Independent or Not? It DOES Matter!

1099 or W-2? That's the question. 

1099, is the answer given by the California labor commission on Tuesday in regards to whether or not Uber drivers are independent contractors or employees.  Uber has come to be known as the "next big thing" in transportation, often being a much more popular choice than taxi cabs or rental cars in some instances.  A passenger puts in their request and a "regular person" in a "regular car" shows up to pick you up to take you to your destination.  Although under the Uber name, some would feel that this "regular person" is no different than the independent taxi driver.  However, the CA labor commission doesn't think so.  Per Claire Zillman for Fortune, "The degree of control that Uber has over its drivers makes all the difference. Uber drivers must pass background and DMV checks, they must register their cars with Uber, and their cars must be less than 10 years old. Drivers’ passenger approval rating must not fall below a certain score. And Uber sets the price for each trip and the driver receives a non-negotiable service fee." While the ruling isn't final, this could be a major shift for the company worth almost $40 billion because that could mean paying minimum wage, employee expenses, and workplace benefits, back-dated and current. 

Why does that matter? 

For most states, an hourly employee starts to receive overtime pay of 1 1/2 times their pay once they work more than 40 hours. In the state of California, an employee earns 1 1/2 times their pay once they work more than 8 hours in a day, and 2 times their pay once they work more than 12 hours in a day. Those hours include the time that the employee is under the control of the employer, meaning all of the time that an employee is permitted to work, whether or not they are required to do so, per the Media Services site. Just think of all of the hours that an Uber driver can work since they typically choose when they want to work and where. That's great for the employee but not so great for Uber. If this ruling sticks, the best way out would be for Uber to let go of some of their control by loosening the requirements and ultimately pushing themselves back into the much wanted "company-independent contractor" space. 

I'm interested to see how this turns out.