Uber drivers in California and Massachusetts were initially awarded $100 million in a 2016 settlement with the company. The claim asked that drivers be classified as employees as opposed to independent contractors. While it was thrown out by a federal court, drivers in New York were given unemployment benefits when it was determined that they were employees. Although incidents involving Uber may have gotten the most attention, it is not the only company that incorrectly classifies its workers.
In 2005, 6.9 percent of workers were independent contractors. By 2015, that number had increased to 9.6 percent of workers. Businesses can save money by classifying workers as contractors because they don’t have to pay a minimum wage or provide benefits. Contractors are also required to pay their own employment taxes. However, in addition to harming workers, improper classification can hurt other businesses as well. This is because they are competing against companies that can pass on lower labor costs to their customers.
As a general rule, independent contractors are expected to retain independence as to how they do their jobs. This means that the contractor sets the rate of pay, creates their own rules for working conditions and determines their own schedule. Employees are essentially beholden to their employers who determine their hours, rate of pay and what their job description entails.
Those who are incorrectly classified as contractors instead of employees could take their employers to court. This may result in recovering damages for unpaid overtime or a failure to pay a minimum wage. Workers may also wish to settle a case out of court by working with a mediator to resolve the matter. An attorney may be able to represent an individual in such a case and help obtain a favorable resolution for the client.