Reference no: EM133345547

Case Study: Background: The Ethical Dilemma: Are Involuntary Employees Really Employees? The rise of Uber and Lyft has been both rapid and widespread. Within a few years, these ridesharing companies took advantage of the readiness of mobile technology to new type of service that was faster and more convenient for many passengers than calling a taxi. Rideshare systems connect people who are looking for cars with people who have signed up to use their cars. In fact, drivers registered with ridesharing companies do not just use their own vehicles; they also pay all maintenance and insurance costs. There are no time cards, supervisors, career paths or health insurance regulations because companies do not consider drivers as employees. Instead, they are independent contractors, members of the "sharing economy" that connects them to online work portals for one-time interactions with customers. Other organizations like the delivery service Postmates, Amazon's Mechanical Turk, and the Handy Cleaning Service have adopted the same model. A series of ongoing lawsuits call into question whether these companies actually treat contractors like employees. Legally, an employer cannot formally evaluate an independent contractor's performance or direct business activities. However, there are some ways in which these companies exercise control. For example, Uber has documented cases where its drivers were "disabled" because online customer reviews were too low. Hours are only somewhat flexible as drivers are told they will be suspended if they accept less than 90 percent of the trips sent to them. Evaluation of job quality and hours worked falls on the employment side rather than independent contractor relationships. What is in danger? Rules and regulations covering employees go beyond the protections available to independent contractors. For example, independent contractors cannot benefit from workers' compensation, overtime bonuses, health care, paid leave or mandatory minimum wage coverage. Employers also have significant tax and legal obligations to employees that do not apply to hiring independent contractors. Some advocates argue that drivers can gain a lot if they are classified as employees because it will bring stability and predictability to their jobs. The social and ethical implications of the sharing economy are only just beginning to be taken into account. Organizations built on the sharing economy will all have to face questions about how their policies affect the willingness of employees they trust.

Question: What would you advise HR departments to do about the ethical dilemma facing organizations like Uber and Lyft, and how might changes in drivers' legal employment status affect companies like Uber and Lyft? you think these organizations will be able to survive competition from, for example, traditional taxi companies, and to what extent do you think employers have responsibilities to these independent contractors, and if you think there is an unfulfilled ethical obligation, what changes might these organizations consider making, regardless of legal requirements?