Ride-sharing services have become all the rage these days for both passengers and drivers, pushing the taxi industry closer to its demise. Lyft and Uber provide the same service as a taxi without all those pesky regulations. While driving for Uber and Lyft is certainly enticing considering that you can make your own schedule and work as much or as little as you’d like, a new report has shown that drivers are missing out on a significant amount of financial kick back by working as contractors rather than full scale employees.
Reuters reported March 21 that Lyft drivers on average would have been eligible to recoup $835 under the standard mileage reimbursement rate set by the United States government. Because Lyft drivers, and Uber drivers for that matter, operate as independent contractors, they are left to pay for these costs on their own. This is the subject of multiple legal cases that argue drivers for companies like Lyft and Uber should be classified as employees and are entitled to reimbursement for the mileage the put on their vehicles or the cost of maintenance to required to continue operating.
Lyft President John Zimmer said, “It should be understood that this is a specific industry where our average driver is doing 15 hours, and we are trying to create benefits for all drivers. We’ve thought about it from the perspective of all the drivers on the platform. … We are trying to do what is the right legal path, and for us that’s quite clear.” Moreover, according to statistics released by Lyft, 82 percent of drivers preferred to be classified as independent contractors.
The fact that the vast majority of Lyft drivers use it as a means to supplement their incomes rather than full time employment underscores the fact that it would be unnecessary and impractical for the company to give employment contracts to their drivers. While the reimbursement estimates are certainly quite large, most Lyft drivers would never recoup that much money since they don’t drive enough.
While Lyft may be at the forefront of accusations that they are relying on drivers operating as independent contractors as a scapegoat for paying fair mileage reimbursements, the case is a tad bit more complicated considering the variation in just how much drivers work for the ride-sharing service. It’s likely that Lyft will continue using independent contractors because that there is no accurate precedent to force them to hire on drivers as employees. And with 82 percent of drivers being comfortable as independent contractors, it’s hard to find a reason for them to do anything different.