Employers Beware! Independent Contractors or Employees? Don’t End Up Like Uber

Employers Beware! Independent Contractors or Employees? Don’t End Up Like Uber

On Behalf of | Aug 23, 2015 | blog

A hot employment law topic facing employers today is the misclassification of workers.  Uber has been making national news regarding this very issue because its entire business model is based on hiring workers as independent contractors instead of employees.

So, what does that mean?  Let’s back up for just a second.  Uber is a company that utilizes its phone application to link people to car service.  Instead of hailing a taxi or reserving a car service like most of us have been used to, Uber has changed this by developing software that connects people to private individuals instead, allowing for a system of mapping you to more convenient and competitive providers.

The legal issues have arisen because by hiring thousands of drivers across the country to make money providing Uber’s service, Uber has become a big company with a lot of potentially misclassified employees.  Uber has hired all of their workers as independent contractors, which means it does not have to pay employment taxes, or provide benefits to these people, just to name a few of the major expenses.  If these people were employees, then Uber would have to pay those costs, drastically increasing their labor costs.  This could, potentially, put Uber’s entire business model at risk.

Uber has already faced upset cab and car services companies, but now, in a massive class action lawsuit, they are facing their own workers, who are fighting in court to be classified as employees.  As of this writing, the case is on its way to a jury trial, which will not only cost Uber a substantial amount of money to defend, but if it loses, will also turn its business model upside down.

So how could Uber have avoided this?  Well, we can’t speak for anyone else, however, as employment attorneys, we work with employee classification on a regular basis.   The answer to what Uber is dealing with, is to work closely with your employment counsel to avoid these risks.

Experienced employment attorneys will review your business structure, to understand exactly how you need to use your workers.  The law is tricky in this area, so you do not want to make any assumptions regarding employee classification without consulting with an employment attorney.  An attorney can analyze how you use your workers and correctly guide you on which employees are truly independent contractors and which are not.  By putting time in up front, you can worry about what you do best later, running your business.  Don’t become the next Uber by failing to work with your attorneys and avoiding any employee misclassification.

At Wilson McCoy, we represent employers who deal with this issue regularly, and have the experience to help you avoid unnecessary legal battles.  If you are not sure if you have properly classified your employees, or if you are just starting out and need to be put on the right path, contact our office for a consultation at 407-803-5400 or [email protected].

There is no reason to take on the risks and potential liabilities involved with employee misclassification.  Be proactive, not reactive.  Contact us today.