Uber and Lyft Lawsuits Reflect Seismic Nature of Independent Contractor v. Employee Battle Uber and Lyft Lawsuits Reflect Seismic Nature of Independent Contractor v. Employee Battle

Uber and Lyft Lawsuits Reflect Seismic Nature of Independent Contractor v. Employee Battle

Earlier this month, a California court indicated it would approve a $27 million settlement of claims that app-based, ride-sharing service Lyft incorrectly categorized its drivers as independent contractors. This follows on the heels of Uber settlements on both coasts of the same types of claims for over $100 million.
 
What is going on?
 
Turns out the 21st century apparently will be serving as the battleground in the U.S. for an epic struggle over the nature of employment. In one corner stands traditional law, where working for someone means being their employee. The Obama Department of Labor echoed this worldview most recently with their “Interpretive Bulletin” of 2015-1 wherein it stated in part:
 
In sum, most workers are employees under the FLSA (Fair Labor Standards Act)’s broad definitions. The very broad definition of employment under the FLSA as “to suffer or permit to work” and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor. (emphasis added)
 
In the other corner stand 21st century businesses, entrepreneurs, and even some workers, who want the flexibility to treat workers as independent contractors, working “gigs” e.g. particular assignments, for particular companies, at flexible locations for a discrete period of time, sometimes simultaneously, hence the common references to the “gig” economy. Such work efforts reflect the newfound flexibility for all parties with the new technologies: the internet; the smart phone; tablets; and massively powerful laptops, hooked to an internet hotspot or home wireless network.
 
The millions of dollars thrown about in settlements show the high nature of the stakes. Sometimes even a settlement at any price appears to be impossible because a company’s very business model depends on independent contractor status for its workers.
 
What does this mean for the average employer? Any use of independent contractor status must be done with great care and specialized labor and employment legal advice. Simply having all concerned sign an “independent contractor agreement” means virtually nothing. Instead, the actual duties must fall within the most recently established legal “safe harbors” to minimize the risks of a lawsuit, a lawsuit that could run into the millions of dollars. Prudent employers will seek an ounce of prevention versus a pound of cure.

For more information laws regarding independent contactors, contact David Carr or another member of our Labor, Employment, and Immigration group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
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