Uber Winning Support for Classifying Drivers as Contractors

State legislators in Ohio and Florida are moving ahead with regulations governing Uber and other ride services that would designate all drivers as independent contractors, bolstering a critical but much-disputed aspect of Uber’s business model.

The states would join North Carolina, Arkansas, and Indiana in requiring the contractor designation as part of new laws governing so-called transportation network companies, a Reuters review of state legislation showed.

The contractor provisions of the current and proposed laws in the five states have not previously been reported. Reuters reviewed the transportation legislation of more than 40 states that have considered regulations for companies such as Uber and its rival Lyft over the past two years.

Uber built its business on the contractor model, arguing that its smartphone app simply connects riders and drivers, who own their cars and pay their own expenses.

But Uber is fighting a class-action lawsuit in California by drivers who said they should be treated as employees. Many of a group of 160,000 California drivers could potentially be part of the class, according to a judge’s ruling Dec. 9, and possibly be eligible for back pay and reimbursement of expenses.

The contractor requirement in the new state laws could help Uber limit the potential damage if it were to lose the California lawsuit and also head off similar challenges in other states.

An Uber spokeswoman said the company supported the Arkansas, Indiana and North Carolina laws, as well as the pending Ohio and Florida bills. She declined to comment on the company’s involvement in drafting those laws, however.

In Ohio, state Rep. Bob Hackett said Uber, Lyft, the taxi industry and other parties were involved in drafting the bill.

At one point, Uber sent five representatives to a meeting with members of the insurance industry to negotiate language in the bill, Hackett said.

“I believe they are independent contractors. And the bill says the State of Ohio believes that they are independent contractors,” Hackett said. The state Senate cleared the bill earlier this month, sending it to the House. Sponsors in both houses said they expected it to be approved.

Bills on the designation of Uber drivers have also been introduced in New Jersey and Alabama but have not been enacted.