What You Need to Know About Uber Drivers’ Worker Status in North Carolina
You may be wondering whether Uber drivers are employees or independent contractors. Here is everything you need to know about Uber drivers’ worker status in North Carolina.
North Carolina considers Uber drivers independent contractors. As independent contractors, Uber drivers do not receive the same benefits and treatment under the law as employees. Key differences between employees and independent contractors make it illegal for businesses to misclassify a worker’s status.
Are Uber Drivers Employees in North Carolina?
Since the company’s start, North Carolina and every other state in the United States have considered Uber drivers independent contractors. However, recently in California, the court has ordered Uber and similar transportation platforms to reclassify their drivers as employees. This ruling only affects Uber drivers in California, meaning in North Carolina, Uber still classifies its drivers as independent contractors.
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Difference Between Employees and Independent Contractors in North Carolina
An employee performs services for a company, and the employer can control how the work gets done. Here are some common characteristics of an employee:
- An employee gets paid regularly, such as weekly or monthly.
- An employee usually receives training and supervision from their employers.
- An employee usually works and completes their tasks on the premises.
- An employee can be fired by their employer at any time.
An independent contractor is self-employed and provides services according to a negotiated contract between them and an employer. An independent contractor can work for several clients at a time. Here are some common characteristics of an independent contractor:
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- An independent contractor gets paid for each project they provide services to.
- An independent contractor uses their own tools and equipment to perform their job.
- An independent contractor works at an offsite location.
- An independent contractor has flexibility in their schedule and can determine their work hours.
Misclassification of Worker Status in North Carolina
Federal and state law treats employees and independent contractors differently; therefore, an employer misclassifying a worker may face penalties.
Under the Internal Revenue Service (IRS) laws, businesses with employees must withhold and pay income taxes, social security taxes, Medicare taxes, and unemployment tax on wages paid to an employee. In contrast, businesses do not generally have to withhold or pay taxes on payments to independent contractors.
North Carolina General Statutes 143-786 defines employee misclassification as avoiding tax liabilities and other obligations by misclassifying an employee as an independent contractor.
How to Determine if a Worker is an Employee or Independent Contractor?
According to the IRS, businesses can use common law rules to determine whether a worker is an employee or an independent contractor. Here are the three factors businesses should consider when determining an individual’s worker status:
Behavioral
Question: Does the company control or have the right to control what the worker does and how the worker does their job?
Answer: An employer would have the right to control what an employee does and how they do it, whereas they do not have that control over an independent contractor.
Financial
Question: Are the business aspects of the worker’s job controlled by the payer?
Answer: An employer would usually reimburse the employees for business expenses and provide them with tools/equipment to perform their job. An independent contractor would be responsible for business expenses and use their own tools/equipment.
Type of Relationships
Question: Are there written contracts or employee-type benefits?
Answer: Independent contractors usually have negotiated written contracts with their clients. Employees will have different benefits, such as pension plans, insurance, vacation pay, etc.
Question: Will the relationship continue after the project, and is the work performed a key aspect of the business?
Answer: For independent contractors, the work usually ends after they complete a project. Independent contractors typically perform services unrelated to the key operations of the business.
Contact Us
If you or a loved one would like to learn more about Uber Drivers Employees North Carolina, get your free consultation with one of our Employment Attorneys in North Carolina today!