For-Hire Vehicle (“FHV”) drivers are part of a booming economic sector with ride-sharing apps like Uber and Lyft. Their classification as an employee or independent contractor is important because there are certain rights associated with each.
Generally, FHV drivers who receive calls from a traditional dispatch base are considered independent contractors. This means they are not entitled to the same benefits and protections as regular employees. Drivers who work for Uber and Lyft are in a different position because Uber and Lyft exercise more direction and control over the work of the FHV driver. Thus, whether an Uber or Lyft driver is an employee or an independent contractor involves a fact-intensive inquiry.
The Differences Between Being an Employee and an Independent Contractor
The Department of Labor treats employees and independent contractors differently, so it is important to know how a worker is to be classified. When distinguishing between the two, the primary factor is determining the degree of control and independence of the driver.
An employee works under the direct supervision of an employer, following specific instructions regarding how, when, and where their work is to be completed. This relationship is typically ongoing, and employees are generally entitled to benefits like health insurance, retirement plans, and paid time off. Employees receive these protections under the Fair Labor Standards Act (FLSA), which also details an employee’s right to minimum wage and overtime pay.
Independent contractors do not have these protections or rights outlined in the FLSA. However, the lack of federal protections is made up for with more autonomy over how they perform their work. Independent contractors are hired for specific tasks or projects, often for a defined period, and have the ability to work for multiple clients simultaneously. Their hiring company does not exercise the same level of control over their daily activities, and contractors usually use their own tools and resources to complete their job.
Are For-Hire Vehicle (“FHV”) Drivers’ Employees or Independent Contractors?
Whether an FHV driver is to be considered an employee or an independent contractor depends upon the facts upon which a claim may arise. For Workers’ Compensation purposes, in New York City, FHV drivers are independent contractors. The New York State Department of Labor (“DOL”) has found both ways. In some cases, the DOL had found FHV drivers to be employees. In other similar cases, the DOL has found FHV drivers to be independent contractors. The DOL engages in ad hoc adjudication. This means there is no bright line rule. Each case is decided on its facts and merits. The DOL makes this determination after it performs a fact-intensive inquiry. Independent contractors generally have more control over their work schedules and often use their own vehicles to complete rides. They are also free to choose when and how often they work, and they may work for multiple companies at once. Since drivers who work for Uber and Lyft exert more control over their access to the app and their use of the app, Uber and Lyft have had a number of adverse DOL decisions filed against them.
As a result of those adverse decisions, the New York Attorney General claimed that the ride-sharing companies systematically cheated drivers out of pay and benefits, calling it the largest wage theft settlement in her office’s history. After many years and ongoing negotiations, the DOL and Uber entered into an unprecedented settlement agreement to resolve both past and future unemployment insurance contributions on behalf of Uber drivers and couriers. Uber paid $290 million and Lyft will pay $38 million to resolve the claims made by the New York Attorney General. Uber was required to make quarterly payments into the New York State Unemployment Insurance Trust Fund and make a retroactive payment to the Unemployment Insurance Trust Fund for payments owed since 2013. New York is the first state in the country with which Uber has agreed to a settlement that addresses both past and future unemployment insurance liability.
What Does This Mean For Drivers?
Most FHV drivers have much more freedom as workers than employees. This includes setting their own schedules and not having to answer to a direct supervisor or employer. Further, FHV drivers often can earn more based on the hours worked, tips received, and the number of rides completed since they may work for multiple companies at once.
Most FHV drivers, unlike employees, do not receive certain benefits such as health insurance, retirement plans, or paid time off. This means that they must pay for their own insurance, as well as pay for their own expenses like gas and vehicle repair. Further, there is no guaranteed paycheck for FHV drivers, so their earnings are fully dependent on how frequently they work. Thus, FHV drivers have much more flexibility than employees, but also have the challenge of managing their own expenses and lack of benefits that employees enjoy.
Though not qualified for minimum wage in most states, in New York City, Uber and Lyft drivers receive a minimum per-ride fee. The same is not true for FHV drivers who receive dispatches from companies other than Uber and Lyft. While Uber and Lyft drivers perform a massive number of trips per day, there are also over 200 livery dispatch bases and over 400 black car dispatch bases. While the TLC also regulates livery and black car dispatch bases, they each operate in a different manner than Uber and Lyft.
Speak With A Transportation Lawyer Today
To determine if you are an independent contractor or an employee in the FHV industry, it is important to consult with an experienced transportation attorney today.
Contribution to this blog by Michael Touma.
