In the often-oversimplified world of contractor-based employment, the Affordable Care Act is a blessing in disguise: “employees” can readily obtain health care with the financial burden falling off the “employer.” However, in the case of Uber, this may all change. And the company is not pleased.
Last year, Forbes reported that a ruling on behalf of the California Labor Commissioner named Uber drivers as employees of the mobile vehicle enterprise. With this ruling, any California Uber employees who clocked in 30+ hours a week qualified for employee-sponsored health insurance under the Affordable Care Act. At that point, the ruling only affected one Uber driver, who over the course of two months in 2015 became eligible for Uber-sponsored health care, by qualifying as an hourly full-time equivalent. Uber took umbrage to the California ruling, having filed an appeal.
In the past, Uber’s CEO Travis Kalanick had talked up the Affordable Care Act, expressing the convenience of the ACA providing health care to its drivers, who are considered independent contractors. And while the Supreme Court’s decision last Summer to broaden the ACA’s scope of subsidies still leaned very heavily in Uber’s favor, the case-by-case nature of handling hourly contract employees remains a controversial topic with regard to employers and the ACA.
While many Uber drivers do not reach that minimum weekly hourly requirement, it certainly sets a precedent for drivers to come—especially those drivers who tend to pack a few weeks of “full-time” Uber hours within a short period of time. They too would qualify. At present time, this is only an issue to be resolved within California. However, if the labor laws change nationwide, then Uber will have to make several shifts in its business model to accommodate their “employees.”
An interesting twist, however, involves Uber’s cofounder Oscar Salazar, who just last year received a multi-million dollar investment into his developing of a prototype for a health care app centered around Uber’s tech business model. Would Uber connect with its Uber prototype developer to provide a uniform platform for drivers and access to health care? Probably not, as Uber has already dug deep into its own pockets to compensate expenses to drivers.
Just last month, Uber was forced to settle for $84 million dollars in a federal class action suit brought on by Uber drivers. The suit involved reconciliation of expenses incurred by drivers while on the job. The LA Times reported that the suits had the potential to push Uber into turning their independent contractors into employees, which would revisit the need for health care coverage in an entirely different way. Other lawsuits are still pending for Uber, so employee classification may very well be on the horizon.
It remains to be seen whether or not Uber’s CEO will be as pleased with the Affordable Care Act if that bridge is crossed.
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