Former Uber Driver Qualifies for Unemployment Benefits, Thereby Threatening Its Business Model

Uber is arguably the least ironic of new economy enterprises.It's battles with - and contempt for - state, local and national governments are one of its defining characteristics.

Which makes the irony of unemployment qualifications undermining its employment stance all the more amusing. JL

Josh Lowensohn reports in The Verge:

Florida's Department of Economic Opportunity (agreed) that Uber's job description and modus operandi for drivers shared more in common with Internal Revenue Service's definition of an employee than an independent contractor.
Uber promises big things for its drivers, from plenty of work to flexible hours, and even discounts on vehicles that can be used when drivers aren't on the clock. However one thing that is not promised when someone becomes an Uber driver is the legal consideration of being called an "employee" versus an "independent contractor." Anyone who's worked in a company with both roles knows the difference: the former comes with numerous benefits, including expanded legal protections and maybe even a dental plan. The latter does not. And if you're a professional driver, whatever camp you fall into could also define who's footing the bill for things like gas, maintenance, and car repairs.

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That very issue came up when a Florida-based Uber XL driver named Darrin McGillis got in a car accident last spring and could no longer pick up passengers. While dropping off a passenger, a scooter rammed the vehicle he himself had purchased. As BuzzFeed reports, McGillis tried to get Uber to pay for the repairs with its insurance, and the company told him it was actually his problem to deal with. Out of work, he decided to file for unemployment with Florida's Department of Economic Opportunity, claiming that Uber's job description and modus operandi for drivers shared more in common with Internal Revenue Service's definition of an employee than an independent contractor. The state agreed, marking McGillis eligible for unemployment.
The difference between employees and contractors makes legal issues murky
If upheld, Florida's decision could signal trouble for it and other companies that want a large, dedicated, and sustainable workforce without the overhead associated with traditional transportation companies. Under the current arrangement, Uber doesn't need to worry about paying for things like paid time off, healthcare, and things like Social Security and Medicare taxes. That's allowed it to hire an army of drivers that can be scaled up or down at a moment's notice, but also created situations like McGillis's where things get murky when there's a snag. A potential driver for Uber may also take a look McGillis's situation as a cautionary tale, and factor it into whether they want to work for the company.
In a statement provided to The Verge, Uber said it disagreed with the decision and planned to appeal it. A separate report on McGillis's case in The Miami Herald notes that Uber has managed to get similar state decisions overturned.
While this is just one specific case, and only in one state, the battle over the independent contractor versus employee designation has been underway for decades, and extends beyond ride-sharing companies. It's been a long-running issue at FedEx, which operates with a similar contractor setup with its ground delivery drivers. That's brought class-action lawsuits, and efforts to change state laws to put liabilities on the companies. Uber and its competitor Lyft now face similar suits over whether the two companies (and others like them) should be footing the bill for things like gas and vehicle maintenance.