I LOVE Uber! I think it is the best thing since the creation of the dishwasher (because really isn’t the dishwasher better than sliced bread?). So when I saw this article in Forbes this week, it immediately made my stomach drop.
In most cases, Uber is considerably cheaper than taking a taxi. I was in LA last week and my taxi from the airport to the hotel was $38 and my Uber ride from the same hotel to the same airport was only $13 (and that was with paying a peak time surcharge). How can they get away with such cheap prices? I am just speculating here, but one of the reasons is likely that they don’t have to provide health insurance to their drivers.
According to the Forbes article, Uber has approximately 160,000 drivers. They consider the drivers to be independent contractors and, therefore, they are not subject to the ACA pay or play mandates. That all may be changing though. A few months back, the California Labor Commissioner decided that an Uber driver was an employee. For now, this ruling only impacts this one individual. But if Uber determines (or rather if the government determines) that Uber drivers should be treated as employees, Uber will be forced with the decision on whether to provide health insurance to its full-time drivers or pay a penalty. Regardless of its decision, their expenses will go up and we know those expenses will be passed on to us consumers. Its other option is to limit the hours that their drivers work, which will likely make it harder to get an Uber. Either way it has a negative impact on consumers.
I don’t know enough about the control Uber has over its drivers to know whether they should be considered employees or independent contractors. I just think it is an interesting story about how the ACA can impact a great service like Uber.