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Worker misclassification an increasing issue for sharing companies

A worker’s relationship with the business he or she is working for is important not only from the standpoint of how business is done and how satisfied a worker is with his or her job, but also from the perspective of a worker’s legal rights. Workers are not properly classified can end up missing out on the benefits and protections due to them, so classification is more than just a paperwork issue.

A recent Huffington Post article looks at the issue of worker classification in the context of the growth of companies that offer sharing services, such as Uber, Lyft, Airbnb, DogVacay, TaskRabbit, Liquid, Lending Club, and Zaarly. These companies and others like them are challenging existing business models, but there are certain legal issues that have yet to be worked out.

Among the sticky areas with the new companies is employee classification, which refers to whether a worker is an employee or an independent contractor. Because of the way businesses have operated, only these two classifications have existed. State agencies dealing with employee classification matters have been locked into this binary system, and the courts that have dealt with classification of workers in sharing companies are struggling to decide how to handle classification for newer business models.

Ridesharing companies, for example, have faced litigation from workers who believed they should have been classified as employees as opposed to independent contractors. Both Uber and Lyft have settled class action lawsuits with workers who have agreed to go with contractor status. It remains to be seen what happens in the future with the way these companies do business and whether ongoing litigation regarding worker classification will spur any changes.

In our next post, we’ll continue looking at the issue of worker classification and why it is important for those who have been misclassified to work with an experienced legal advocate.

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