call!