A legal battle has been waged as to whether Lyft and Uber drivers should be independent contractors or employees—and even state legislators are getting involved.
Do you ever wonder who vets the driver when you are taking an Uber or a Lyft ride?
Do you wonder what background checks they undergo before they are able to drive, or maybe what condition the car you are riding in is in?
Also, who controls the hours that a driver works and how do they get paid?
These are all excellent questions and there is really no simple answer.
Uber and Lyft allegedly do background checks, but in the same breath they claim that the drivers are independent contractors and therefore have little to no control over them outside of the software enabling the drivers to pick up rides.
For example, according to Lyft, each driver’s background check entails a nationwide criminal database search, Social Security number trace, federal and state court records search and 50-state sex offender registry trace. They also say they do this for each driver annually. Lyft also states that drivers must take a full uninterrupted 6-hour break for every 12 hours they are in “driver mode” on the company app. The 12 hours do not need to be consecutive.
Of course, these drivers may simply switch over to Uber or another rideshare app and drive for that company. Uber also has a maximum amount of time a driver is able to operate the app continually. As of this writing, the time mirrors Lyft’s 12 on, 6 off. Both companies require drivers to follow local driving regulations.
In addition, Lyft requires the vehicle used to be no older than 7 years and they must contain 5 seatbelts. A popular car used by Uber and Lyft operators is the Toyota Prius as it has a great reliability record, is very fuel-efficient and has a good safety crash rating.
While it can be risky to use an Uber or Lyft to shuttle yourself from point A to point B, the drivers themselves also face a variety of dangers. It’s not uncommon to hear about incidents happening between riders and drivers on the news, but these types of confrontations can happen with regular taxi cabs, too. Police departments don’t traditionally collect data on crimes or complaints between Lyft, Uber or taxi cab companies.
If you want to learn more about the driver before getting in their car, we recommend using the app to check the driver’s ratings and feedback. If you don’t like what you see, you can decline the driver that has automatically been selected by Uber or Lyft for you, and see if your next driver has better reviews and ratings.
Independent contractors vs. employees
The distinction between independent contractors and employees is extremely significant when it comes to workers’ compensation. In a nutshell, employees are covered by workers’ compensation when they are hurt on the job, while independent contractors are not.
When a third party is at fault for an accident, the injured Uber or Lyft driver can typically get treatment through health insurance or on a lien that will ultimately have to be repaid through the proceeds of their claim against the at fault driver. However, if the independent contractor driver is at fault, they may not be able to get compensation for medical treatment. They may not have health insurance or the co-pays could be so high that they cannot afford treatment.
On the other hand, if the driver was considered an employee, it would not matter whose fault the accident was.
The driver would automatically be considered an employee and be eligible for medical treatment under the workers’ compensation statute in Georgia. This means that they would receive medical treatment at no cost to them and be reimbursed for driving to and from the doctors.
Independent contractor laws in Georgia
In recent years, lawmakers in some states have looked into giving employee rights—including workers’ compensation—to rideshare drivers.
In California, for example, the legislature actually passed a bill that would have made Uber, Lyft and other rideshare drivers employees. Needless to say, the rideshare companies did not like this law and spent hundreds of millions of dollars trying to get the law overturned via a proposition. Their effort was successful and thousands of drivers were subsequently stripped of their workers’ compensation rights. (Recently, some drivers have sued trying to overturn the proposition.)
In Georgia, Uber and Lyft drivers are considered independent contractors.
There is a 13-part test to determine if a worker is an independent contractor or an employee. An individual does NOT have to meet all 13 questions to be considered an employee. A judge will weigh all the evidence to determine what the status of the individual is.
Independent contractor checklist
Here are the questions that may be asked to determine a worker’s true status:
- Was there a contract written that expressed the intent of the parties to classify the injured worker before the incident took place?
- Who has the control over the time, manner and method over the work that is to be performed?
- Is the individual paid for by the job, paid a salary, hourly, etc.?
- Was the individual recently hired?
- Does the employment agreement have a definite beginning and end?
- Who furnishes tools and equipment for the job?
- Does the job require skill?
- Who is in charge of setting the hours of the worker?
- Does the individual have control over employees, or does the employer have control?
- Is the business of the individual different than that of the employer?
- Is the individual free to work for other individuals at the same time (no exclusivity)?
- How is the individual paid and are taxes withheld?
- Does the individual not have to perform work without additional pay?
A brief history of Uber, Lyft and rideshare services
Uber launched in the summer of 2010, when the first set of drivers hit the streets of San Francisco. The idea was simple: anyone with a car could become a make-shift taxi driver and make a little extra cash in exchange for a ride.
Lyft lifted off in June 2012 as an alternative rideshare service to Uber.
As you may have guessed, all rideshare services are considered competitors by the traditional taxi companies. However, there’s no doubt that Uber and Lyft are helpful in serving areas that traditionally don’t have large taxi companies in operation, such as rural and suburban communities.
While Uber is a bit more structured with its rules and rides, Lyft is more “free-wheeling.” Both offer a variety of service classes with Uber being more available nationwide. Lyft, on the other hand, has limits on passengers and increasingly luxurious services within its Lyft XL, Lyft Lux, Lyft Black and Lyft Black XL ranges. Uber is run more business-like, while Lyft and its drivers are seen as more casual.
Breaking down the costs of rideshare driving
Money.com published a study in 2015 that showed the average cost of Lyft ride was $12.53, which can vary due to the type of vehicle service chosen and the city the ride is taking place in. Lyft also used to operate during what it called “primetime,” where fees would go up depending on demand. But that controversial feature was replaced by “personal power zones” in 2019, which pays drivers a bonus based on location and demand. Uber operates a similar incentive for its drivers.
You may wonder what a Lyft or Uber driver can make if you hustle and decide to pursue this kind of gig. According to MoneyUnder30.com, depending on the city and how many rides you give in an hour, you could earn anywhere between $7 and $14 per hour. Some make more, but many less.
Both Uber and Lyft take 20% to 25% of each fare, of which, the city where the ride happened gets a cut, too. And out of that hourly rate quoted above, don’t forget expenses and fees you may have to pay for such as tolls, gas, maintenance, car cleaning services and, of course, taxes. That means after those expenses, you could be looking at $4.50 to $12 or so per hour. TheStreet.com’s own research showed an average payout for Lyft and Uber drivers as being $8.55 to $11.77 per hour, after expenses.
According to Lyft, new drivers that give 100 rides in 30 days can earn a $300 signing bonus. It’s also fairly common that an Uber driver is also a Lyft driver. People do this to increase their chances of picking up a fare. Most drivers report Fridays and Saturdays as being their busiest time of the week, and they are able to take tips.
Both Uber and Lyft make weekly direct deposit payments to drivers’ bank accounts. Both also offer a faster way to get paid—Uber’s is called Instant Pay, while Lyft’s is named Express Pay. Using this option allows the drivers to withdraw earnings after each ride if desired, and the payment usually shows up in the driver’s bank account within a few hours or a day.
Be informed before getting behind the wheel
At the end of the day, only you can make the decision whether or not to work for a rideshare company like Uber or Lyft (or both). If you’re considering becoming an Uber or Lyft driver, it’s important to understand the costs and consider the risks, such as the fact that you may not be covered by workers’ compensation if you get hurt while driving.