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The Differences Between Employee and Independent Contractor in California

Alexander D. Napolin, Esq.

In a recent class-action lawsuit, Uber agreed to pay out 8.4 million to drivers in California who were hired as independent contractors instead of employees. This case is important because it highlights the difference between these two classifications, and how they are treated under the law. For Uber drivers, this can be an important distinction to make, as it can impact things like benefits and taxes. At the same time, there are some who prefer the flexibility that independent contractor status provides. Others would rather have the benefits and protections that come with employee status. In this blog post, we will discuss the difference between being an employee and independent contractor, why this difference matters, and how this lawsuit sets a precedent for companies to follow.

Employees and Independent Contractors: A Distinction That Matters

Employees

In September 2019, California passed Assembly Bill 5 stating that workers must be classified as employees unless an employer can demonstrate several things. For one, the worker must be free from the employer's control and direction in connection to their work performance. They must also perform work that is outside the usual course of the company's business. Finally, they must be customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. If a worker does not meet all three of these criteria, they will likely be classified as an employee by AB-5.

There are many benefits to being an employee. For one, employees are entitled to things like a minimum wage, overtime pay, and workers' compensation. They also have the right to form or join a union, and they are protected from discrimination and harassment. Furthermore, if an employee is terminated, they may be eligible for unemployment benefits.

The Differences Between Employee and Independent Contractor in California

Independent Contractors

On the other hand, independent contractors are not subject to the same laws and regulations as employees. They are not entitled to things like a minimum wage or overtime pay. Furthermore, they are not protected from discrimination or harassment, and they are not eligible for unemployment benefits if they are terminated. Independent contractors are also not covered by workers' compensation. They are not entitled to benefits if they are injured on the job.

So why would anyone want to be classified as an independent contractor? For many Uber drivers, it is the flexibility that comes with this classification. Independent contractors can choose when and where they work, which gives them a lot of control over their schedule. They are also not required to work a certain number of hours. Finally, they can take on other jobs in addition to driving for Uber.

Are Uber Drivers Independent Contractors

Now that we have a better understanding of the difference between an employee and independent contractor, let's take a look at how this applies to Uber. As mentioned earlier, Uber has been accused of misclassifying their drivers as independent contractors instead of employees. This means that they are not entitled to the same benefits and protections as employees. Given the conditions laid out above, it is clear that Uber's employees are in fact employees and not independent contractors.

The Uber Class-Action Lawsuit

Background Information On Uber and Proposition 22

As some background for this case, it is important to mention Proposition 22, which was approved in 2020 and then challenged for being unconstitutional. Prop. 22 involved ride-hailing companies (including Uber) and whether or not they could legally classify their drivers as independent contractors instead of employees. Despite being originally introduced about two years ago, it is still hotly contested and will likely be revisited in the coming years.

Knowing Your Rights as a Worker in California

The Settlement for Ubers Employees

The lawsuit was originally filed in 2013 by two Uber drivers who alleged that they had been misclassified as independent contractors. In 2016, the case was certified as a class action, which meant that it could proceed on behalf of all current and former Uber drivers in California. After years of litigation, the case was finally settled on July 21, 2021. Under the terms of the settlement, Uber will pay $8.4 million to drivers who were misclassified as independent contractors.

This is a significant amount of money, but it is important to keep in mind that it will be divided among all of the drivers who are part of the class action. Given that there are tens of thousands of drivers in California, it is unlikely that any individual driver will receive a large sum of money from the settlement. Uber also changed some aspects of their business, and will now give drivers more information about their fares as well as giving drivers the option to turn off their app if they do not want to receive any more fares.

This lawsuit is important because it sets a precedent for other companies who may be misclassifying their employees as independent contractors. It also highlights the importance of correctly classifying workers, as there are many benefits that come with being an employee.

Are Uber Drivers Independent Contractors

What This Case Means for the Future of Uber

This case is likely to have a significant impact on Uber and other companies who use independent contractors. The settlement itself is not overly large, but it sets a precedent that these companies can be sued for misclassifying their workers. In addition, the changes that Uber has made as a result of the lawsuit will likely be adopted by other companies. This means that drivers will have more information about their fares and will be able to turn off the app if they do not want to work. It is possible this could lead to less income for these companies.

Overall, this is a polarizing situation for individuals working for ride-hailing companies. Some drivers prefer the independent contractor classification because it provides them with more flexibility. Others would rather be classified as employees so that they can receive certain benefits. Regardless of which side you are on, it is important to understand the difference between these two classifications and how it can affect your rights as a worker.

Knowing Your Rights as a Worker in California

If you are working for a company like Uber, it is important to know your rights as a worker. You should also be familiar with the differences between an employee and independent contractor. If you have been misclassified as an independent contractor, you may be entitled to back pay, reimbursement for expenses, and other benefits. An experienced lawyer can help you understand your rights and options under the law. If you have any questions about those rights, or would like to speak to an attorney about your situation, please contact us today. The lawyers at Napolin Accident Injury Lawyer have experience handling these types of cases, and we can help you get the compensation you deserve. Contact us today for a free consultation at (866)627-6546.

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