The ride-sharing company Uber recently announced a preliminary $100 million agreement to settle claims alleging that it improperly classifies its workforce as independent contractors. Because the settlement involves the foremost business entity in the new gig economy, this is a groundbreaking agreement that could provide guidance to many other emerging businesses that take advantage of the sharing environment. For all other businesses, it serves as a stark reminder of the pitfalls that can result from categorizing your workers as contractors.
What Does This Deal Mean For All Other Employers?
For traditional businesses outside the sharing economy, this deal is a good reminder that the law favors workers being classified as something other than independent contractors. If it is a close call, a court or government agency examining your business will probably consider your workers to be employees, entitled to all the rights and benefits the law (and your policies) allow.
Just last year, the U.S. Department of Labor (USDOL) issued an Administrator’s interpretation aimed at addressing what it characterized as the “problematic trend” of mis-classification, sending a signal that these cases will be an enforcement priority for the foreseeable future.
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