Uber Fighting Back Contractor Challenge

Will online-based firm have to pay benefits?



When is an employee not an employee entitled to some minimum payments and benefits?

As evidenced by Uber, the fast-growing, online-based taxi service fueled by independent operators, that is a big question.

Uber is fending off a lawsuit by its contractors who want a guaranteed minimum wage, mileage compensation and Social Security payments.

The San Francisco firm has even hired the same lawyer, Ted Boutrous, who helped Wal-Mart beat back a similar lawsuit four years ago.

Uber’s cut-down cost model benefits the company and frees individual drivers to act as entrepreneurs, or at least sort of. One issue is whether the contractors’ use of Uber apps when they get service calls from passengers actually redefines them as employees.

Uber’s argument is at odds with a ruling by California’s labor commissioner last month that a driver who connects with customers through the company’s app must be considered an employee.

Larger questions have been raised by U.S. Sen. Mark Warner, who's asked if the new “gig” economy based on skimpy to no benefits paid by Internet-based and other employers will somehow grow into a ticking entitlement time bomb.

Not laying a benefits’ foundation for such workers could make taxpayers ultimately responsible for layoffs, illness and the like.

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