In the current gig-economy, some companies have constructed huge enterprises based on business models that classify their entire workforce as independent contractors. By classifying their workers as independent contractors rather than employees, these companies shift their costs onto the workers and communities they serve.
Traditionally, companies paid payroll taxes on employees. And, companies provided benefits (such as workers’ compensation) for employees. Neither is true with independent contractors. The costs and taxes are shifted to the worker. Work-related injury and disability costs are shifted first to the worker. But, when the worker is unable to pay, these costs are borne by the entire community. In past years, I’ve written several articles discussing why basic workers compensation benefits are important to our entire community.
Employee classification matters for several reasons. Today, I’ll stick to a topic I frequently discuss — Workers’ Compensation In Alabama.
The Battle Over Employee Classification
Are rideshare drivers employees or independent contractors? Companies like Lyft and Uber have long-classified their drivers as independent contractors in writing. But, as I wrote in a prior post — What the company calls you is NOT the determining factor.
Employee or independent contractor? When I first started practicing law, the issue often arose in injury cases involving commercial truck drivers. Many trucking companies identified their drivers in writing as “independent contractors.” But, the companies then treated the drivers as employees by controlling their activities. Trucking companies would often control the routes, equipment, behavior, hours, and even dress, of drivers. Drivers were clearly employees in everything but name.
Alabama law traditionally looked beyond the terms used by the company and worker. If the focus was on the terms, then every company would simply label its workers as “independent contractors” to avoid providing important benefits like workers’ compensation. The real deciding factor under Alabama law — Whether or not the company (employer) reserved the right to control the work activities. If so, the person was probably an employee and likely entitled to workers’ compensation benefits.
Over the years, we’ve successfully helped many truckers get basic workers compensation benefits. We’ve also successfully fought this issue in a number of cases involving injured construction workers. By getting basic benefits such as medical care, many of these workers were able to heal and return to gainful employment.
With rideshare companies, the issue became cloudier. These drivers use their own vehicle. And, they log into apps to perform their work. Companies, like Uber and Lyft, call their drivers independent contractors. These companies also battled in courts and legislatures across the country to maintain the independent contractor classification. The battle has played-out with some varying results. Because rideshare companies could not count on courts to exempt them from basic worker protections, they have spent millions lobbying state legislatures for new laws.
Our Legislature Creates An Exemption For Rideshare Companies
This brings us to the current Alabama legislative session. In Alabama, State Senator Arthur Orr sponsored a bill that would basically exampt rideshare companies from work comp requirements. I’m not really surprised Senator Orr sponsored another bill to remove workforce protections. Year-after-year, he sponsors legislation to arbitrarily cut-off medical treatment for injured workers after a set period of time. And, he has regularly sponsored a bill to arbitrarily cut-off benefits for our most disabled workers, those suffering total disability, after a set period of time. These proposals are unfair to working families. They are also short-sighted. If passed, they would end up imposing burdens on families who could least afford it. I’ve written about those proposals in the past. You can read some of my prior articles on this blog. So, I’ll get back to today’s topic – Work comp benefits for rideshare workers.
This legislation would create a new definition of worker, called a “marketplace contractor.” What an interesting title. The legislation then lists several requirements that must be met for the label “marketplace contractor” to apply. But, it’s basically written to cover rideshare drivers, like those who work for Uber, Lyft, Grubhub, etc.. The legislation is basically written to insure these companies never provide work comp benefits.
Governor Ivey will likely sign the new legislation. It will be interesting to see how this issue develops and impacts communities as ridesharing increases on our roadways.
Rideshare Driver Injuries Are An Important Issue
Rideshare drivers spend their working hours in cars. So, they face an increased risk of injury or death on the roadway. But, their risk of injury is much broader than just car accidents. Many rideshare drivers must deal with unruly or intoxicated passengers. If you look at statistics for taxi cab drivers over the years, you will see a huge rate of injury from violent assaults by passengers. We need to keep in mind that the job (rideshare driver) puts these workers at higher risks for both car crashes and assaults. As a community we need to protect our workers when they are placed at an increased risk.
I’m sure companies like Uber will respond to the legislative changes by saying that they provide injury protection insurance for drivers. They do. But, like everything else, these companies have shifted all the costs to the individual drivers. The driver pays for it. There is another huge difference between basic benefits provided through workers compensation versus through private insurance policies. That is, insurance companies can change the policy terms. Do we really want workers subjected to private coverage that may change next year or the year after (whenever the insurance executive decides)? Wouldn’t it be better for these workers to have the protection of basic benefits under the law?