Florida says Uber driver is employee, not contractor

Florida has decided that Uber drivers are not freelance contractors, as Uber has long claimed them to be, but are, in fact, employees of the company.

The decision, brought by the Florida Department of Economic Opportunity, upends the very business model that has propelled Uber to a $41 billion startup that has steamrolled across markets from Beirut to Boise, and is bound to be vigorously protested by the company. By designating drivers as contractors — Uber even goes so far as to refer to drivers as “customers,” saying that drivers license the app from Uber like any technology consumer — Uber doesn’t have to pay for health care, disability, overtime, sick days, maternity leave or vacation, as most employers must. That keeps their profit margins up and enables the company to grow at breakneck speed. No cumbersome employee interviews to conduct.

Florida’s decision affects for the time being one man, but it may have ripple effects across Uber’s Florida operations. State authorities this week notified Darrin McGillis, 46, a former Uber driver who was fired earlier this spring. He filed for unemployment benefits, and after an investigation, the state determined “you are an employee of that company” and McGillis “is entitled to receive benefits” backdating to March 29.

Uber declined to comment on McGillis’ case. Uber has until June 3 to appeal the state’s decision to classify McGillis as an employee, and until June 9 to appeal the decision that he has a right to unemployment benefits.

McGillis shared the documents, letters written by the Department of Economic Opportunity’s Reemployment Assistance Program, with the Mercury News. The decision came the same day a group from Stanford University released a survey showing that contract workers for on-demand companies such as Uber struggle with financial uncertainty and lack the critical safety net of health care and other benefits.

The Miami Herald on Thursday published a story about the state’s decision and McGillis’ story. According to the report, Uber deactivated McGillis’ account after the driver demanded the contact information of a passenger after his car was damaged during a ride. Uber refused, citing privacy concerns, and McGillis was reimbursed for the damage. But he continued to press for information about the passenger.

Florida determined that there was no evidence that McGillis committed any misconduct at work, so he can collect benefits.

This post has been updated since reaching Uber on Friday.

Photo taken on April 24, 2014, shows an image of the Uber smartphone application. By BRITTA PEDERSEN/AFP/Getty Images.

 

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  • Judee Wudruff

    This is a great decision by the Florida court and may affect companies that have similar practices. The designation of ‘independent agents’ to workers that earn money for a company is a scam that, for example, online phone marketing companies have run for a long time. As was stated in the article, companies do this to avoid paying taxes, extend health insurance benefits and generally low-ball wages. Uber is an evil company — a leech that sucks off a city’s infrastructure by not paying for anything (local taxes for each ‘independent agent’ wage, tariff for using city streets and services, etc…).

    • goneafk

      Whether or not Uber is “an evil company” or “a leech that sucks off a city’s infrastructure” is subject to opinion. But regardless, it is irrelevant to whether they should be considered an employer. They simply don’t meet the test of an employer. Uber drivers use their own equipment, set their own hours, and develop their own strategy for maximizing their income. Those are the very test for an employee situation vs. an independent contractor.

      • alrui

        Yes & if you dont like that business model go drive for a traditional cab co!

        • apache501

          That’s the option most employees usually have

      • fight4thepeople

        All of the factors you listed are certainly factors of independence, but Uber exercises control in other ways. Also, uber could not operate as a business without its drivers. The drivers are part of the day to day operation of the business, which weights toward the employment side of the scale. I’ve also heard that Uber requires its drivers to furnish snacks and drinks to the riders, which is another factor of control. Finally, they can terminate a relationship with their drivers with no penalty whatsoever. I’ll let the courts speak on that again:

        In Cantor v. Cochran, 184 So.2d 173 (Fla. 1966), the court in quoting 1 Larson,
        Workmens’ Compensation Law, Section 44.35, stated: “The power to fire
        is the power to control. The absolute right to terminate the relationship
        without liability is not consistent with the concept of independent contractor,
        under which the contractor should have the legal right to complete the project
        contracted for and to treat any attempt to prevent completion as a breach of
        contract.”

      • apache501

        To meet “guarantees” they need to work a certain amount of hours and take an amount of customers designated by the company. They also require that the driver maintain a high level of customer service to meet the “hourly guarantees”. The company also lets them know where Surge is happening (so they aren’t really choosing their hours).
        They do all of that AND let them know they need to make a payment on their equipment that they “choose” to finance (at moribund interest rates) thru the company. Those are just a few ways Uber handles their drivers like employees.

    • alrui

      Great liberal reaction!

      • apache501

        I had that reaction and I’m a libertarian.

