Since Uber debuted on the market back in 2009 and disrupted the taxi industry with its ride-sharing app, the gig economy has exploded around the world and infiltrated almost every sector of the economy. Combined with the global pandemic, millions of workers now work as independent contractors on a freelance basis.

If you’re part of the gig economy or planning to start a career as a gig worker, there are a number of things you should be aware of. While it may seem like a more flexible form of work, it has its pros and cons. In this article I want to look at some of the legal issues surrounding the gig economy. Below are some of the things you should look out for.

Good Work, Not So Good Terms

While working in the gig economy has its perks such as working from almost anywhere you want, this flexibility comes with consequences.

A freelancer does not have the same benefits as a full-time employee in a company. This includes basic benefits like off-days, sick leave and vacation days. While there are labor laws in place to ensure no exploitation happens in the workplace, these generally do not apply to freelancers.

Even if there is always a demand for freelancers and their services, they do not have security to protect their wages. Oftentimes, freelancers are also underpaid. Not only are they not paid enough for their work, they are also not always paid on time.

In 2018, a survey found that 74% of freelancers left a marketplace because of payment issues. 29% of respondents also reported that they were not paid at all, while 27% were paid late.

As the gig economy continues to develop everyday, issues like these may arise more. However, there is an issue bigger than exploitation and unprotected wages: employment contracts.

Contracts, Contracts, Contracts

When it comes to employment, contracts are extremely important. This lays the foundation for a freelancer’s agreement with the companies that engage them, and allows them to be aware of the benefits that they have. These terms are often set by the companies, since there are no standard terms put in place for freelance employment.

With great power comes great responsibility, something which some companies lack. In the worst case scenario, companies may breach contracts to avoid taxation issues on their end.

When employers are not transparent with their terms, or continue to change their terms even while they engage you as a freelancer, it is a big red flag. Before seeking out freelancers, companies are aware that freelancers will have a harder time seeking legal guidance in the case that anything goes south too.

Uber and Lyft

As the years go by, many people look to ride-sharing companies for freelance employment. There is always a demand for Uber or Lyft rides, which makes this market so enticing for many people who are looking for quick and easy money.

However, working as a freelance driver may mean that you’re responsible for your passenger’s safety.

Uber Drivers

First and foremost, an Uber or Lyft driver is covered by insurance. Uber has three different tiers of insurance. In the first tier when a driver is off-duty, Uber does not accept any liability. This means that the driver would have to rely on their own auto insurance policies.

In the second tier, an Uber driver must be accepting passengers but not actually transporting them yet. In this situation, the driver’s personal insurance scheme will be the primary coverage in the case an accident occurs, and Uber will only cover the rest if the driver’s insurance is insufficient in the accident claim.

In the third tier, the Uber driver must be transporting their passengers. In this case, Uber will cover both driver and passenger under their insurance policy.

Lyft Drivers

Lyft has a similar insurance scheme to Uber’s. When the driver does not have their Lyft Driver app on, any accident expenses will be covered with their personal insurance schemes.

When the Lyft Driver app is left on but not transporting any passengers, Lyft will provide coverage for the driver in the event that their personal insurance does not respond. While this may sound a bit better than Uber’s terms, the ambiguity makes it unclear and will vary from case to case.

If a Lyft driver accepts a passenger, Lyft will cover the passenger and driver for any accident that occurs before the passenger is dropped off and the ride is completed.

Passengers

What do you do if you get hurt as a passenger in an Uber or Lyft? The good news is you are probably covered. If you’re in the car and being transported to your destination, you will be covered by the insurance schemes under the app you’re using. A qualified personal injury lawyer can help you clarify where you stand and help you access compensation.

Knowing Your Rights

Whether you’re a passenger or someone working for a ride-sharing company, it is important to know your rights. If you’re a freelancer in the gig economy more generally, it’s also extremely important to know what you’re entitled to.

To protect yourself, always seek out the advice of a qualified legal professional.