In the first part of this post, we took note of the remarkable growth of the sharing economy. Perhaps the highest profile example of this is the ride-sharing company Uber, which is already thought to be worth more than $60 billion.
In this part of the post, let’s look at some of the emerging legal issues in the so-called gig economy, which is so at odds with traditional notions of employer and employee.
Many of these issues concern the definition of an “employee” for tax and labor law purposes.
Sharing companies typically try to assert that they aren’t employers who have to make payroll tax payments and shoulder other burdens such as workers’ compensation and unemployment insurance payments. Instead, the theory is that the companies merely provide an online platform to connect two private individuals.
But what if a sharing company actually exercises considerable control over the work that is provided? Depending on the facts and circumstances of a specific case, it may be that the person providing the service is actually an employee, not an independent contractor.
This is the premise of several class-action lawsuits being brought against sharing companies. One of these lawsuits is against Uber, on behalf of Uber drivers in California. Other companies involved in litigation challenging the classification of workers include Postmates, an on-demand delivery service based in the Bay Area, and Lyft, Uber’s main rival in the ride-sharing business.
In short, stay tuned. There is much that must be clarified regarding the legal status of workers in the sharing economy.