Hiring independent contractors, rather than employees, can be an effective way for companies to save some money. In exchange, independent contractors have more freedom than employees. They get to make their own hours and decide where they work.
The down side is, unlike employees, independent contractors are responsible for covering all of their own business expenses, insurance, and they have no job stability. Some workers consider this a fair trade in exchange for the extra freedom that comes with freelancing, while others prefer the stability that comes with having a steady paycheck.
Because independent contractors bear a heavier burden than employees, state and federal labor laws are strict when defining the parameters of an independent contractor. She must be a worker who is truly free in her work environment.
Uber, the San Francisco-based ride-hailing service, classifies its drivers as independent contractors, but some of the drivers are taking issue with this definition.
All over the country, drivers have been filing wage and hour lawsuits against the ride-hailing company, alleging they were misclassified as independent contractors, when they were effectively working as employees.
Courts in at least five other states have ruled in Uber’s favor, but the most recent ruling by the California Labor Commissioner’s Office has declared that a former driver for Uber was an employee, not an independent contractor.
Among other things, the Commissioner’s Office pointed out that Uber provides its drivers with phones and has a policy of deactivating its app if drivers are inactive for 180 days. If the drivers were truly independent contractors, they would use their own phones and be able to decide if and when to stop working for Uber.
The driver in question, Barbara Ann Berwick, worked for Uber for about eight weeks between July and September of 2014. In that time she alleges she worked about 60-80 hours per week and earned a total of $11,000. Because she was responsible for covering all of her own business expenses (maintaining a car can be very expensive) and all of her own taxes, Berwick alleges that, in the end, she was paid less than minimum wage.
The California Labor Commissioner’s Office has ordered Uber to pay Berwick $4,152.20 in expenses and other costs for the time she spent working for the company. Uber is appealing the decision.
Although it’s the most recent, the California decision is not the only one to rule against Uber. In May, authorities in Florida determined a former Uber driver should be classified as an employee. Uber is also appealing that decision.
This California ruling stands out because the Commissioner’s Office formally laid out its arguments for why Uber drivers should be considered employees. The decision affects only Ms. Berwick directly, but it could encourage other similarly situated workers throughout the state to file lawsuits of their own, especially if Uber fails its appeal.
Uber is not the only one to be affected by the California ruling. Its rival, Lyft, and Instacart, a grocery delivery service, both operate in much the same way. If Berwick wins the appeal, companies like Lyft and Instacart may have to face similar lawsuits from their drivers.
Our Naperville, Glen Elynn and Wheaton wage and hour attorneys and unpaid overtime lawyers and attorneys are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers misclassify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.
Nationwide Consumer Rights is based in Chicago and Oakbrook Terrace. We represent clients throughout the country who have not been paid for the overtime hours that they worked. If you believe that you are owed overtime wages, contact one of our Chicago class action attorneys by phone at 630-333-0333 or through our online form.