People who drive for a ridesharing service such as Uber or Lyft may have concerns over their classification as an independent contractor. This has been a source of controversy and legal battles for years. Unfortunately, the problem persists.

Back in 2014, there was a lawsuit against Uber for employee misclassification. Drivers are finally receiving their payouts from the settlement, but is it enough?

The origins of the lawsuit

Uber drivers have been feeling cheated out of their employment rights since the inception of the app. In 2014, driver Steven Price had enough and decided to sue the company, claiming Uber misclassified him as a contractor instead of an employee. This means Uber fails to provide its drivers with the following benefits:

  • Minimum wage
  • Overtime pay
  • Rest periods
  • Meal periods
  • Workers’ compensation
  • Unemployment benefits

Independent contractors for Uber do not get these benefits, despite the fact that they undergo background checks, and many rely on the company for income. The lawsuit over employee misclassification took years to settle, but now it is paying off–or is it?

Minimal payouts

The original settlement of $7.75 million dwindled down to $1 million that numerous drivers had to split. However, according to Nasdaq, drivers are receiving less-than-desirable payouts. Some drivers are reportedly receiving as little as 15 cents. These amounts may seem insulting, especially to drivers who earn less than the minimum wage.

The problem of employee misclassification

This is a prime example of how the ridesharing concept is problematic. Uber touts its ability to provide drivers with economic freedom and stability but fails to provide them with the protections they deserve. Classifying drivers as independent contractors significantly reduces labor costs for Uber, but it results in an unlevel playing field for drivers.

Those who work for a ridesharing company or similar business in the gig economy should consider whether they are a victim of misclassification.