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Impact on the “gig economy” of NLRB’s Redefinition of Joint-Employer Standard

| Sep 30, 2015 | Personal Injury, Workers’ Compensation

Economies evolve and change over time, thus standards and definitions must be continually reviewed to ensure that the protections the law provides can be applied to the workforce as it currently operates. In the digital age, and in an era when subcontracting labor is an increasingly common event, the NLRB has set forth to redefine the New Joint-Employer Standard.

In terms of defining what an employee is, in part for the purpose of clarifying workers’ compensation issues, the NLRB determined to define the relationship between employer/employee, and to determine whether or not there was direct, indirect, or the potential for control over prevailing work conditions.

Based on the NLRB’s opinion in Browning-Ferris, a joint-employer relationship exists for employees of companies such as Uber and Lyft. These companies have attempted to skirt existing laws by labeling their employees as contractors. This has saved both companies, and many others, untold millions of dollars. However, the contractor classification they have bestowed upon those working on behalf of the company’s has left these individuals without coverage should something happen to them or their vehicle while performing duties for the company. Indeed, many are finding out that their own insurance companies consider the use of their vehicles as temporary taxis negates the liability and collision coverage they carry.

The NLRB’s decision this past month effectively identifies the tasks Uber and Lyft drivers are performing as being the same as those the company would be required to perform if those tasks were not outsourced. This opens the door for them to unionize should they so desire and decide to mobilize. If this occurs, it is likely that they would collectively push for legislation that would formally define them as employees with all the rights and privileges that would entail.

Uber and Lyft are part of a growing trend within the employment sector. It’s a trend where employees aren’t employees, they’re contractors. Under the present laws, companies such as Uber and Lyft are not required to provide workers’ compensation coverage for their employees. As such, should a person performing tasks for either company be injured in the performance of those duties, the companies bear no legal responsibility for compensation. With the growth of this so called “sharing economy,” it’s an issue that labor commissioners across the country are grappling with.

In light of the NLRB opinion and recent court decisions, it’s clear to personal injury lawyers in Chicago that this is changing and state’s are beginning to close the loopholes so that drivers working on behalf of Uber and Lyft will receive the protections the workers’ compensation system provides. In places such as Alaska, Uber has been ordered by the court to pay Alaska nearly $78,000 in unpaid workers’ compensation insurance for the 6 months that the company maintained operations in Anchorage. As before, Uber had argued that their drivers were contractors, not employees, and as such the company believed they were not required to pay the workers’ compensation premiums.

States such as California have already ruled on this issue and determined that Uber drivers are employees of the company and not contractors. Thus, should Uber wish to operate in either Alaska or California, they must provide workers’ compensation insurance to cover any medical care that would result following any workplace injury that occurred during a driver’s performance of their tasks.

Ask any personal injury lawyer in Chicago, and they’ll tell you just how important it is to update the laws and regulations to reflect the prevailing gig economy that’s emerging. It’s no longer just trucking, construction, maintenance, and housekeeping services that are being subcontracted by large companies. One of the most recent examples occurred earlier this year when FedEx settled multiple class-action suits by drivers claiming they were deliberately misclassified by the company in an attempt to cut expenses.

Of course, the evolving economy is is raising a number of legal questions, and a potential new classification of employee. A third category if you will. Proponents say that creating a system where workers would be subject to regulation, and wherein employers would share a burden of expenses including Workers’ Compensation, but not Social Security and Medicare, would solve the problem. Pointing to European employment classifications which have already done so, they argue that it is a win-win for both business and employee alike as it creates a streamlined balanced between economic viability of the business, flexibility for the contractor, and security for both.

With up to 40% of the US workforce expected to be considered freelance, contract employees by 2020, there’s not a moment to spare in redefining the employer/employee/contractor relationship in the eyes of the law. Failing to do so would leave millions of Americans exposed to the costs and burdens work-related injuries can pose.