Today’s post was shared by Workers Comp News and comes from www.jdsupra.com
Recently, the ride-sharing program, Uber decided to settle two major class-actions lawsuits, filed in California and Massachusetts. These cases will help define how the company classifies drivers in the future.
The Purpose of the Lawsuits
The drivers in both lawsuits claimed that Uber had misclassified them as independent contractors, when they should have been employees, and that they did so to save money. A switch to hiring employees, rather than relying on independent contractors would have been a major blow to the company’s business model.
Under the terms of the settlement, Uber may continue to classify its drivers as independent contractors. This means that they are not responsible for covering payroll taxes, workers’ unemployment insurance or workers’ compensation for its drivers.
The Implications of the Lawsuits
Although Uber is not responsible for providing workers’ compensation insurance for its drivers, the lawsuits did require some changes. Uber will be paying out 100 million dollars to the drivers involved in the suit and all drivers will now be able to solicit tips from their passengers.
Uber also agreed to assist with the creation of a drivers’ association in the two states where the lawsuits were filed. This is a rare action for a company that considers its drivers to be independent contractors.
Not much information is available about what this association will be responsible for. Uber will be paying for some of the costs of the…