​The Recent Uber Debate

The “gig economy,” where workers seek additional income acting as independent contractors is becoming a fact of life in the modern world as wage growth remains stagnant. For some, it’s the sole source of income. However, the benefits of being an employee are lost to those workers, like ride-sharing drivers who may find themselves injured while performing their job duties.

Uber Tests Providing Insurance for Drivers Injured on the Job

The ride-sharing company Uber, looking to attract more drivers and maintain the current stock, is using South Carolina as a test-case for their own form of worker’s compensation insurance for their independent contractors. They are instituting a form of personal insurance where drivers opt-in, paying 3.75 cents per mile for coverage with a maximum limit of $1 million. Uber’s customers in South Carolina will pay an additional 5 cents covering the cost. The driver can use the extra pay to cover the insurance or pocket the money.

Whether Uber Drivers Are Employees or Independent Contractors

The coverage could call the status of drivers into question regarding whether they are employees of Uber or independent contractors. Uber drivers set their own hours and their workplace, such as it is, is not limited or directed by Uber. However, a benefits package – Uber also offers employees savings accounts and health insurance – could suggest that these drivers are in fact employees under the law.

Moreover, if the employee does accept Uber’s offer of personal injury insurance, can they still sue Uber for liability if they are injured while driving a customer? Worker’s compensation is a bargain between the worker and employee. Does the policy create a bargain between Uber and its drivers?

Uber’s contract with its drivers includes an arbitration agreement. Uber drivers can opt out of this agreement as well, as many have. If there is no arbitration agreement, the driver may still sue Uber.

As a practical matter, it may be difficult for a driver to show that Uber is at fault for an on-the-job injury. The Uber driver may attempt to show that they are in fact an employee and so then eligible for benefits under South Carolina’s Worker’s Compensation program.

Current Law Declares Uber Drivers to be Independent Contractors

This may also be a tough task. A federal judge in Philadelphia recently held that Uber drivers are independent contractors, finding that Uber does not exert enough control over the drivers (Uber settled other similar lawsuits). Uber does impose penalties on drivers for refusing customers, for example, which could be a form of controlling work behavior. With the addition of a benefits package like the South Carolina test-case, a judge may see things differently than the judge in Philadelphia.

The gig-economy is increasingly popular. With companies like Uber acting less like a booking agent and more like an employer, drivers in South Carolina could be classified as employees and thus eligible for worker’s compensation. Development in the law is something to keep an eye on.