Independent Contractor or Employee Classification

New York Supreme Court Rules that Uber Drivers Are Employees

Independent contractor or employee classification is a distinction that employers must make when building business relationships and also for taxation and insurance purposes.

Recently, the New York Supreme Court upheld a decision that Uber drivers qualified as employees. The legal issue arose when drivers sought unemployment benefits after no longer driving for Uber. The New York Department of Labor (DOL) determined that Uber was an employer. However, Uber objected and took legal action to appeal the issue. The case finally reached the New York Supreme Court. As a result of reviewing the case, the court deemed Uber liable for unemployment insurance benefits owed to its drivers.

The Legal Basis for Independent Contractor or Employee Classification

Independent contractor versus employee classification is a complicated legal area. The reason for its complexity is that an employer can classify workers differently. Classification depends on whether it is for tax purposes, unemployment benefits or workers compensation.

The Court held several factors as evidence that Uber had an employee relationship with drivers, including the facts that Uber:

  • Controlled drivers’ access to customers
  • Calculated and collected fares
  • Set the drivers’ rates of compensation
  • Provided a navigation system
  • Tracked the driver’s location by using an app throughout the trip
  • Controlled the vehicles
  • Precluded certain driver behavior

This issue regarding Uber and other rideshare companies is not unique to New York. Other states and cities around the nation have been dealing with driver classification. The gig economy has resulted in many different types of work relationships.

In fact, California sued Uber in May 2020 to seek an injunction that would force rideshare companies to reclassify drivers as employees instead of independent contractors. Despite the fact that courts granted the injunction, a few weeks later, California voters passed Proposition 22. Prop 22 allowed ridesharing app companies to continue classifying their drivers as independent contractors.

Do You Have Concerns About Employee Classification?

Call (718) 275-6500 to arrange an appointment with Stephen D. Hans & Associates, P.C.



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