When it comes to classifying workers, it seems that Uber has been heading down the wrong road.
The California Labor Commission recently ordered the company to pay over $4,100 to cover the costs of mileage and tolls to Barbara Berwick, a driver for Uber in San Francisco.
Uber believes its drivers are independent contractors, not employees.
Classifying drivers as independent contractors allows the company to be exempt from paying drivers’ insurance, job-related expenses and employer taxes; leaving more funds for operations and expansion.
In theory, it makes sense.
Except for that little $4,100 fine. And whatever fines will follow.
Because there will most likely be more.
The California Labor Commission disagrees with the independent contractor classification, and in this case at least, considers Uber drivers to be employees. Drivers are paid by passengers, but Uber pays drivers a non-negotiable service fee. The company sets rates for trip fares, and is responsible for vetting the drivers and vehicles.
This adds up to control.
There are three main factors which determine whether a worker is an employee or independent contractor:
- Behavioral: Does the company control or have the right to control what the worker does and where and how the worker does his or her job?
- Financial: Are the business aspects of the worker’s job controlled by the payer? (Including how and when the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
- Type of Relationship: Are there written contracts or employee type benefits (pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
The Big Picture
When classifying workers, it’s important to look at the entire relationship, consider the degree of control and direction, and then make a determination.
Classify your workers correctly to avoid fines.
It’s uber important.
Need help classifying your workers? Call managestaff.
It’s what we do.