There is a long history of businesses that try to deprive workers of the protections and benefits they are entitled to under the law by wrongly treating them as independent contractors, rather than employees. Now, some workers and regulators are accusing companies like Uber, which connects cars with passengers on mobile apps, of doing the same thing to the thousands of drivers, couriers and others who work for them.
Agricultural businesses, textile mills, construction firms and other enterprises have often classified workers as contractors to lower their costs by, for example, not paying workers the statutory minimum wage and overtime, not making Social Security contributions and not offering workers’ compensation for on-the-job injuries. Just last month, FedEx agreed to pay $228 million to settle a class-action suit brought by truck drivers who said their classification as independent contractors was wrong because they were required to work 10 hours a day, wore company uniforms and drove trucks that carried the company’s logo.
In recent years, app-based businesses like Uber, Lyft and Instacart have grown rapidly, in part because they signed up tens of thousands of people to work on their services as independent contractors. Uber, the most successful business in this sector, has signed up more than 160,000 of what it calls “driver-partners.” There is no question that the companies in what some people call the “gig economy” would not have been able to grow so fast if they had hired all of these people as employees.
Some of those workers are now accusing these companies of skirting federal and state labor laws. Drivers in California, for example, are suing Uber and Lyft in separate cases, demanding that they be treated as employees. And last month, the California Labor Commissioner’s Office ruled that a driver who filed a complaint against Uber was an employee, not a contractor. The agency ordered the company to pay the driver, $4,150 in business expenses and interest. Uber is appealing that decision.
Executives at these companies say their business model is so new and different that they cannot be considered traditional employers. They also say that most of their workers do not want to be treated as employees because they would lose the flexibility to work when and how often they want.