It’s Business, And It’s Personal

Could worker classification disputes leave Uber, Lyft, stalled?

On Behalf of | Dec 16, 2015 | Business Contracts & Disputes |

The past few weeks have been something of a bumpy ride for companies such as Uber and Lyft. Considering that Uber operates in the Fayetteville area it seems reasonable to think that many users and drivers are following things. We know that attorneys focused on providing legal support to businesses are keeping an eye open.

What seems to be occurring is that an apparent bicoastal rift is forming when it comes to the question of how drivers for Uber and similar ride-service will, could or should be classified — whether as contractors or company employees. And where such questions exist, business disputes are bound to erupt.

Based on just a couple of news stories since early this month, here is how things seem to be breaking down. Uber can claim progress for its preferred business model of identifying drivers as independent contractors. This follows decisions in Ohio and Florida to press ahead with measures to declare drivers as contractors. If those laws are enacted, the states will join North Carolina, Indiana and Arkansas.

Meanwhile, in Seattle, the City Council voted unanimously this week to allow drivers for Uber, Lyft and other companies like them to unionize. And in California, a class-action lawsuit is underway as a group of Uber drivers seek to be classified as full-time employees.

How the drivers are classified is important. If they are contractors, the companies they drive for avoid the legal obligations and administrative burdens that traditional employers deal with. These would include paying for workers’ compensation coverage and some tax issues.

There are some legal observers who question whether Seattle’s effort can succeed. They say the ordinance allowing unionization could violate federal labor law on a couple of fronts. For example, if the drivers unionize and negotiation sets ride prices, it could violate antitrust laws. Indeed, legal challenges are widely anticipated.

How the matter eventually gets sorted out is something worth watching.