UBERIZATION OF THE WORKPLACE, PART 2: UBERIZATION OF EMPLOYER/EMPLOYEE/INDEPENDENT CONTRACTOR RELATIONSHIPS – AN INTRODUCTION

This blog post is part two of a six part series on the impact the Uber business model is having on employment laws across the nation.

Living in a state that still prohibits Uber from operating within its borders (at least as of the time of this writing), my experiences with the company are fairly limited.  That being said, I spent my time on every Uber ride learning a little bit about my driver and came away with a very positive view of the experience each time.  One reason I wanted to get to know my driver is because I know I will be asked to rate my ride after reaching my destination.  This is very important to the driver because their continued relationship with Uber depends upon the feedback received.  Here’s what I’ve learned from my Uber experiences: 

  1. On a personal note, I liked the convenience of the experience. I waited less time for a ride; I didn’t have to exchange cash; and, I paid less than I have for cab rides.
  2. My drivers all had other jobs. I’ve been given rides by a military chopper pilot, a tech worker, a parent with some spare time and a minivan, a Hello Kitty® enthusiast, and even a fellow who works as a taxi driver.
  3. My drivers loved the ability to earn some scratch in their spare time – no schedules, no commitments – and sometimes it’s serious scratch. More than once, I’ve been picked up by someone on their way home from work.  In addition to being convenient because the driver can look at my destination and see if it works for him/her, those after-work hours are a peak time for driving.  In other words, they made a little more money because of surge pricing.
  4. Uber is safer under a number of scenarios. Had some wine with dinner?  Faced with driving in an unfamiliar city?  Call Uber.

Lessons 2 and 3 above relate directly to the employer/employee/independent contractor debate plaguing Uber and other businesses that use this model.  For a lot of Uber drivers, these are the biggest pros of the relationship:  (1) they get to keep their day job while making extra money, and (2) they love the flexibility of the arrangement.  These drivers feel in control of their earning potential.  Some drivers have used Uber technology to become entrepreneurs by building their own fleet of vehicles and having others drive for them.  There are drivers out there making six figures.  In my View, the arrangement pioneered by Uber dovetails perfectly with the needs of those who lack specialized skills and might not otherwise be able to find a good paying job, not to mention those who need to make a little extra money or who do not have time to work a set schedule, like a college student or a homemaker.

The other faction, those who want to impose the employer/employee relationship upon these types of arrangements, make several arguments in opposition to characterizing Uber drivers as independent contractors.  They argue that these individuals lose the protection of employment, which includes, among other things, workers’ compensation and unemployment benefits, employer contributions to social security or retirement, fringe benefits, and protection by anti-discrimination laws.  Independent contractor status also makes these drivers responsible for their own mileage and gas/maintenance expenses.  Full disclosure on the bent of my Views before you read more of my in-depth review of some of these issues: last I checked, there are a LOT of people who work without the “protection of employment.”  Every small business owner, entrepreneur, and even attorneys who go out and hang up a shingle work without the protection of employment.  If someone wants a job with benefits, he or she can go work somewhere else.  It’s a choice.  And not always an uninformed one.  If someone only wants to be transported by companies utilizing an employer/employee relationship, he can take his business elsewhere.  No one is forcing anyone to uber.

Lastly, the conspiracy theorist concern is that all employers will try to classify their employees as independent contractors to avoid these extra costs.  In my View, that’s not going to happen.  Sure, there are savings associated with using independent contractors.  And undeniably, some employers have pushed the envelope in that direction.  But, there are features of the employment relationship that are equally or even more important for employers to take advantage of.  The at-will relationship offers a lot of flexibility for both the employer and the employee.  Loyalty is valued by employers, and it is far less likely to develop in the independent contractor relationship as compared to the employer/employee relationship.

Before we move on in detail, it is worth remembering that independent contractor status is a legitimate, legally-recognized category of worker.  Some have postulated that perhaps a new worker classification is needed in light of the app-powered workforce.  Others say that the test for independent contractor status is outdated and needs a reality check.  That test, as you will see momentarily, is unwieldy and difficult to apply.  The Wage and Hour Division of the U.S. Department of Labor (“WHD”) would, of course, disagree and, as I mentioned earlier, has issued an Administrator’s Interpretation of the independent contractor relationship which could reasonably be posited as a thinly-veiled opposition to the positions taken by Uber in the litigation pending in California.  Let’s take a more detailed look at that Interpretation.

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Vanessa Towarnicky's primary focus is in the area of labor and employment law. She has been involved in representing clients in various employment cases, including sexual harassment; deliberate intent; age, race, and disability discrimination; wrongful discharge; and various other employment-related torts. She is admitted to various state and federal courts as well as the Third Circuit Court of Appeals and Fourth Circuit Court of Appeals.
 
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