Ride-hailing services such as Uber and Lyft have faced numerous legal battles over the classification of their drivers. While Uber and Lyft have always maintained that their drivers are independent contractors, there have been several lawsuits that have challenged this classification. The question is, are Uber and Lyft drivers employees or independent contractors?
The answer to this question is not straightforward, as it depends on various factors. Generally, an employee is someone who performs services for an employer under the employer`s direction and control, while an independent contractor is someone who is self-employed and provides services to a company but is not under the company`s control.
Factors that determine whether a worker is an employee or independent contractor include:
1. Control: One of the most important factors is the level of control the company has over the worker. An employee is typically subject to more control by their employer than an independent contractor. For example, if a company sets the driver`s working hours, mandates the specific routes to take, or requires drivers to wear specific clothing or adhere to specific grooming standards, it is more likely that the driver would be classified as an employee.
2. Financial independence: Independent contractors are typically responsible for their own expenses, such as fuel, insurance, and maintenance of their vehicles. They also have more autonomy when it comes to setting their prices for services. In contrast, employees receive a regular salary or wage from their employer and have expenses such as fuel and maintenance of the vehicle covered by the company.
3. Duration of the relationship: An employee typically works for an employer for a longer period, while an independent contractor provides services for a specific project or task.
The classification of Uber and Lyft drivers as independent contractors has been challenged in several states. One of the most high-profile cases was the California Supreme Court`s decision in Dynamex Operations West, Inc. v. Superior Court in 2018. In this decision, the court adopted a new classification test called the ABC test, which makes it much more difficult for companies to classify workers as independent contractors. The ABC test determines an individual is presumed to be an employee unless all three of the following factors are met:
A. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
B. The worker performs work that is outside the usual course of the hiring entity`s business; and
C. The worker is customarily engaged in an independently established trade, occupation, or business.
The adoption of the ABC test had significant consequences for companies like Uber and Lyft, as it made it much more difficult for them to classify drivers as independent contractors. California subsequently passed Assembly Bill 5, which codified the ABC test into law, effectively making it much harder for companies to classify workers as independent contractors in California.
In summary, the classification of Uber and Lyft drivers remains a contentious issue. While both companies maintain that their drivers are independent contractors, it is clear that the status of drivers may differ depending on various factors. The legal battles surrounding this issue are likely to continue as states continue to grapple with how to classify gig workers in the modern economy.