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Are Uber drivers employees or independent contractors?

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A lawsuit filed by an injured driver seeking workers compensation benefits from ride-sharing service Uber Technologies Inc. highlights ongoing debate over criteria that are used determine whether workers are independent contractors or employees.

Driver Abdo Ghazi, who was punched and stabbed last November by a passenger, filed a class action lawsuit in late April in the Superior Court of California in San Francisco. He alleges San Francisco-based Uber intentionally misclassifies its drivers as independent contractors to avoid providing workers comp coverage.

Peter Burton, Philadelphia-based senior division executive of state relations for the National Council on Compensation Insurance Inc., said while some states have laws that clarify whether someone is an employee or a contractor, the issue is unresolved in many jurisdictions.

“This has been a challenging issue for years,” Mr. Burton said. “Until the courts rule on these cases in California, it is still unknown how the wind will blow.”

In a separate lawsuit in San Francisco federal court, drivers for Uber and Lyft Inc. are seeking to be classified as employees. If successful, the ride-sharing companies could be required to provide workers comp to drivers.

Mr. Burton noted states use several tests to determine whether a worker is an independent contractor or employee, such as whether the employer directs and controls the worker's actions and whether the employer provides tools for the individual's job.

Indeed, Uber has contended that its drivers are not employees precisely because they own their own vehicles, said Kevin Ring, Ashville, North Carolina-based lead workers compensation analyst at the Institute of WorkComp Professionals.

“With Uber, you are driving your own car and set your own hours” Mr. Ring said. “They can argue that all that they do is provide you with the app.”

In another case, the Illinois 1st District Appellate Court ruled last week in favor of the Illinois Workers' Compensation Commission's decision to award benefits to an independent contractor who lost his leg in an accident while driving for a trucking company. The judges ruled that while Radomir Cvetkovski owned the tractor-trailer, the control the company had over the equipment was “indicative of an employment relationship.”

Mr. Ring said it may best to err on the side of caution when determining employee status and potential liabilities under the Illinois workers comp system.

“Ultimately, the advice we give our clients is that if an employee is responsible for reporting to work at set times and if they are being provided the tools and supplies they need to do their job … they are without question an employee,” he said.