Uber drivers are now employees!
Well, kind of. And only in Oregon. Which is home to only a tiny portion of Uber drivers.
Here’s the deal. Brad Avakian, Oregon’s Commissioner of Bureau of Labor and Industries, issued an opinion on the status of Uber drivers yesterday: According to Oregon law, they ought to be considered employees rather than contractors.
Avakian said that, because the drivers work for the company’s benefit, they’re economically dependent on Uber. After all, the company’s business model is based on legions of drivers being available night and day. This is different than, say, a health technology company that hires a contractor to do design work.
The opinion isn’t the same as a law, but it means that if Uber drivers were to sue for employee status in Oregon, they’ll have this on their side. And a lawsuit isn’t at all unlikely. Uber is currently fighting a class action suit filed by drivers in California.
In a previous post I used the IRS’s guidelines to show how companies can tell the difference between employees and contractors. Let’s see how those criteria apply to Uber drivers:
Employees vs Contractors
- Behavioral Control: Does Uber control how, where, and when drivers do their jobs? Nope, drivers can work on their own terms, which often signals that a worker is a contractor. But Avakian said that even though Uber drivers have their own cars and work whenever they want, the company dictates the technology they use to do their work. And in Oregon, that is a sign of an employee.
2. Financial Control: Does Uber direct or control the financial and business aspects of the worker’s job? Avakian says that it does because Uber maintains complete control over the rates drivers charge. Unlike employees, contractors typically set their own rates.
3. Type of Relationship: The IRS has left this one ambiguous. Uber drivers use their own cars and set their own hours, but because Uber requires its drivers to use the technological infrastructure of its choosing, Avakian believes the drivers are employees. It’s not always easy to tell whether a worker is an employee or a contractor, and the Uber situation is definitely one of those cases.
If Uber complies with Avakian’s opinion, the company would have to begin treating Oregon drivers as employees and pay payroll taxes, contribute to workers comp, and reimburse expenses (think: gas). But it may take a lawsuit before Uber makes these changes.
“I’m hoping that before anything like that happens, that this opinion will be helpful to Uber and other similar companies in knowing how Oregon’s law could be applied,” Avakian said, adding that his bureau consulted with Uber in the process of researching.
Coming as a shock to absolutely nobody, Uber disagrees: “The Oregon Bureau of Labor and Industries issued this opinion without apparently talking to any drivers and after a brief five minute phone call with Uber that came out of the blue,” wrote an Uber spokeswoman. “Unsurprisingly, it’s full of assertions that are plain wrong. It’s disappointing that a public body would have so little regard for the facts.”
This is far from the first time Uber has dealt with the employee vs contractor conundrum. It continues to maintain that its role is merely to connect private contractors with customers, like a Craigslist for rides.
This issue also illustrates the inequity caused when various states treat the same workers differently. For example, inDinero CEO Jessica Mah has written about how pro cheerleaders are contractors in every state except for California, even though the NFL, NBA, MLB, and NHL all operate in numerous states.
The lesson is an easy one: If you hire workers, categorize them correctly from the beginning.