Uber, Lyft, Airbnb, HomeAway, TaskRabbit, Homejoy, Instacart, and other companies all represent what we now call a sharing economy. A sharing economy is a flexible economic network of people that share resources – such as equipment, services, and skills – with one another, often at significantly lower cost than traditional retail or employment arrangements. With these new and emerging disruptive models come many far-reaching implications that are surfacing including the question of employee status and workers’ compensation.
Just recently, the California Labor Commissioner ruled in favor of an Uber driver that claimed she was an employee of the ride-sharing company and not an independent contractor and should be entitled to minimum wage, reimbursement for expenses and other benefits. While Uber has appealed this ruling, it does call into question whether such companies have employer-employee relationships with tens of thousands of American workers:
- Are these drivers (in addition to personal shoppers, house cleaners and lunch deliverers) who enjoy the flexibility of setting their own hours eligible for standard employee benefits like overtime pay and workers’ compensation?
- How much control does a company like Uber have over these workers and how does this affect any case that may arise? For example, does Uber’s ability to remove drivers off the platform, set rates, and establish mandates to follow certain protocols amount to an employer-employee relationship?
There are also other workplace implications to be considered depending on how the case in California goes, as described in a recent article in Insurance Journal. For instance, will a company like Uber be responsible for being OSHA-compliant and required to ensure that work conditions are safe? If every “employee” is basically his or her manager, will Uber have to provide state-mandated manager training, such as sexual harassment training?”
The California case against Uber is but one. There is also a class-action suit filed on behalf of workers for house-cleaning company Homejoy, as well as delivery service companies Postmates and Try Caviar, which argues that they have been misclassified as independent contractors when they should be treated like employees. Other similar cases pending against ride-sourcing platform Lyft and grocery-delivery company Instacart. In fact, Instacart just announced that it will allow some contractor workers to become part-time employees, as regulators more closely scrutinize the workforce of these on-demand companies.
How these cases all pan out could ultimately affect the business models of these companies and how successful they continue to be.