Technology Firms Seek New Category of Worker Status

As it now stands, there are two types of workers: Employees and independent contractors. Now, a number of technology firms, like Uber and others, are seeking the creation of a third category of worker, somewhere in between.iphone1

In workers’ compensation law, the categorization of an worker is critical. Employees, by-and-large, are covered by workers’ compensation insurance if they are injured or become ill on-the-job or in the course and scope of employment. Independent contractors, meanwhile, cannot expect these protections.

The former should receive relatively quick response from the company on coverage of medical bills and a portion of lost wages and/or death benefits. For them, negligence is generally not a factor that precludes them from benefits, though they are generally less than what one might receive prevailing in court. Independent contractors can take the companies for which they work to court for injuries or illness, and they can even receive compensation for losses like pain-and-suffering (not available to workers’ compensation recipients) – but they have to prove negligence.

The line between who is an employee and who is an independent contractor has always been a bit fuzzy. Some companies label workers as independent contractors (to avoid paying the workers’ compensation insurance, taxes, etc.), when in reality, the worker’s more fits the definition of an employee. A fair number of workers’ compensation cases have been won, even when the worker was classified as an independent contractor, because the industrial commission and/or the courts determined the worker had many attributes that more closely mirrored an employee.

In recent years, there have been a number of cases in which there has emerged a sort of hybrid of worker, with equally strong arguments being made for each classification. These involve technology firms that mostly offer on-demand services: A ride, grocery shopping, food service, etc.

The New York Times recently tackled this issue in an article titled, “A Middle Ground Between Contract Worker and Employee.” The writer touched on how Munchery, an on-demand food preparation and delivery service, initially classified all drivers as independent contractors. They didn’t get the benefit of minimum wage and overtime, they weren’t eligible for unemployment and they couldn’t receive workers’ compensation if they got hurt while working. But then, two years ago, the company shifted course completely and made its drivers all employees. They now get health benefits, assuming they work at least 30 hours weekly.

Such a shift is indicative of the fact that there is a level of ambiguity when it comes to worker characteristics. For example, some might work as few or as many hours as they wish, but they might also receive rigid instructions on how to perform certain tasks.

For this reason, the argument has been raised that the federal government should create a third type of worker category. In a recent article for The Brookings Institution, the former chief economist and former deputy labor secretary to President Obama called on the government to establish a third category that would grant workers more rights and protections than they would have under independent contractor status, but don’t force them to fit the mold of employee status.

There are some who argue that isn’t necessary, and that companies simply need to decide what kind of model best suits them. Although there may be less upfront cost for independent contract work, the company has to expect turnover rate may be high and quality may be less than desired.

If you have been hurt at work and are unsure of your options for compensation, call us today for guidance.

Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:

A Middle Ground Between Contract Worker and Employee, Dec. 10, 2015, By Noam Scheiber, The New York Times

More Blog Entries:

OSHA: Lumber Mills Repeatedly Expose Workers to Danger, Dec. 13, 2015, Charlotte Workers’ Compensation Lawyer Blog

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