Published in Employee Benefits online

FedEx, Uber and Yelp cases bring employee status issue to the fore, By Marianne Calnan – Neena Patel comments.

In the US-based case of Gray vs FedEx Ground Package System, the latter contracts with operators to make deliveries. Under their contracts, the operators were not required to personally drive, but could hire someone else to do so.

The plaintiffs brought a suit against FedEx claiming that they should be classed as employees rather than independent contractors, and should therefore receive the benefits employees are entitled to.

A court originally ruled in the operators’ favour and awarded damages. FedEx appealed the decision.

The original decision was reversed and the case has been submitted to a jury for consideration.

The case follows others surrounding employment status, such as those recently involving Uber and Yelp.

Yelp reviewers class action dismissed

US District Judge Richard Seeborg dismissed class action brought by a group of Yelp reviewers against the organisation. The reviewers sought to be considered as employees and therefore be compensated as such.

In the case of Lily Jeung, et al., vs Yelp, the claimants alleged that they were ‘directed how to write reviews and given other such employee direction’ from Yelp, which also controlled their work schedule and conditions. Two of the three claimants bringing the class action also claimed to have been ‘fired’ by the organisation.

In the judgment, Seeborg said it could be inferred that the term ‘hired’ referred to the process by which members of the public could sign up to Yelp to leave reviews, while ‘fired’ referred to user accounts being involuntarily closed.

The judge found that submitting reviews could not be considered as performing a service, dismissing the class action case.

Uber drivers seek employee status in UK and US

In the UK, Uber faces legal action from the National Union of General and Municipal Workers (GMB) over claims that it has breached its legal duty to provide staff with basic rights around pay, holiday, health and safety, and discipline and grievances.

Uber stated that its drivers are ‘partners’ rather than employees, and are therefore not entitled to standard workers’ rights. GMB has called on Uber to ensure that all of its drivers are paid the national minimum wage, given the statutory entitlement to paid holiday, and adhere to legal standards on discipline and grievances.

Meanwhile, in California, a US District Court judge has certified class action by certain Uber drivers in the US state against the organisation. In the case of O’Connor et al. vs Uber Technologies, the drivers are seeking to be recognised as employees rather than independent contractors, with support for expenses such as fuel and vehicle maintenance.

These cases raise questions about what defines someone as an employee and therefore what rights and benefits they are entitled to. Although the individual cases differ from one another, they also highlight the blurred lines between how different organisations recognise staff.

Neena Patel, senior associate, employment and partnership law at Fox Lawyers, said: “Although it’s a preliminary finding, this decision [in O’Connor et al. vs Uber Technologies] has paved the way for further litigation and signalled a potential victory for the drivers, who argue that they are employees and should therefore be protected by employment laws.

”Similar to the approach taken for determining employment status in the UK, the judge held that under Californian law the question of whether the drivers are ultimately employees or independent contractors depends on a mixed question of fact and law.

“Uber is now facing similar legal action in the UK. There are significant cost savings in engaging their drivers as self-employed contractors.

“In the UK, not only does it allow the organisation to avoid employer’s national insurance contributions (NIC) liability associated with hiring, but it also means that there is no obligation for holiday, sick pay or maternity pay or to contribute towards pension benefits.

“When determining employment or worker status, UK employment tribunals look at the substance of the relationship rather than the label that is applied. This is likely to be one of the biggest obstacles to a finding of employment or worker status.”

Sarah Henchoz, partner at Allen & Overy, added: “Organisations regularly review the most effective way they can provide services, and this has led to many looking at innovative, and cheaper staffing solutions. This is not necessarily a bad thing for workers; these new models can provide a worker with greater flexibility, allow them to find a work pattern that suits them, and to work for different employers in tandem. However, without the right protections and awareness of what giving up employment rights means, workers can find themselves without job security and losing out on valuable benefits.

“These cases highlight the need for employers to take care when using alternative resourcing. What a worker is called is largely irrelevant; it is how that worker is treated in practice and the level of control that the employer has over them that really matters.

“It is therefore important that both parties understand the relationship and how it will work in practice. Contractual documentation must clearly set out what rights and obligations each parties have.”

Commenting on the legal action facing Uber in the UK, Lyndsey Crook, employment solicitor at Langleys Solicitors, said: “This will be an interesting case about whether Uber’s drivers are genuinely self-employed, or are actually workers or even employees. There are a wide variety of factors that employers need to consider when establishing the true employment status of those they engage to do work for them, including whether the individuals need to carry out their duties personally, the amount of control the employer has in relation to the way the job is done, whether the employer is required to provide work to the individual and whether they must accept it; the level of integration of the drivers into the business, and how they are paid and taxed on earnings.”