Are new workers’ compensation laws needed for Uber and Lyft drivers?

Michigan lawmakers pass new auto insurance laws for app-based ride-sharing services but fail to address workers’ compensation benefits for drivers.

We saw an interesting blog post from Michigan Auto Law about new auto insurance laws passed by the Michigan Legislature. House Bills 4637, 4639 and 4640 set liability limits for drivers with and without passengers, create exclusions from coverage, and address payment of No Fault benefits to passengers.

New auto insurance laws are a first-step into regulating ride-sharing services. Missing from this discussion is whether drivers should be entitled to workers’ compensation benefits.

Disputes about whether Uber and Lyft drivers are employees or independent contractors have been raging across the country. According to the Wall Street Journal, Uber recently agreed to pay $100 million to resolve class-action lawsuits in California and Massachusetts.

By deliberately misclassifying employees as independent contractors, ride-sharing companies avoid having to purchase mandatory workers’ compensation insurance. This has a real human cost when drivers get hurt and cannot support their families.

Amendments to the Workers Disability Compensation Act (WDCA) in 2011 changed who is considered an employee. On and after January 1, 2013, IRS revenue ruling 87-41 is to be used to determine if an employer-employee relationship exists. Factors to be considered include:

(1) Instructions; (2) Training; (3) Integration; (4) Services Rendered Personally; (5) Hiring, Supervising, and Paying Assistants; (6) Continuing Relationship; (7) Set Hours of Work; (8) Full Time Required; (9) Doing Work on Employer’s Premises; (10) Order of Sequence Set; (11) Oral or Written Reports; (12) Payment by Hour, Week, Month; (13) Payment of Business and/or Traveling Expenses; (14) Furnishing of Tools and Materials; (15) Significant Investment; (16) Realization of Profit or Loss; (17) Working for More Than One Firm at a Time; (18) Making Service Available to General Public; (19) Right to Discharge; (20) Right to Terminate.

House Bill 4637 creates a new test for Uber and Lyft drivers. A transportation network company driver is considered an independent contractor, and not an employee, if all of the following conditions are met:

(a) The transportation network company does not prescribe the specific hours during which the transportation network company driver is required to be logged in to the transportation network company’s digital network, (b) The transportation network company does not impose any restrictions on the transportation network company driver’s ability to use other transportation network companies’ digital networks, (c) The transportation network company does not assign a transportation network company driver a particular territory within this state in which he or she may provide transportation network company prearranged rides, (d) The transportation network company does not restrict a transportation network company driver from engaging in any other occupation or business, (e) The transportation network company and the transportation network company driver agree in writing that the transportation network company driver is an independent contractor.

We believe creating a new standard for transportation network company drivers is a step backward. Should other industries also get their own specific test? Where does the slippery slope end? Updated workers’ compensation laws are needed for emerging technologies like ride-sharing services to protect individuals hurt on-the-job.

Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (855) 221-2667 for a free consultation today.

Related information:

Uber pays $100 million to settle class action lawsuits

Photo courtesy of Creative Commons, by Falcon_33.

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