Uber, Lyft Trying To Convince Courts That Drivers Are Not Employees

What’s the difference between a contractor working for you and an employee? Often, an employee will receive benefits like health insurance and workers compensation if something goes awry, among other things, while a contractor is hired to do one job and that is it. Uber and Lyft don’t want their drivers to fall into the employee category and be responsible for all that entails, but thus far they haven’t been able to sway the courts to see it their way.

The ride-hailing companies didn’t move judges into ruling that their drivers are independent contractors instead of employees in two separate rulings this week, reports Reuters, which could mean they and other businesses might be on the line for a slew of employee benefits.

U.S. District Judges Edward Chen and Vince Chhabria in San Francisco federal court said in the two rulings that it would be up to juries to determine what the companies’ drivers are. If they’re employees, as separate lawsuits claim, Uber and Lyft would likely have to reimburse them for expenses like gas and vehicle maintenance, and force them to pay Social Security, workers’ compensation and unemployment insurance.

Right now, drivers pay all outside expenses themselves. Putting the onus on Uber and Lyft to do so would significantly raise the companies’ costs.

Chen said in his ruling on Wednesday that because Uber has the right to fire its drivers, who provide a key service for the ride-hailing app, those two things skew to the side of drivers being employees.

“Uber could not be ‘Everyone’s Private Driver’ without the drivers,” Chen wrote. Because it’s a muddy issue, however, it should be up to a jury.

Chhabria also pointed out how hard it is to figure out which category Lyft’s drivers fall into, as there are characteristics of both in the job.

“The jury in this case will be handed a square peg and asked to choose between two round holes,” the judge wrote. “California’s outmoded test for classifying workers will apply in cases like this. And because the test provides nothing remotely close to a clear answer, it will often be for juries to decide.”

If juries decide ride-hailing drivers are employees, that could ripple out into other industries that rely on a pool of privately contracted individuals to provide a plethora of services on-demand.

While Uber and Lyft are staying mum, an attorney for drivers in both cases is glad judges have chosen to put the question to juries.

“We are very excited about both rulings,” the attorney told Reuters.

Uber, Lyft rebuffed in bids to deem drivers independent contractors [Reuters]