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Uber’s comp-style program could feed into worker classification dispute

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Last year, Uber Technologies Inc. launched an insurance program to provide what experts say is a version of workers compensation coverage, but the move could raise questions about worker classification and entitlement to benefits if other gig economy companies follow suit.

In 32 states, including California, Texas and Florida, Uber drivers have access to Driver Injury Protection, offered through Aon P.L.C. and OneBeacon Insurance Group, for workers who are injured on the job.

The program was designed around a usage-based pricing model and helps pay medical bills and replace normal earnings in case of an accident. The coverage costs drivers less than 4 cents per mile. The program had been in development since 2015.

“On a basic level everyone needs an option to at least protect themselves when they are earning on this system,” said Curtis Scott, San Francisco-based head of insurance at Uber.

Uber used occupation accident insurance for the long-haul trucking industry as a model for its program, said Mr. Scott.

“What we said is how can we replicate that product that solved the same problem for long-haul trucking and modernize it for the gig economy,” he said. “It was pretty clear that the three basic benefits are medical expenses from an accident when you are working, income replacement when you can’t work because of the accident, and, in an unfortunate circumstance, death benefits. That’s the core of it. How can we take a data-driven approach and modernize this originally ’70s concept and apply it to the gig economy and solve a real-world problem?”

Uber’s program is unique, and if other gig economy companies create similar coverage programs for workers who are independent contractors, experts say it may complicate future rulings for worker misclassification cases within the gig economy.

“There is a concern there; for individuals who work in the gig economy, it’s a tradeoff,” said Joan Verchot, a Cincinnati-based partner at law firm Dinsmore & Shohl L.L.P. “They want the flexibility of taking on these gig jobs, but they hate the lack of benefits and the lack of security, and that’s what it comes down to.”

“If they start down the path of providing this kind of insurance, they run afoul of the definition of an employee in Ohio, or probably any other state,” Ms. Verchot said, referring to the provisions of Ohio state law governing its workers comp system. 

Other legal experts disagree, saying that it is too early to tell what the outcome of a program like this will be.

“I don’t know if we will be able to answer that until the issue is presented to a court,” said Lance Gould, a Montgomery, Alabama-based principal at law firm Beasley, Allen, Crow, Methvin, Portis & Miles P.C. “There are so many different factors, and it’s case-specific. In the end, what they are doing is offering a benefit that’s similar to benefits employees receive. It could be that a judge weighs that factor against a company, but we will not know until that issue is presented to a court.”

Uber emphasizes that Driver Injury Protection is an optional insurance program that can be started or stopped by the driver after every trip, which is different from traditional programs that an employer would offer.

“These are independent contractors, and they need something that is designed for independent contractors, and that’s what Driver Injury Protection largely does, where workers compensation is a creation of state law and designed for employees. We need to solve a problem for what’s at hand here, which are independent contractors that desire flexible work arrangements,” said Mr. Scott.