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Uber is the latest company embroiled in allegations of misclassification

Uber, the ride sharing company, is facing allegation of employee misclassification.

If you follow the news the news, you may have heard stories periodically about employee misclassification, where companies have faced prosecution for wrongly classifying employees as independent contractors. One of the most recent occurrences of this phenomenon came out of California and involved the popular ride sharing service, Uber. This ruling could potentially affect employees of similar ride sharing companies like Lyft across the nation.

About the case

In the case, a driver for Uber filed a complaint contending that the company misclassified her has an independent contractor and not an employee. The California Labor Commission heard the case and eventually agreed with the worker. As a result of the ruling, the commission ordered Uber to reimburse her for the 6,468 miles that she had driven while working for the company. Additionally, she was awarded costs to cover the costs of tolls and interest in the amounts of $256 and $274.12 respectively. Finally, the commission awarded the driver an additional $4,152 for other expenses. Under California law, if the worker is an employee the employer is required to reimburse them for gas, tolls, insurance and other costs necessary to carry out the job.

What does this case mean for Texas workers?

Since this case occurred in California, it does not directly affect similar workers in Texas. However, it is a prime example of employee misclassification that routinely occurs across the nation, including Texas. Although the distinction between the two types of workers may seem academic, it is actually very important, as the worker’s status determines employee rights and benefits, tax implications and liability. Some basic differences between the two are:

  • Work hours. An employee generally works the hours specified by the employer. However, an independent contractor is free to set his or her own hours.
  • Control. If the employer directs and controls the worker’s work, the worker is likely an employee. On the other hand, if the worker has control over how the work is done without input from the employer, he or she is an independent contractor.
  • Benefits. Employees are eligible to receive unemployment compensation, workers’ compensation and overtime benefits (if non-exempt), as well as legal protections while on the job (e.g. wage and hour laws). Independent contractors are not.

Since companies are not legally required to pay for the unemployment benefits, overtime, taxes, workers’ compensation benefits, etc. of their independent contractors, and are shielded from legal liability for their workers’ actions, many have attempted in recent years to illegally misclassify workers as a cost saving measure. According to the Texas Workforce Commission, 35,000 workers in the state were misclassified between 2010 and 2012.

If you believe that you have been wrongly misclassified, it is important to speak with an experienced employment law attorney. An attorney can advise you further about whether there has been a misclassification and help you assert your right to recover the compensation you are due by law.