Summary: Recently there has been a great increase in the use of application based ride-sharing. With increased use comes increased possibility of driver injury either by the hand of a passenger, a third party, or in an accident. Heavily litigated, the question of whether app based ride-sharing drivers are actually independent contractors, as the companies claim, or if they are legally considered employees, has become an issue over the past few years. If workers are legally considered employees then they would be eligible to receive employee benefits such as workers compensation. If workers are legally considered to be independent contractors, they become wholly financially responsible for their own on-the-job injuries and illnesses.

Topics covered:

Introduction
Independent contractor or employee
Driver injury
Cost of injury
Independent contractors
Court decisions
Benefits
Conclusion

Introduction

With the recent boom of application based ride-sharing popularity, one question that is continually resurfacing is, “Where does liability fall when a driver suffers an injury?” Increased usage of this technology has brought rise to increased on-the-job injury and illness, suffered by the drivers. Several drivers have brought the ride-sharing companies to court claiming that they deserve to be classified as employees due to the nature of the work they are performing. Are Uber and Lyft drivers technically classified as employees, or independent contractors, and what does that distinction entail?

Independent Contractor or Employee

In a normal situation involving on-the-job injury, the worker is generally covered by workers compensation. Workers compensation is a form of insurance providing wage replacement and medical benefits to employees who are injured or become ill resulting from workplace conditions. In exchange for workers compensation coverage employees relinquish their right to sue the employer in case of workplace-caused illness or injury.

Under workers compensation law most workers providing services to a for-profit business will be deemed an employee of that business, and therefore must be covered by the employer's workers compensation insurance. Whether or not a worker is an employee is generally dependent upon facts, decided on a case-by-case basis, and contingent upon factors such as the degree of control the employer has over the worker, the method of payment, the furnishing of equipment or materials, and the right to hire and fire. There are several factors that are examined in order to determine whether or not a worker is an independent contractor. Some of the most common factors that are considered in making the designation are as follows:

·Right to control: the degree of direction and control an organization has over the person they contract with to perform the task. If the organization controls the manner in which the work is performed, it is an indication that the job is being performed by an employee. If the person doing the work is largely in control of the time and manner of the work he is performing, it indicates that the job is being performed by an independent contractor.

·Character of work: if the character of the work being performed is consistent with the work that the hiring organization is performing, it is indicative that an employee is performing the task. If the work is substantially different from the work performed by the employer then the work is likely being performed by an independent contractor.

·Method of payment: An employee will likely be paid on an hourly or salary basis. Employment is generally indicated by the tax with-holdings, and provision of other employee benefits. A business paying cash for labor, or paying on a task-by-task basis is probably paying an independent contractor.

·Furnishing equipment: If the business supplies the equipment required to complete the job, it is likely furnishing the equipment to an employee. If the worker is expected to supply their own supplies to complete a task, it is likely that that worker is considered to be an independent contractor.

·Training: If the employer provides more than minimal training to the worker, it is indicative of an employer/employee relationship.

Driver Injury

Although most of the ride-sharing horror stories available through the media are about passengers being victimized by drivers, sometimes drivers themselves are physically or verbally abused by passengers. There have been reported incidents of spitting, punching, kicking, stabbing, and car-jacking, along with hundreds of incidents involving driver injury in case of a car accident. If a driver is considered an employee, then injuries that occur during the course of employment would be covered by workers compensation. If the drivers are considered independent contractors then there is no workers compensation coverage and the injuries that occur during the course of employment are not covered.

Cost of Injury

Without workers compensation, when a worker suffers serious injury from an accident or from an incident with a passenger, the worker will have to take the business to court in order to recover for lost wages, medical expenses, and inconvenience. Frequently a severe injury will prevent the worker from continuing to participate in that line of work, sometimes the worker's main, or only, source of income. Often the worker will not have enough money to hire a lawyer and pay necessary court costs after being out of work, so court is not always an option.

Independent Contractors

Although drivers for ride-sharing companies may think they qualify as employees, they do not—legally speaking. The big players in the app-based ride-sharing field are under no obligation to provide the same worker protection for independent contractors as they are for employees, including workers compensation. The big ride-sharing companies have all maintained that their workers are independent contractors instead of employees, and the tendencies of the companies back up that claim. Independent contractors are broadly free to control large aspects of their work, including what hours to work and what clients to pick up. When the workers are afforded this freedom, they become solely responsible for any injury they receive while working. On the other hand, the ride-sharing companies who hire drivers provide training, have fairly high standards for the vehicles that can be driven, and perform extensive background checks before allowing someone to drive for them.

Court Decisions

Several courts have found that the Uber workers are considered to be independent contractors. Since Uber workers provide their own equipment, their vehicles, are paid by the job, and have complete control over what hours they work, the U.S. District Court, N.D. California dismissed a claim by the Uber drivers that they were employees in the case O'Connor v. Uber Techs., Inc., 58 F. Supp. 3d 989 (N.D. Cal. 2014).

The U.S. District Court, D.C. heard a case where the passenger brought action against the ride-sharing company and the driver after the driver stabbed the passenger following an altercation. The plaintiff alleged negligent hiring. The company was found liable for the actions of the driver, despite the independent contractor designation. Search v. Uber Techs., Inc., 128 F. Supp. 3d 222 (D.D.C. 2015). In Cotter v. Lyft, Inc., a suit brought by drivers of a ride-sharing company against the ride-sharing service alleged that it violated California wage and hour laws by classifying them as independent contractors instead of employees. The court refrained from reclassifying the drivers from independent contractors to employees due to the amount of control each driver has over the hours and times he works, and the variance that freedom causes between each drivers case. At the point the case was brought to court, there was such a risk for the drivers and for the ride-sharing company that deciding either way, without first allowing a jury to hear the case, could cause a huge detriment to one party, either the company, the driver who works 60 hours a week, or the driver who works 60 hours over his whole ride-sharing career. Cotter v. Lyft, Inc., No. 13-CV-04065-VC, 2016 WL 1394236 (N.D. Cal. Apr. 7, 2016). All in all, the courts have largely decided to stay with the independent contractor classification up to this point in the litigation.

Benefits

There may be some hope for ride-sharing drivers though. Taxi-drivers in America are also considered to be independent contractors, but are offered workers compensation in several major jurisdictions due to the violent nature of their jobs. Ride-sharing apps eliminate some of the risks that go along with the occupation, such as publicly handling money, and the ability to choose hours and clientele, and the ability to limit pickup/drop-off locations to areas deemed safe. Some risks still remain, such as working alone, picking up intoxicated clientele, and the lack of safety barriers in the vehicles. Providing workers compensation for ride-sharing app drivers could benefit the companies in certain circumstances. If a worker can prove that the injury was caused because the company was negligent in some way, the worker could sue the company for an enormous amount of money.

Despite these benefits of providing an independent contractor work-force with workers compensation, in some aspects it doesn't make sense. Generally workers compensation covers lost wages in the event of an on-the-job injury. With the amount of leeway a driver is given with the amount of hours worked, the time of day worked, and the type of clientele that the driver chooses to pick up, the amount of losses that could occur during a given period of time could vary greatly.

Conclusion

Lawsuits over worker classification can take years to resolve, and can end up hurting all involved parties more than what could be gained by judgment. Instead of resorting to a convoluted legal process that is so deeply dependent on the facts and circumstances of each individual case, perhaps the government, or the ride-sharing companies themselves, should implement minimal protection guidelines or requirements for independently contracted workers. The sharing-community is a swiftly growing movement, and in order to promote change, innovation, and certainty for workers, there should be a standard of protection for the inherent risks of the business despite worker classification.