Since 2012, Brett Helling has built expertise in the rideshare and delivery sectors, working with major platforms like Uber, Lyft, and DoorDash.
He acquired Ridester.com in 2014, the first ridesharing marketplace, leveraging his direct experience to enhance the site. His insights at Ridester are recognized by Forbes, Vice, and CNBC.
Expanding his reach, Brett founded Gigworker.com and authored “Gigworker: Independent Work and the State of the Gig Economy“, demonstrating his comprehensive knowledge of the gig economy.
Owner, Ridester.com Updated on: February 21, 2024
Key Takeaways
Whether you’re driving with UberX or driving with Uber Eats, the global ride-sharing company views you as an independent contractor, not an employee.
This classification applies in the United States and Canada. Yet, Uber drivers are considered employees in other countries. An Uber driver’s classification ultimately comes down to the legislation of the country they work in.
The first step in holding the employee vs independent contractor debate is understanding the definition of each classification.
Here’s the scoop on the main differences between these classifications:
An employee is a person who works for only one company, and that company has direct control over how the work is done and the working hours.
Another aspect of employee status is that your employer provides any equipment you need to get the job done. This is a key difference between Uber drivers and those who work at taxi service companies. An Uber driver uses their personal car, while taxi drivers use company cars.
Finally, employees are entitled to benefits, such as pensions, health and dental insurance, and minimum wage.
On the other end of the spectrum, you have independent contractors.
An independent contractor isn’t limited to working with just one company. For example, an Uber driver can also register on Lyft and look for rides there. Also, a company that hires independent contractors doesn’t have a say in how or when these people work.
Since independent contractors are responsible for providing any equipment they need, they’re also responsible for any repair or maintenance costs.
On another note, independent contractors don’t get benefits like social security and health insurance. They’re also not protected by minimum wage laws and can be terminated immediately by the employer at any time.
Uber’s stance on classifying its drivers is pretty clear. The company views its drivers as independent contractors who use its platform as a way to connect with willing riders.
So, why does Uber operate like this? The answer is all about money and their business model of cutting costs.
By classifying its drivers as independent contractors, Uber avoids having to take on millions of dollars in expenses.
If Uber classified drivers as employees, the company would be on the hook for payroll taxes, social security requirements, and employee health insurance. This isn’t to mention car maintenance and repair expenses.
Although a lot of Uber drivers aren’t pleased with being classified as independent contractors, others see it as a good position to be in. The main reason is the flexibility they enjoy when deciding when to work. This comes in handy, especially for those who have other jobs.
Since Uber driver classification is a hot topic of debate, there are a lot of legal battles surrounding it.
A prime example of such legal battles is the California Assembly Bill 5 (AB5). This bill was proposed to change the classification of some gig workers from independent contractors to employees.
It was designed specifically to increase regulation on companies like Uber and Lyft which hire large numbers of independent contractors. The bill required these companies to use a “three-pronged test” to prove that a worker is an independent contractor and not an employee.
The AB5 didn’t see the light of day in the end. In November 2020, California voters approved Proposition 22. This law overrides AB5 and classifies drivers on app-based ride-hailing and delivery services as independent contractors.
Proposition 22 was an initiative backed by none other than Uber, Lyft, and DoorDash.
