Ride-Sharing Services Must Pay for Workers’ Compensation Coverage

Ride-sharing company Uber is now available for services in North Carolina in Asheville, Charlotte, Fayetteville, Outer Banks, Piedmont Triad, Raleigh-Durham and Wilmington. In South Carolina, it’s available in Charleston, Columbia and Greeneville.
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This is a convenient service for users hoping to catch a quick, affordable ride in a clean vehicle, ready to pick them up at their location within minutes.

But Uber has never fashioned itself a company that provides rides. Rather, it has insisted, it is a technology company that connects riders to rides. Drivers, the company insists, are independent contractors who must pay for their own liability insurance, are paid by the ride and aren’t entitled to benefits such as unemployment or workers’ compensation.

However, two decisions recently have challenged that assertion, which could mean a host of changes for the company – and the benefits its drivers receive.

The first was handed down by the California labor commissioner, who ruled that a driver who filed a claim against the ride-sharing driver is in fact an employee. The scope of that ruling was narrow – only as applicable to that specific driver, who sought reimbursement of vehicle-related expenses.

But it set a strong precedent for the company’s 160,000 drivers nationally that could make the firm eligible to pay:

  • Workers’ compensation insurance
  • Employment taxes
  • Gas and maintenance expenses
  • Employee health benefits

Workers may be entitled to collect some of that in back pay, depending on their situation. That case is a good reminder not just to other ride-sharing services (Postmates, Lyft, Instacard, TaskRabbit, etc.) but all companies that when you misidentify workers, there is a hefty price to be paid.

In a second recent noteworthy news piece on this subject, Uber has agreed to settle a case brought by the Alaska Department of Labor and Workforce Development for $78,000. The agency had accused the company of misclassification of workers.

The company operated in Anchorage for about six months before it left amid a special investigation that delved into the issue of whether it was properly paying its workers – and the government. Here again, the company contended the workers were independent contractors, but the state asserted they were in fact employees.

The case was pending, but no formal charges had been filed when Uber decided to pull its operations out of Alaska altogether. That meant there was never a formal hearing. This settlement was a way to resolve the outstanding issue without having to take the case to court, which the state saw as pointless given that the company was no longer operating there.

Just after the company ceased operations, a superior court judge ruled in that case it could operate in the state without paying workers’ compensation insurance and the other benefits – but only if it was offering its initial free ride program. The judge barred the company from driving until it could come to an agreement with the city of Anchorage about whether it violated taxi law ordinances.

Negotiations between the company and the city have thusfar gone nowhere.

If you have been injured at work, contact the Lee Law Offices at 800-887-1965.

Additional Resources:
Uber settles over unpaid workers’ compensation insurance, Sept. 4, 2015, By Sean Doogan, Alaska Dispat News

More Blog Entries:
North Carolina Workers’ Comp Law Would Target Cheating Businesses, Aug. 28, 2015, Asheville Workers’ Compensation Lawyer Blog

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