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Does Workers’ Compensation Cover Iowa Uber Drivers?

On Behalf of | Mar 2, 2013 | Firm News

Workers’ compensation is an insurance program that ensures that employees who are injured while working will be compensated for their injuries and lost wages. All Iowa employers are required to pay premiums; injured employees may recover from the workers’ compensation policy carrier compensation for partial lost wages, paid medical care, and partial or total permanent disability benefits as appropriate.

Only employees are entitled to workers’ compensation, however; workers who are independent contractors don’t get those benefits. If you’re a driver for a company like Uber or Lyft, are you an employee that is entitled to workers comp or an independent contractor? In Iowa, the question is still open.

Workers’ Compensation Benefits: Only for Employees

Not everyone who works for a company has the legal status of an employee; some are “independent contractors.” Independent contractors are not entitled to wage and hour protections (including minimum wage, overtime pay, and mandatory breaks), paid or protected leave (including sick leave), workers’ compensation, protection from workplace discrimination, or unemployment benefits. Uber and its largest competitor, Lyft, classify their drivers as “independent contractors,” and don’t pay for workers’ compensation insurance or other benefits.

There are perks to being an independent contractor for a business such as Uber or Lyft, such as working as little or as much as you want, choosing your own hours or shifts, and only picking up riders where or when you choose. Drivers use their own vehicles, although the companies both require that vehicles meet certain guidelines and you must carry vehicle insurance as directed by each company; gas, maintenance, tolls, and any other operating costs are each driver’s responsibility. However, just because an employer says you’re an independent contractor doesn’t mean that you are.

How Do You Determine Whether a Driver Is an Independent Contractor or Employee?

Iowa courts consider three main factors to evaluate the degree of control an employer has over the worker versus the degree of independence the worker has. Only if a worker has a sufficient degree of independence will the court uphold a classification of “independent contractor.” The court will investigate the relationship between the parties, focusing specifically on

  • Which party controls the worker’s behavior,

  • Whether the worker directs his own finances, and

  • The overall relationship between the worker and the company.

Drivers are free to set their own hours, decide when and where to drive, use their cars, wear their clothes, and have the option to use their phones. They also determine their routes, which is a high degree of control over how they perform their work. However, both companies have some rules drivers must follow that limit the workers’ freedom. The companies perform background checks before allowing individuals to become drivers (and may repeat background checks periodically; they determine the rates for fares; they set rules about drivers’ conduct and how they do their job; they require drivers and passengers use their system for payment. These policies all demonstrate a level of control by the companies over how the drivers perform their work.

Workers for Uber and Lyft frequently work at other professions or occupations and drive as a side job, working as many or as few hours as they would like, so they retain a high level of financial control. In terms of the overall relationship, the companies do not give drivers benefits like paid leave, pension opportunities, or health care and they specifically maintain that the drivers are independent contractors. Uber and Lyft contend that their primary business service is not actually providing transportation to passengers but merely acting as a broker-agent between available drivers and potential riders; however, it would seem likely that the drivers are performing an “essential service” to the business’ operation.

What Are the Courts Saying?

Iowa courts have not yet addressed how Uber and Lyft drivers are properly classified. Other states have different tests for classifying workers, so court decisions from other states are not necessarily instructive as to how Iowa courts will rule on the issue.

Some decisions in other states have upheld claims that drivers are independent contractors. In a New Jersey case, a determined that a limousine driver was properly classified as an independent contractor because he could set his own schedules and work as many or as few hours as he wanted, supplied his own equipment (vehicle, uniform, insurance, gas, etc.), and was free to pick up or refuse passengers at will. Although the company directed what kind of vehicle he drove and what he wore, supplied him with a small computer to connect to and track passengers, and set the fares, the court did not agree that it asserted enough control over his work to create an employer-employee relationship.

However, a California court recently ruled that drivers working for companies like Uber are in properly classified in that state as employees rather than contractors. Many lawsuits and labor claims are pending in state courts and bureaus of labor around the country, and the companies have settled many large, high-profile cases.

If you work for Uber or Lyft and are injured in an accident, you still may have a claim against another driver or responsible party. Iowa workers’ compensation insurance only covers medical benefits and partial wage reimbursement, a third-party personal injury award could include reimbursement for medical bills, out-of-pocket expenses, lost wages, and compensation for pain and suffering. Your automobile coverage may also provide some reimbursement for medical expenses and possibly some weekly wage replacement benefits. You should talk to an experienced workers compensation Iowa and personal injury attorney to make sure your rights are protected. You may have options to recover from your injuries.