Independent Contractor v Employee: What Really Happened with Uber?

the Uber App

From Diane Kennedy’s USTaxAid, Diane Kennedy (DK) discusses the recent decision in California that an Uber driver was an employee and not an independent contractor.  She reviews the factors that are part of the classification test and then discusses a few in particular.  She writes:

One of the critical differences in the arguments is that Uber stated they were in the technology business, and the plaintiff said they were in the transportation business. If Uber is in the transportation business, then the driver might have a valid point. That’s because the driver was critical to the business. Of course, that’s just one point.

DK Note: Uber doesn’t just provide scheduling for rides. It also has conference lines, online business meeting sites and more. I think DOL got this wrong and there is probably a ‘shame on you’ for Uber’s attorney not point this out more strongly.

Uber argued that they didn’t have control over the driver’s activities and the DOL found that it didn’t take much control because it wasn’t a very highly skilled job.

DK Note: That was pretty insulting to the driver and I think it is wrong. There is an assumption that you know how to drive an automobile, that you know how to use a smart phone to run the app and how to navigate. Uber didn’t do any training for those things.

Even though the driver furnished their own car and paid all vehicle expenses, the DOL thought it was irrelevalent because the drivers were integral to Uber’s business.

DK Note: I think this argument could be made for any business. If you hire a cleaning service, having a clean office is integral to your business so they must be employees. If you hire an answering service, getting messages from your customers is integral so they must be employees. Since it’s true for every business, what is unique about the argument for Uber being an employer.

The DOL said that nothing the driver could do would affect profit or loss.

DK Note: Now that’s ridiculous. Drivers get to pick when and how much they drive. One of the issues I’ve heard from successful Uber drivers regarding the complaining drivers who don’t make much money is that the later group insists on working 9 to 5. The successful drivers know that they should work when there is demand. That means, depending on where you are, that you’re working holidays and nights most of the time. That’s a managerial decision and it greatly influences how much money you can make. The DOL got this wrong.

I think the decision by DOL is wrong.

This is compounded by the fact that the driver had set up a California corporation to receive payment for her services. Employees don’t set up corporation to receive payment. She stated, as part of her case, that after she told Uber to pay her corporation she changed her mind. I think that was likely posturing so that she could bring the case. The contract was between her company and Uber, though. That means a contractual dispute should have been between her corporation and Uber. That would have been nonsensical and the whole case should have never have been heard…

Read the full story at Independent Contractor v Employee: What Really Happened with Uber?

I really like this article because Diane Kennedy takes a position and explains how she got to it.  Instead of simply reporting what happened, she offers her opinion.  Thanks Diane!

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