        • alrui

          To your credit a libertarian is far more rational then a liberal, I.E. leftist:-)

  • alrui

    Of course a state full of blow hards and morons like FloriDUH would side with a loser who even after being reimbursed continues to press for personal info – why? Probably so he could beat the guy or some other brainless stunt!

    • apache501

      Seems like the guy had a valid beef. Everything about his situation “showed” he was an employee.

  • Funken Duncan

    If you are a private contractor, dont you set your own prices. Uber controls the price of every fare.

    • goneafk

      Uber does control the price of the fare. But the driver chooses whether to take the price. This is no different than any other contract negotiation. “Will you do the job for X dollars?” Yes or No.

      If you don’t want to accept Uber’s network limitations, you are more than welcome to use a competing companies deal, or you can create your own. That’s the entire point. Nobody is forced to drive for Uber.

      • fight4thepeople

        It’s a lot more complicated than that. Uber requires a lot of things of its drivers, and that’s why they were held to be an employer. If they lightened up on their control, they probably wouldn’t be in this situation. Here’s the Supreme Court of Florida’s take on the factors of control:

        In Cantor v. Cochran, 184 So.2d 173 (Fla. 1966), the Supreme
        Court of Florida adopted the tests in 1 Restatement of Law, 2d Section
        220 (1958) to determine whether an employer-employee relationship exists,
        including:

        (1) A servant
        is a person employed to perform services for another and who, in the
        performance of the services, is subject to the other”s control or right of
        control.

        (2) The following matters of fact, among
        others, are to be considered:

        (a) the extent of control which, by the
        agreement, the business may exercise over the details of the work;

        (b) whether the one employed is in a distinct
        occupation or business;

        (c) the kind of occupation, with reference
        to whether, in the locality, the work is usually done under the direction of
        the employer or by a specialist without supervision;

        (d) the skill required in the particular
        occupation;

        (e) whether the employer or worker supplies
        the instrumentalities, tools, and a place of work, for the person doing the
        work;

        (f) the length of time for which the person
        is employed;

        (g) the method of payment, whether by time
        or job;

        (h) whether or not the work is part of the
        regular business of the employer;

        (i) whether or not the parties believe they
        are creating the relation of master and servant;

        (j) whether
        the principal is or is not in business.

    • fight4thepeople

      Employee vs. independent contractor relationships are one of the most complicated legal issues that are decided when it comes to workers comp, reemployment assistance benefits, etc. Setting the price is certainly a factor of control, but the state has to weigh all of the aspects of the relationship when taken as a whole. In this case, Uber excercised a little too much control in the relationship and is getting dinged for it. They can certainly rework their business model somewhat and probably get a different result the next time one of these cases goes before the state. DOR hasn’t ruled on the entire class of drivers yet, just one guy.

  • Chuck Cotton

    There is no question they are EMPLOYERS and the drivers are employees. Who Says? The IRS tax Code and the Department of Labor. Every driver through America is entitled to backwages, overtime when earned, payroll taxes, workmen’s com, expense reimbursements and other earned benefits. Why? These app companies are clearly transportation carriers and CONTROL everything, the app, the rates, the money, pays the insurance premium, hires and fires, ABSOLUTE CONTROL. Their web sites are fraudulent and social media which circumvents not only the drivers out of earned income, benefits, tips, employment taxes, any overtime pay, but both state and federal government is defrauded out of payroll and income taxes as well as sales taxes where required in certain states and municipalities.The pending federal employer vs employee litigation pending the San Francisco US Federal Court has issue bench statements prior to trial , likely the courts will rule these app companies are EMPLOYERS. REALLY, IT IS A NO Brainer.
    Every state and federal court will rule fore the drivers. Fortunately, Uber, Lyft, Sidecar all have plenty of money to pay the hundreds of millions of dollars due from inception and all future wages and income.

    • alrui

      Your analogy is dead wrong, if so same could be said for many people in sales who work independently under a corporation as well – perfect example is real estate agents. Whats next we want the nanny state to regualte every form of employment? That is if anyone is employed after TPP!

      • fight4thepeople

        443.1216, Florida Statutes
        (13) The following are exempt from coverage under this chapter:
        (n) Service performed by an individual for a person as a real estate salesperson or agent, if all of the service performed by the individual for that person is performed for remuneration solely by way of commission.

        Real estate sales agents working solely on a commission basis are specifically exempt from coverage for reemployment assistance benefits under state law. Doesn’t matter whether they are employees or not. The same goes for insurance agents working solely by way of commission.

 
 
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