Should you be an employee or contractor? Here’s why it matters | Brunch on a Wednesday

uberThere hasn’t been an easier or more exciting time to consider being a freelancer or entrepreneur than now. Technology has made it possible for more and more people to work for themselves and choose a life of financial independence.

But sometimes, companies will take advantage of that, whether it’s the small business owner who is hiring their first employee and wants to save a few hundred dollars on taxes, or big companies like Uber and Instacart or Homejoy, whose entire business models are predicated on having their workers maintain independent contractor status.

We had accountant, Matt Close of Bethel Tax, on the radio show last Sunday to talk about some of the main differences between an employee and contractor and how Uber is riding the fine line between the two.

It was a bit tough for me to swallow – I am a big fan of Uber from the consumer side, and the female consumer side in particular. I feel safer in Uber cars, know the driver’s license plate number, don’t have to carry cash, and can rate the driver’s service level. I used them all winter long.

One of my biggest eye openers was the fact that Uber can essentially fire, or “deactivate” their drivers for low ratings. This completely takes away any control someone in a contractor-like position would normally have. If a client is unhappy and choose not to hire you again, that’s one thing, but if your “technology platform provider” (as Uber likes to call themselves), has the ability to decide whether or not you can be on their platform, that smells like an employee/employer relationship.

Here’s where it matters: if your workforce is all independent contractors, you don’t have to pay into Social Security, Medicare, unemployment, have workers comp or disability, expense reimbursements, or provide time and a half for holiday work. Pretty sweet deal for these companies.

If you also don’t get the benefits of being a contractor, like choosing your clients, branding your business how you want to brand it, and creating your own processes for how to run it, are you now just being exploited?

The show ends with some tips on how to advocate for yourself if you are supposed to have employee status but are being paid as a contractor.

How do you feel about this whole debate? Should Uber drivers be considered employees? Have you ever found yourself in a situation where you were paid as a contractor but should have been an employee? What did you do? Leave a comment or email me at pam@brunchandbudget.com!

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