Workplace Issues

New State Laws Support Uber’s Business Model

Uber classifies drivers as independent contractors rather than employees.
Matthew HellerDecember 10, 2015

Uber is making headway in getting states to support its business model, which classifies drivers as independent contractors rather than employees.

The model has been disputed in states such as California, where drivers contend in a class-action lawsuit that they should be treated as employees, which would entitle them to back pay and reimbursement of expenses.

But, according to Reuters, state legislators in Ohio and Florida are now joining North Carolina, Arkansas, and Indiana in moving ahead with regulations requiring that drivers for Uber and other ride services be designated as contractors in new laws governing so-called transportation network companies.

Uber contends that its model is valid because its smartphone app simply connects riders and drivers, who own their cars and pay their own expenses.

“The contractor requirement in the new state laws could help Uber limit the potential damage if it were to lose the California lawsuit and also head off similar challenges in other states,” Reuters noted.

In Ohio, state Rep. Bob Hackett said Uber, Lyft, the taxi industry and other parties were involved in drafting the transportation network bill.The state Senate cleared the bill on Wednesday, sending it to the House, and it is expected to be approved.

“I believe they are independent contractors. And the bill says the State of Ohio believes that they are independent contractors,” Hackett told Reuters.

In Florida, the legislation passed a state House committee on a bipartisan 10-1 vote. “In Florida we want to be an inviting economic climate for people exercising their own liberty, to make their own choices about employment,” said Florida state Rep. Matt Gaetz, adding that the variations among Uber drivers, with some working long hours and others doing it on the side, supports the independent contractor model.

But Shannon Liss-Riordan, who represents drivers in the California class action, believes such bills “dock” workers’ rights. “It is somewhat scary they are trying to bury that provision in the legislation,” she said.

Bills on the designation of Uber drivers have also been introduced in New Jersey and Alabama but have not been enacted.