Uber Drivers: A Disputed Employment Relationship in Light of the Sharing Economy

Ride-sharing companies such as Uber Technologies Inc. (“Uber”) have revolutionized the ride-sharing industry. In the realm of employment classification, Uber has a substantial financial motivation to classify its drivers as independent contractors because it frees Uber from financing workers’ compensation programs, payroll taxes, and employee benefit programs. Others argue that Uber should not be able to escape such direct liabilities. In light of this ongoing debate, the U.S. District Court for the Northern District of California has recently denied Uber’s class-action settlement agreement, thereby preserving the issue of whether Uber drivers should be classified as employees or independent contractors. Federal courts have traditionally decided employment relationships by applying one of three factor-based tests: the right-to-control test, the economic realities test, and the entrepreneurial opportunities test. My Note first applies each employment classification test to Uber drivers, and subsequently evaluates the competing arguments for employee and independent contractor statuses. The Note’s final section explains why Uber drivers should be classified as independent contractors under a slightly modified economic realities test