New gun policy by Uber reignites discussion on whether its on-demand workers are independent contractors or employees

Detroit, Mich. – June 29, 2015 – With Uber’s new no-firearms policy prohibiting both drivers and riders from possessing a firearm of any kind in the vehicle, the network transportation service is facing more questions as to how far the company and other app-driven companies in the on-demand economy can go in controlling the behavior of independent contractors without running afoul of the law. Kellen Myers, an attorney with Detroit-based management side labor and employment law firm Nemeth Law, P.C., says the key issue with Uber, already embroiled in a multi-front battle defending its classification of its drivers as independent contractors rather than employees, is the new gun policy regulates a driver’s otherwise lawful behavior.

“The recent change by Uber was prompted, in part, by an incident in late April where an Uber driver in Chicago shot and wounded a gunman who opened fire on a crowd of people,” Myers said. “The Uber driver’s actions were ultimately considered lawful because he had a concealed carry permit and acted in defense of himself and others.”

Prior to this incident, Uber did not have a weapons restriction policy of any kind.

“The new policy by Uber is noteworthy in how it regulates a driver’s otherwise lawful behavior. For example, under Michigan’s concealed handgun law, an Uber driver would be permitted to carry a concealed weapon if properly licensed,” Myers said. “With Uber’s policy change, the driver is now restricted from doing so or risk losing his or her ability to use Uber’s software platform.”

Generally, courts and government agencies look to the amount of control a company exerts over a worker to determine whether that worker is properly classified as an independent contractor or an employee. In essence, the more control exerted by the company the less the worker appears like an independent contractor.

“Improper classification of workers by employers can lead to significant liability and bring unwanted lawsuits or agency investigations,” Myers said. “Uber’s policy change and legal battles have brought more attention to employer use of independent contractors overall and in the on-demand worker economy. Employers need to be particularly aware of their use of these workers and craft an appropriate business strategy taking worker issues into consideration.”

Myers says companies that plan on using on-demand workers as a business strategy need to consider the following:
 The pros and cons of using an independent contractor/on-demand worker versus a full or part-time employee, including wages, benefits, taxes, insurance, the potential of misclassifying the individuals and, from a talent perspective, whether a company can grow and sustain itself and build value using an on-demand worker model.
 Conducting an audit to insure the individual is properly classified as an on-demand worker/independent contractor.
 Making sure the audit conducted looks at applicable classification tests the U.S. Department of Labor uses, as well as the Internal Revenue Service and the State of Michigan.
 Involving a corporate accountant, corporate attorney and employment attorney before adopting a specific employment model to insure all bases are covered.

About Nemeth Law, P.C.
Nemeth Law specializes in employment litigation, traditional labor law and management consultation for private and public sector employers. It is the largest woman-owned law firm in Michigan to exclusively represent management in the prevention, resolution and litigation of labor and employment disputes.

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Nemeth Law attorney looks at on-demand workers; workforce trend or business model that’s here to stay?

Detroit, Mich. – April 20, 2015 – Whether one has hopped into an Uber car or not, the relatively new taxi service company has caused some to slam on the brakes when considering its on-demand worker foundation. While some view the company as disruptive to the workforce in terms of its non-employment strategy, others see the use of on-demand personnel as the labor market and technology pushing the boundaries of traditional notions of employer and employee.
Patricia Nemeth, founder of Detroit-based management side labor and employment law firm Nemeth Law, P.C., says the taxi company’s business model, one increasingly used by other emerging and often app-based companies as well, is analogous to what some industries have been doing for years – albeit on a much larger scale.

“Hospitals and nursing homes have used ‘contingent’ workers to supplement their full and part-time workforce for years,” Nemeth said. “While Uber is not using its drivers to supplement staffing, the concept of an on-demand employee is not new.”

Employers and on-demand contingent workers enjoy this flexible employment relationship for a variety of reasons. While some Uber drivers may work several jobs to make ends meet, others moonlight as drivers to make extra money in addition to income from their full-time job.

“One of the criticisms of allowing Uber to operate solely by on-demand workers is the organization is not required to offer benefits,” Nemeth said. “With the Affordable Care Act, employees can buy their own health insurance. Yet this cost savings has some workers questioning if the Uber business model is legal.”

Nemeth notes there have been several high-profile lawsuits against companies utilizing on-demand workers. For example, app-based companies such as Handy, Uber and Lyft are dealing with lawsuits challenging the classification of these workers as non-employees. If they are successful, it may put a quick halt to the rise in such services, as well as the use of independent contractors by these types of companies.

“Uber has brought attention to the use of an on-demand workforce and the success it can create for an organization; but it has also brought attention to the pitfalls companies may run into by attempting to utilize a workforce without the overhead of regular employees,” Nemeth said.

Nemeth said companies that plan on using on-demand workers as a business strategy need to consider the following:
 The pros and cons of using an independent contractor/on-demand worker versus a full-time employee including wages, benefits, taxes, insurance, the potential of misclassifying the individuals and, from a talent perspective, whether a company can grow and sustain itself and build value using an on-demand worker model.
 Conducting an audit to insure the individual is properly classified as an on-demand worker/independent contractor.
 Making sure the audit conducted looks at applicable classification tests the U.S. Department of Labor uses, as well as the Internal Revenue Service and the State of Michigan.
 Involving a corporate accountant, corporate attorney and employment attorney before adopting a specific employment model to insure all bases are covered.

About Nemeth Law, P.C.
Nemeth Law specializes in employment litigation, traditional labor law and management consultation for private and public sector employers. It is the largest woman-owned law firm in Michigan to exclusively represent management in the prevention, resolution and litigation of labor and employment disputes.