Employee or Contractor: The Many Shades of Grey
1. Clear employer-contractor policies. From the time the business model is established, define the hard and the soft rules. Have a clearly written policy manual that guides the business decisions so that all parties have a clear understanding of the agreement.
Uber gives good open-ended pay, flexible hours, family activities, vehicle discounts. These are benefits. But do they provide contractors privileges such as health and dental coverages or paid time off similar to employees?
2. Size matters. This helps determine the business model. Many times, contracting applies to small- or medium-scale types like caregiving businesses.
Shrewdly, the giant money-makers have a way of getting away with it to save up on overheads and other employee-related costs. Take FedEx and now, Uber. Had Uber stayed smaller than its 50 billion valuation, maybe they would have remained inconspicuous and would have easily avoided cases plaguing them today.
3. Exercise rights — operate within the legal framework.
FedEx lost their almost-10 year case and re-classified its more than 2,000 independent contractors to employees.
Once reported to the IRS, expect an audit. Once the courts determine employee status, it takes more time and money to change the decision. The consequences are substantial and taking the risk is not an option.
Along with the IRS, Department of Labor, State Unemployment, and others add to the cost of converting to an employee model of business.
4. Honesty is still the best policy. No cliché can ever be more meaningful than this. Yet, it is a golden rule approaching extinction. Authenticity seals the employer-contractor or employer-employee relationship directing the proper course of action when clarification is required.
Uber declares that it is “nothing more than a technology platform”. Say what? They could have commissioned robots instead, programmed to switch on and off as they please. Like many, Uber is in the service business where people use technology to meet their needs.
Here’s the clincher. Despite the tough blow, many believe that Uber will win the battle years from now.
Oh, going back to Barbara Berwick, she now enterprises a start-up known as Rideshare School teaching drivers to argue employee status. And, going back to the question posed earlier, rights will certainly not be eroded as long as workers will not allow it. Take it from Barbara.
Meanwhile, a solution awaits Uber. Take it from Travis.
