Uber drivers who worked for the ride-sharing company in Massachusetts and California over the past seven years would have been entitled to roughly $730 million in expense reimbursements if they had been classified as employees instead of contractors, according to recently-filed court-documents. Attorneys for the drivers used a standard mileage reimbursement rate set by the federal government to determine how much compensation driver should have been entitled to. According to Uber, drivers would never have been given that reimbursement rate.
Currently, Uber and its rival Lyft are attempting to settle class action lawsuits brought against them by current and former drivers for the companies. The drivers contend that they should have been classified as employees. If they were employees, they would have been entitled to reimbursement for expenses such as automobile maintenance, gas, and more. Currently, drivers pay those expenses themselves.
A proposed settlement with Uber would pay drivers up to $100 million. The judge must decide if that is a fair settlement. Attorneys for the drivers assert that the value of claims is about $852 million, whereas Uber says the total value of the drivers’ claims is $429 million. The $100 million settlement only represents about 12 percent of the potential $852 million in damages, or about 23 percent of the $429 million in damages. Rival company Lyft agreed to settle its case for $12.25 million, but that deal was rejected by a judge because it only represented about nine percent of the total potential value of drivers’ claims.
After this lawsuit is over, drivers will not be classified as employees. However, those drivers who are involved in the lawsuit could be entitled to thousands of dollars each under the terms of the proposed settlement. In addition to the money, Uber agreed to a new policy which will govern driver termination, which includes appeals for drivers who are terminated by the company. The company will also allow drivers to begin soliciting tips. Finally, Uber has agreed to help create a drivers’ association, which can help drivers organize and pursue their rights against the company.
Although it may not sound like there’s a big difference between being an independent contractor and an employee, the differences are huge. An independent contractor is normally entitled to an hourly wage, or a per-job wage, and that’s typically the extent of the employer’s responsibilities. However, for an employee, an employer must withhold federal, state, and local taxes, pay half of the tax mandated by FICA, pay the full tax required under the Federal Unemployment Tax Act, follow state unemployment insurance tax laws, pay workers’ compensation insurance, and file a number of tax returns throughout the year for employees. In addition, employees may also be entitled to employee benefits offered, including health insurance, vacation days, retirement plans, sick time, and paid holidays off.
The IRS has given guidance to help determine which workers are employees and which are independent contractors. Normally, the more control over how and when the work occurs that a worker has, the more likely it is that he or she is an independent contractor rather than an employee. Normally, independent contractors determine for themselves how work is to be performed, while employers have the right to control how employees perform a service.
Whether or not a worker is an independent contractor or an employee has huge implications for both the worker and the employer. If you believe that your employer has misclassified you as an independent contractor when you are actually an employee, call the Oakland employment law attorneys at Liberty Law at 510-645-1000. We work with clients throughout the Oakland-San Francisco area. Call us today to learn more or to schedule your free consultation.