Contractor or Employee?

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Misclassifying Ride-Share Drivers Can Put You at Risk

Ride-hailing services Uber and Lyft have been making headlines in the past few years by defending themselves in lawsuits filed by drivers. What’s at stake is whether or not the drivers should be classified as employees or independent contractors, and if the companies are benefitting – and putting riders at risk – by intentionally misclassifying their drivers.

Worker misclassification – the practice of illegally labeling employees as independent contractors – has been on the rise. More people are choosing the flexibility of working as independent consultants or contractors, and consumers and businesses have literally been cashing in on opportunities created by the growth of the “digital platform” economy. Uber and Lyft have capitalized on advances in technology as well as the increasing numbers of people looking to supplement their incomes.

However, by classifying workers as independent contractors rather than as employees, ride-hailing companies can avoid paying minimum wage and payroll taxes such as Social Security and unemployment insurance, as well as incurring costs associated with workers’ compensation, health insurance and other benefits. As a result, Uber and Lyft have been accused of “stealing wages from drivers earning below a minimum wage and gaining millions of dollars in unlawful cost savings,” ultimately undercutting competitors.

Digital Technology Platform?

Uber argues that it is not an employer, but a digital technology platform that connects riders to drivers. Some judges have disagreed, holding the company liable for paying unemployment benefits to dismissed drivers. While the issue continues to play out in courtrooms across the country, the bottom line is the financial impact on those who are misclassified can be devastating – and this practice impacts riders, too.

For users of ride-hailing services, the key issue is safety. Neither Uber nor Lyft drivers undergo fingerprinting and background checks. Uber doesn’t meet with drivers in person before allowing them to carry passengers, and drivers are never required to check into an office. Unfortunately, incidents involving drivers who are criminal offenders and ridesharing passengers being harmed are becoming all too common.

By comparison, licensed limousine drivers are hired and paid as employees. They receive worker’s compensation, unemployment and must pay state and federal income tax. All professional ground transportation companies conduct face-to-face interviews, and drivers are background checked, fingerprinted and their motor vehicle records are reviewed. Employer companies are licensed by state, local and federal agencies and have an operating license from the local town and state government with a federal I.D. number. They must abide by the Department of Labor laws which include minimum wage requirements.

Limousine services are committed to keeping riders safe when they use a for-hire vehicle. A fully-vetted chauffeur will take you exactly where you need to go, with no stops along the way or last-minute cancellations. If you’ve been looking for a reliable alternative to ride-sharing apps, the New Jersey limousine services and the National Limousine Association will get you to your destination – safely and reliably.