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Several Uber drivers have claimed to be employees, despite their classification as independent contractors. Some of the drivers sued after California passed a law aimed at requiring gig economy companies to classify workers as employees that took effect January 1, 2020. [13] Likewise, many more workers in the gig economy are making similar claims.
The distinction between independent contractor and employee is an important one in the United States, as the costs for business owners to maintain employees are significantly higher than the costs associated with hiring independent contractors, due to federal and state requirements for employers to pay FICA (Social Security and Medicare taxes) and unemployment taxes on received income for ...
However, such employees are more expensive to hire than independent contractors because Social Security and Medicare taxes must be paid on wages in the form of FICA tax. [2] Statutory employees pay FICA tax through their employer, and so do not pay self-employment tax; despite this, they must report expenses, income and wage. [3]
The ballot initiative was backed by gig-work companies that wanted to keep their workers classified as independent contractors and were resisting a 2019 state law that would have considered them ...
Classifying Uber drivers as employees could mean considerably higher costs for the company.
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In May 2020, California Attorney General Xavier Becerra sued Uber and Lyft, alleging the ride-hailing companies had misclassified their drivers as "independent contractors" rather than "employees" in violation of AB5. The suit alleged that Uber and Lyft denied their workers mandated "employee" benefits and protections such as minimum wage and ...
[1] [2] McCourt had obtained work through a labour hire company named Personnel, which engaged him through an "Administrative Services Agreement" that described him as a "self-employed contractor". [2] Personnel assigned McCourt to work on construction sites run by its client, Hanssen, with whom McCourt never signed an employment contract.