Are Uber and Lyft Drivers Still Independent Contractors?

Uber and Lyft drivers: employees or independent contractors?

In New York State, they’re might be neither — or both, Or it kind of may not matter anymore — at least in some cases.

Wait. What? You might be thinking that now the world has truly gone mad — or that I have. Understandable, but please, hear me out.

NYS and Uber and Lyft (and apparently other ridesharing platforms) have figured out a way to address their respective concerns without fighting over the actual classification. How exactly has it done that and are there bigger implications?

First, there’s the Black Car Fund. Admittedly the BCF has been around since 1999. When Uber and Lyft started doing business in New York they and similar apps were included in this fund. OK, but what IS it? It started out as a fund to provide Black Car drivers workers’ comp benefits. It has since expanded to include dental, vision, urgent care, telemedicine and prescription benefits.

Why are ridesharing companies included in this fund? Because they are structured like Black Car companies as they usually operate off credit and not cash. Passengers, via a 3% surcharge pay the benefits. So drivers for Uber, Lyft and similar companies can tap into these funds.

But now Uber and Lyft just entered into a settlement with the NYS AG office to pay $328m for “allegedly cheating drivers out of hundreds of millions of dollars” according to the State.

Drivers will receive an “earnings floor” (a guaranteed minimum rate)  as well as guaranteed paid sick leave and other improvements in working conditions. In addition the settlement represents monies wrongfully deducted from drivers’ pay, such as sales tax and BCF surcharges. Riders are supposed to pay those charges, not the drivers.

Also, last week NYS and Uber entered into a settlement where Uber will pay into the NYS Unemployment Insurance Trust Fund and make a lump sum payment retroactive to 2013.

OK, but then aren’t the drivers employees? NYS seems to be saying yes. Uber and Lyft say no. That said, the lines seem to be getting increasingly blurred.

If it allows all parties to move forward and everyone’s happy does it matter? It could. First there’s taxes. Presumably the drivers will have to pay tax on their earnings and it’s not done through payroll withholding. But here are some other considerations:

1. What about I-9s? No, they don’t fill out I-9s, but undocumented immigrants can’t work for them — at least not Uber– and to get Employment Authorization Documents they need a Social Security number. Other immigration laws regarding visas address who can and can’t work for Uber, Lyft or similar companies.

2. What about the NLRB and unions?. The current Board, under the right facts would likely argue that they’re employees — if it means that they could join a union. Of course if the drivers already have benefits and are satisfied, though, maybe it’s not an issue to them. But I still wonder…

3. Will this phenomenon catch on in other states? Massachusetts is seeing efforts to place the question on the voting ballot in 2024. What about in other industries? I guess time will tell.

As of now, however, under the federal Fair Labor Standards Act and state wage and hour laws the presumption is that a worker is an employee, unless a business can bring evidence that rebuts that presumption.

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Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.

Before choosing an attorney, you should give this matter careful thought. The selection of an attorney is an important decision. If you find this communication to be inaccurate or misleading, you may report it to the Committee on Attorney Advertising Hughes Justice Complex, CN 037, Trenton, NJ


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