Both Uber and Lyft, the most popular rideshare companies, classify their drivers as independent contractors, not as employees of the company itself. As independent drivers, drivers need not punch a time clock or make themselves available during specific times. While they need to follow specific guidelines offered by the company, including the type of vehicle they drive, drivers need not go through a lengthy application or screening process before they begin work for the company.
This system offers multiple advantages to Uber and Lyft as well as the drivers who work for those companies. Hiring drivers as independent contractors means that Uber and Lyft do not have to pay the same taxes on those employees. It also prevents the companies from facing as much liability in the case of an accident.
Uber and Lyft Insurance
Both Uber and Lyft offer insurance to their drivers that offers substantial protection in the event of an accident. When Uber and Lyft drivers have passengers in their vehicles, they have up to $1 million in insurance coverage: substantially more than most private drivers carry on their vehicles. In Louisiana, a driver who drives only for personal use and carries a minimum liability policy may have just $15,000 in coverage for bodily injury for a single individual injured in an accident, and $30,000 of coverage for multiple parties injured in the same accident. Uber and Lyft, by comparison, offer substantially more compensation for individuals injured in accidents with their drivers.
Uber and Lyft also provide insurance for drivers who are “active,” or waiting to accept a job, and who are driving to or from a job with their apps turned on. These tiers of insurance are not as high as the insurance offered when drivers have passengers in their vehicles: while available to accept a rider, the driver carries $50,000 in bodily injury protection per victim, or $100,000 per accident, for individuals injured in an accident. When the app is off, both Uber and Lyft drivers must use their personal insurance to cover any accident that occurs.
Uber and Lyft drivers must, according to mandates from the company, carry their own liability insurance in order to remain contracted with the company.
Other States May Designate Uber and Lyft Drivers as Employees
California recently sued Uber and Lyft, stating that its drivers are employees, not independent contractors. This ruling challenges the gig economy and has the potential to spread across other states, changing the way Uber and Lyft manage their drivers as well as how those drivers record compensation for their services. Uber classifies its employees as independent contractors because their duties fall outside the usual responsibilities of the business itself: that is, Uber classifies itself as an app, and since drivers do not perform app-related duties, they are not direct employees of the company. In a class action suit against Uber, however, driver Thomas Colopy claimed the opposite. According to Colopy, drivers fulfill the primary purpose of Uber, and they should, therefore, be treated, paid, and classified accordingly.
While Uber has made progress in keeping its drivers classified as independent contractors, drivers continue to push back. Uber and Lyft drivers, in the midst of the COVID-19 crisis, won unemployment benefits and recognition for their position within the industry. This critical shift in thinking could continue to challenge the way Uber and Lyft view their drivers–and how those drivers are recognized in the future.
What does designating Uber and Lyft drivers mean to accident victims? Victims should take several key things into consideration.
1) If Uber and Lyft drivers are employees, not contractors, Uber and Lyft may have a higher degree of liability when an accident occurs.
Rather than simply turning to the driver’s insurance policy for compensation following an accident caused by that driver, or that occurs in an Uber or Lyft vehicle, accident victims may be able to file a claim against the company. If Uber and Lyft drivers are employees, not contractors, Uber and Lyft may bear a higher degree of responsibility for screening their drivers, keeping up with their habits, and ensuring that they continue to provide safe transportation for riders who choose to use those services.
2) Victims injured in accidents with Uber and Lyft drivers may deserve additional compensation.
Severe injuries like spinal cord injury, traumatic brain injury, and amputations may bring with them substantial medical bills, many of which can continue for the rest of the victim’s life. While Uber and Lyft’s $1 million insurance policies can provide substantial compensation following an accident, it may not provide enough compensation to cover those kids of heavy, lifelong medical bills. On the other hand, if Uber and Lyft drivers are employees, accident victims may be able to see compensation from Uber or Lyft directly, increasing the compensation they can receive for their injuries.
3) If Uber and Lyft drivers are classified as employees, Uber and Lyft may bear more responsibility for instituting training.
Instead of simply trusting that drivers can get behind the wheel and figure out the app for themselves, Uber and Lyft may need to institute training protocols that will increase their drivers’ skill and capability on the road. This training could reduce the risk of accidents, leading to safer roads and safer trips for rideshare passengers.
In Louisiana, as well as most other states, Uber and Lyft drivers remain independent contractors. That does not necessarily mean, however, that they will continue to be held independent contractors, especially as the law changes to take the actions of those drivers and the liability of the company into account. If a court rules that Uber and Lyft drivers are employees, it could permanently change the way rideshare accident victims approach their claims. If you suffered injuries in a rideshare accident, an experienced personal injury attorney can provide valuable information about how to proceed with your claim. Contact Allan Berger & Associates today at 504-526-2222 to schedule a free consultation and learn more about your rights following a rideshare accident.