After a much-publicized struggle to break into the New Orleans market, Uber- the ride sharing service, has finally arrived. Though UberBlack, the luxury version, has been operating in New Orleans for some time, the announcement of Uber’s more mainstream service, UberX, was met with excitement by locals, especially those anticipating rides during festival season. After slowly convincing New Orleans City Council members, Uber officially announced its local launch on April 16, 2015. Uber touts itself as a company which will “create hundreds of job opportunities for independent entrepreneurs . . .” See what they did there?
As “independent entrepreneurs,” as opposed to employees (or as a 1099 vs. a W2, as some would say), Uber drivers are afforded the opportunity to become their own boss. They are not mandated to follow instructions from a supervisor, no clock-out hours for lunch, and certainly no overtime requirements. However, with this admittedly attractive flexibility comes a lack of benefits, and technically, a lack of wages.
Recently, a class-action lawsuit has been filed against Uber (and similar “independent entrepreneurial” services) alleging that the drivers are more properly classified as employees, which insinuates that they are entitled (allegedly) to certain benefits and protections that stem from such a relationship. These suits, often known as “Misapplication Suits” are not new to the legal landscape of workers’ compensation law. What is new, however, is the impact independent entrepreneurs will have on that same legal landscape. Judge Vince Chhabria of the US District Court for the Northern District of California aptly noted that “the jury [in the Uber case] will be handed a square peg and asked to choose between two round holes.”
While the focus is currently on the ever-growing service on-demand industry, proper classification of personnel is critical.