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 association and will meet with members several times throughout the year. This is not a labor union, but drivers will be able to elect leaders who can discuss major concerns with company management.
It’s unlikely that the association will be granted any significant powers. If that happened, it could run into legal challenges. Labor law in the United States does not allow companies to control or dominate any worker organization. This law was designed to prevent company-run unions that advocate for the business, rather than the workers.
Of course, Uber could allow an outdoor union to run the association. This would allow the association to bargain for its members and could also help Uber avoid legal problems.
How these changes will impact Illinois Uber drivers is yet to be determined. Questions that a driver may have regarding on-the-job injuries should be directed to a Chicago workers’ compensation attorney for clarification.
In Chicago, Mayor Rahm Emmanuel has proposed an ordinance for ride-sharing services like Uber and Lyft. Howard Ankin agrees and supports the proposed changes. You can read about the changes here.