Navigating the Uber Economy
In litigation against ride-sharing companies Uber and Lyft, former drivers have alleged that they were misclassified as independent contractors and denied employment benefits. The companies have countered that they do not employ drivers but merely license access to a platform that matches those who need rides with nearby, available drivers. At stake are the prospects, not only for Uber and Lyft, but for a nascent, multi-billion dollar, “on-demand” economy. Unfortunately, existing laws fail to provide adequate guidance regarding the distinction between independent contractors and employees, especially when applied to the hybrid working arrangements common in a modern economy. Under the Fair Labor Standards Act and analogous state laws, courts consider several factors to assess the “economic reality” of a worker’s alleged employment status; yet, there is no objective basis for prioritizing those factors. This Essay argues that the classification of workers as independent contractors or employees should be shaped by an overarching inquiry: How much flexibility do individuals have in determining the time, place, price, manner, and frequency of the work they perform? Those who select these variables are more independent than those who must accommodate themselves to a business owner’s schedule. Our approach is novel and would provide an objective basis for adjudicating classification disputes, especially those that arise in the context of the on-demand economy. By reducing legal uncertainty, this focus on worker flexibility would ensure both that workers receive appropriate protections under existing law and that businesses are able to innovate without fear of unknown liabilities.
Benjamin Means & Joseph Seiner, Navigating the Uber Economy, 49 U.C. Davis L. Rev. 1511 (2016).