New court documents released on March 17 reveal that over half of Lyft drivers have driven with another ridesharing company. Out of these drivers, 83 percent drove with another company while they were also working with Lyft. These are but two of the many revealing facts about Lyft drivers that we learned late last week.
“The independent contractor designation is critical to the success of ridesharing and the sharing economy as a whole.”
These data are available because Lyft settled a class action lawsuit over how it classifies its drivers at the end of January (for more information, see my Reason article on the settlement). The recent release was a supplemental brief filed by Lyft that regards preliminary approval of the settlement.
Lyft and Uber drivers are classified as independent contractors instead of employees. Lyft’s $12.25 million settlement, which has no legal precedent, allows the company to continue designating its drivers as independent contractors. The settlement will likely encourage future employment classification lawsuits.
The independent contractor designation is critical to the success of ridesharing and the sharing economy as a whole. In exchange for giving up flexibility, employees are guaranteed certain protections under the 1938 Fair Labor Standards Act. The FLSA exempts independent contractors from its coverage because they still maintain a large degree of flexibility and often work for multiple employers, either at one time or sequentially.
As I laid out in my testimony before the House Judiciary Committee last month, the employer-employee model does not fit the characteristics of sharing-economy workers and the nature of their work. Extending the employment protections discussed below to Lyft and Uber drivers simply makes no sense.
Since sharing-economy companies do not control workers’ hours, and determining how much someone is actually working solely for these companies is difficult (if not impossible), minimum wage and overtime pay requirements are inapplicable to the companies’ workers.
Because of the option of flexibility, independent contractor work is often transient, or done in addition to other work, so there is little reason to compel sharing-economy companies to fund unemployment insurance benefits. Their workers also usually complete jobs off site and use their own materials. For these reasons, workers’ compensation systems should remain optional—not mandatory—for workers in the sharing economy.
To add more support to their independent contractor designation, half of Lyft’s drivers work another job while partnering with the company, and three out of 10 work another full-time job. An outside survey of Uber drivers paints the same picture, as two-thirds of Uber drivers hold another full- or part-time job.
Other data show that only 755 out of the 150,600 California Lyft drivers in the settlement class worked 30 or more hours in at least half the weeks that they drove with Lyft. That is one half of 1%—.05%—of drivers. Only 15% of Uber drivers work 35 hours or more a week, yet Uber also faces a class action lawsuitin California over its use of independent contractors.
Additionally, Lyft drivers in the settlement class worked with the company for an average of just 92 hours in total. To show the pointlessness of Lyft’s $12.25 million settlement, a Lyft driver who worked the average number of hours will only receive around $60. These class action lawsuits over employment classification are not meant to help drivers—they are nothing more than giveaways to trial lawyers that raise costs for consumers.
An independent survey included with the brief, which received responses from 3,100 Lyft drivers, found that 82% of Lyft drivers agreed or strongly agreed with the statement, “I like being an independent contractor.” Since flexibility is one of the main benefits of the sharing economy model, it is not surprising that 99% of Lyft drivers agreed that with the statement that “I like to choose when I work.”
Though surveys can encourage respondents to answer in a particular fashion and should not be taken as authoritative, the overwhelming number of favorable responses points to the conclusion that Lyft drivers value their independent contractor status.
“Ridesharing clearly does not fit into the federal employer-employee model.”
Uber drivers share the same sentiment. When 600 Uber drivers were asked the question, “If both were available to you, at this point in your life, would you rather have a steady 9-to-5 job with some benefits and a set salary or a job where you choose your own schedule and be your own boss?” 73% said that they prefer flexibility over the traditional employment model.
While Uber has been open about sharing data on its drivers, Lyft had previously chosen not to follow its rival’s lead. Ridesharing clearly does not fit into the federal employer-employee model . Drivers’ work is that of independent contractors. Besides, there is no reason to force an employer-employee relationship on the sharing economy when most workers only want to use the platforms for part-time work. The more data that is made available on sharing economy workers, the clearer this conclusion becomes.
This piece originally appeared at Forbes
This piece originally appeared in Forbes