In an article appearing in The New York Times last week, it was reported that the NY State Department of Labor ruled that two (2) former drivers for Uber are eligible for unemployment compensation benefits. In so doing, the DOL found that the drivers were employees of Uber and not independent contractors. While this ruling applies only to the two (2) drivers in question, it obviously has a bearing on Uber’s other drivers in NY State – and possibly elsewhere!
This decision follows one last year in California where that state’s labor commissioner ruled that an Uber driver was an employee and not an independent contractor. Uber has faced similar rulings in other states and, generally, has prevailed. Presumably, Uber will be appealing the NY State DOL ruling.
Typically, these types of cases turn on the degree of control a company exercises over the worker in question. Apparently, the NY DOL was not impressed that the Uber drivers own their own cars, pay their own expenses and normally set their own hours.
The message to be received by all entities using what they classify as independent contractors is that an internal audit should be conducted to ascertain whether such classifications are defensible. Deferring that audit may mean that the company will be spending much more time and money when the DOL (or another governmental agency) comes knocking.
For more information on worker classifications or other labor and employment questions or concerns, please contact Philip Mortensen.