A class-action suit recently filed in Massachusetts against an on-demand car service alleges the company misclassified its drivers as independent contractors instead of employees. As a result, according to the complaint, the drivers have to bear the burden of expenses that the company should be paying, including the costs of owning or leasing their vehicles, gas and insurance.
The complaint alleges the drivers are employees under Massachusetts law because the service they provide is essential to the business — which uses mobile apps to connect passengers with drivers — and because the company requires drivers to follow detailed rules, such as requirements concerning the cleanliness of the drivers' vehicles, their conduct with passengers, including what they are allowed to say to passengers, and their promptness in picking up passengers and taking them to their destinations. The drivers are graded and are subject to termination based on their adherence to the rules.
A similar class-action lawsuit was filed against a competitor of the company last year. Companies that use smartphone apps to match service providers with people who want to hire them for short-term and often one-time jobs are part of a growing trend. As more businesses become engaged in what has been dubbed the “sharing economy” — also called the peer-to-peer, collaborative or gig economy — the problem of worker-classification disputes is likely to grow.
Companies involved in the sharing economy say they are merely providing a platform to bring people together.However, they may face many of the same worker-misclassification issues as companies using traditional business models. A recent Ninth Circuit case held that a company's delivery-truck drivers in California should be treated as employees, not independent contractors, due primarily to the company's control over the drivers’ work details.
Any of the following actions by a company may be factors in determining whether workers are independent contractors or employees:
Providing detailed instructions about how service providers are to perform a job;
Evaluating the way the work is performed (not just the end result);
Training providers in how to do their work; and
Telling providers when or where to work.