Two federal courts in San Francisco this week will begin to consider the question for the on-demand era of startups: Are workers who use the technology platforms to find jobs independent contractors or full fledged employees?
In separate lawsuits, drivers have sued Lyft and Uber, the two popular ride-service firms, contending that they are owed reimbursement on gas and vehicle maintenance as employees would receive, reported Reuters.
The outcome of the cases would affect workers only in California. But if the drivers win, the companies could be forced to comply with state laws requiring they pay workers compensation and unemployment insurance, the news service said.
Such a ruling could affect the firms’ valuations as well as those of similar firms that provide on-demand services such as house cleaning and coding.
Dean Baker, co-director of the Center for Economic and Public Policy Research in Washington told Reuters:
If you’re subject to the same rules as everyone else, investors might start asking ‘Are you still this hot company?’ The answer may be no.
But many people are liberated by the income provided by these new business models, Shelby Clark, the chief executive of Peers, which represents independent contractors, told the Wall Street Journal. “At the same time, working in the sharing economy can feel isolating and confusing,” Clark said.
In many ways, the laws have yet to catch up, Wilma Liebman, former chairwoman of the National Labor Relations Board, told the Journal in a separate story.
“A third category becomes necessary when you have people who are borderline and economically dependent on the company,” she said.
Photo by Associated Press