Uber settles employment status dispute with thousands of drivers

Gig economy presents unique challenges for people hurt on-the-job and the future of workers’ compensation.

Uber Driver

CNN is reporting on another settlement between Uber and thousands of its drivers regarding employment status. Uber insists its drivers are independent contractors and not entitled to employee benefits like minimum wage, overtime, or sick leave. Details of the settlement were not disclosed but the settlement will cost between $146 million and $170 million. This comes on the heels of a driver strike that occurred last week seeking a living wage and increased job security. Uber wants to put many of these issues to rest ahead of its upcoming IPO.

We find this dispute fascinating because it shows how technology is changing employment. Nobody thinks about these issues until it happens to them. The gig economy presents a unique set of challenges for people hurt on-the-job. Drivers who are classified as independent contractors are not entitled to receive workers’ compensation benefits. This means they are on their own for medical bills and lost wages. A scary prospect for anyone who is working full-time and trying to support a family.

Businesses are required to purchase workers’ compensation insurance in Michigan when they have 3 or more employees at a time or 1 employee working for 35 or more hours per week for 13 or more of the preceding 52 weeks. This is to protect employees form accidents that happen on-the-job. It is a safety net that has existed in our state for over 100 years.

Unfortunately, some employers game the system by misclassifying employees as independent contractors. This shifts the burden to other payers who must pick up the tab when an accident occurs. It also leaves disabled employees out in the cold when they cannot work and need medical treatment.

Employee misclassification hurts the competitiveness of other businesses who must pay additional taxes and purchase required workers’ compensation insurance. Uber competing with taxi services is a clear example of how an industry can be turned upside down up by new technology. Is there really any difference between an Uber driver and a taxi driver? Where should the line be drawn in this new gig economy? What factors should be used to determine employment status? How do we hold businesses responsible for covering their employees hurt while working?

Michigan law considers services as “employment” when an individual meets the requirements of IRS revenue ruling 87-41. A complicated patchwork of factors that do not represent economic reality in 2019. Set-hours of work and payment by the hour should not be determinative. Uber drivers might not appear to be employees on the surface but that should not automatically make them independent contractors.

Michigan lawmakers need to come up with a plan to ensure that Uber drivers are protected if they get hurt while working. Disabled people do not simply evaporate because no workers’ compensation insurance is available. Taxpayers pick up medical bills through programs like Medicaid and Medicare. Medical costs are shifted to group health insurance raising premiums for everyone else. Cash assistance from the state is not a substitute for lost wages.

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 (844) 201-9497 for a free consultation today.

Related information:

Uber continues struggle with workers’ compensation problem

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