With
the incredible growth seen in companies like Uber or Lyft, such peer-to-peer
ridesharing business models are gaining a lot of attention. Taxicab companies are the closest relative to
these businesses, resulting in arguments about whether such similar services
should share insurance and liability rules.
The distinction between an employee and an independent contractor is the
key factor that leads relations with a worker to vary in its degree of
leniency. If taxicab and ridesharing
drivers can be grouped into the same category, whether it be contractor or
employee, then the insurance and liability rules should be identical to one
another.
When
deciding a worker’s status, both the IRS and the Fair Labor Standards Act under
the U.S. Department of Labor provide certain criteria used to make the
distinction. Such legislation and federal organizations determine the standards
companies must uphold for their employees, which leads to more rigid rules in
certain cases, dependent upon how a worker is defined. Both organizations provide similar outlines
that revolve primarily about independence, fixed wages, personal investment,
and how integral a worker’s services are to the company.
An
independent contractor holds a very loose relation to the company they are
interacting with. If a worker can either
make a profit or suffer a loss from their activity, meaning they do not have a
fixed wage or yearly income, then this would lead to a stronger argument for
them to be an independent contractor. A
contractor will also oftentimes have to invest in their own equipment, tools,
or even assistants to perform the job.
Their flexibility continues on to their hours and wages, both having
some, if not all, of the control held by the contractor. These workers are also primarily paid by the
individual job and can be seen working for multiple companies at a given
moment, explaining why an independent contractor does not hold a very integral
piece of the businesses actions.
Contractors usually perform work for a small portion of the total
objective of a company, defining their ties as loose.
With an employee, they are fully integrated
into their employer. They are usually
payed by the hour or have a fixed yearly income and receive explicit
instructions from the company regarding how to fulfill their work. Employees yield certain benefits and
protections from their employer and have the right to quit without incurring
any liability. The main distinction that
defines an employee is the fact that they provide services that are integral to
the daily operations and objectives of the company. With these guidelines set by IRS and FLSA, an
analysis of the state of both ridesharing and taxicab workers will set an
undisputable argument for or against the universal adoption of insurance and
liability rules.
An
Uber driver chooses their own hours, buys and pays for expenses of the vehicle
in use, and plays the most integral role (arguably the only role) for the
company’s services. When using these
basic facts to analyze the state of the worker, an Uber drives is in a gray
area with the definitions given by the FLSA and IRS. By choosing their own hours, Uber drivers
veer towards the side of being an independent contractor, which is strengthened
further by their personal expenses for the cars they use in service. But the fact that their services are the most
vital part of the company’s actions pushes them towards the definition of an
employee. Also, an Uber driver’s wages
are fixed unlike an independent contractor.
Although Uber seems to be creating an array of contractors at the
surface, these key distinctions allow for some leeway in their assessment. To determine how these workers should
correlate with taxicab workers, it is necessary to assess a taxicab drivers
status and determine if it is vastly different enough to yield entirely
different insurance and liability regulations.
A
taxicab driver, dependent upon the size of the company and area it covers, will
often lease a car from their company but also have the option to buy one. They also need to purchase or rent a radio
and meter for their vehicle depending on how the leasing system is set up for
their specific company. In this way
there is a clear similarity between taxicab and ridesharing drivers. Both need to make some personal investment in
the equipment used for their services.
Taxicab drivers also have fixed fares they charge in a similar fashion
to ridesharing drivers. Being able to
pick their own hours and work a completely free schedule strengthens the ties
with taxicabs and ridesharing companies.
Also, both business models revolve entirely around these drivers,
proving they both form the most integral part of the companies day-today
actions. Based off these simple yet
highly important criteria, it is impossible to deny that the nature of both
kinds of workers are hard to distinguish.
Such similarities make it hard to understand how ridesharing companies
could have started out without following the precedent in insurance and
liability rules set by taxicab companies.
Although
it is still unclear whether these workers should be defined as employees or
independent contractors, it is undeniable that the two types of businesses
share nothing but common ground. As a
result, it is only fair and logical to admit these should share exact, or at
least very similar, rules and regulations regarding their insurance and
liability policies. The nature of these
policies can be decided based off further evaluation and a finalized decision
on the status of the workers, but that is not necessary to understand identical
policy should be applied to taxicabs and ridesharing companies.
Sources Consulted:
Link 1
Taxicab requirements
Link 2
Uber Specifications
Link 3
Employee v Independent Contractor
Link 4
Definitions from FLSA and IRS
Link 5
Taxicab Driver Expenses
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