Several recent legal debates involve drivers who contract for driving services such as Uber and Lyft. These debates address the status of the driver; whether a driver is considered an employee of the service, or whether the driver is an independent contractor. Several states, including California and Utah, have determined that these drivers are employees and not independent contractors. As a result, drivers have several rights and responsibilities as employees that they would not have as contractors.
Employees enjoy several benefits that are not offered to the independent contractor. Independent contractors are required to obtain their own medical insurance and report their own taxes to the IRS. On the other hand, employees are offered medical insurance benefits, paid sick leave and paid vacation. Independent contractors are only paid when they work, and receive no vacation or sick leave benefits. In addition, the record-keeping requirements for employees are much less than those for independent contractors. The employer is required to withhold taxes and keep tax-related records for employees. Taxes and record-keeping issues are a heavy burden for the independent contractor. There are also more protections for employees under labor laws. Finally, independent contractors are responsible for gas, maintenance and insurance; employees can demand reimbursement for these costs.
As employees of driving services, drivers have several responsibilities that they would not have as contractors. When the courts deem these drivers to be employees, they will be subject to scheduling and reporting rules that independent contractors are not bound by. This will make it more difficult for some drivers to enjoy the flexibility and autonomy of working when they want and taking only the driving assignments they choose to accept. In addition, employees can be required to adhere to a dress code and have certain equipment in their vehicles; independent contractors are largely exempt from these requirements.
While court battles are still raging over this issue, and driving services are trying to fight the classification of drivers as employees, it is not likely that judges will relent on this issue. As a result, passengers of these services may see some changes in the future. The main change that is expected is a rise in fares for rides. In addition, the flexibility of scheduling and usage of these services for passengers may be impacted. And finally, the value of the companies themselves may be reduced, which will affect the profit margins for the companies and investors.
To learn more, contact a company like East Coast Driver Solutions.