Maryland Law and Ride-Sharing Apps
In today’s age of convenience, ride-sharing apps like Uber, Lyft, and Sidecar have made taxi-hailing a thing of the past. As the number of these drivers has increased exponentially over the last few years, so has the question of who’s ultimately financially responsible for accidents resulting from these unique services.
The manner in which ride-sharing companies classify their drivers is not only a crucial aspect of these companies’ hiring processes but also has huge ramifications for Maryland motorists. Instead of becoming an “employee” of the company, these drivers are identified as “independent contractors” or even “third party providers.”[1] At common law, the distinction between an employee and an independent contractor rests on the degree of control exercised by the hiring party. An employer controls the work and its instrumentalities and circumstances to a greater degree than does a hiring party in an independent contractor relationship. The Fourth Circuit applies a twelve-factor “hybrid test” in its employee/independent contractor determination, which combines the common law element of control by the hiring party over the hired party’s work with an analysis of the degree of economic dependence of the worker on the putative employer. However, the common-law derived control element is the most important factor.
By categorizing their drivers as independent contractors rather than employees, ride share companies attempt to save on costs while protecting themselves from the typical responsibilities that an employer would usually embody through vicarious liability principles. For instance, under the well-developed doctrine of respondent superior, an employer can be held responsible for the negligent acts of its employee or agent that are committed during the course and scope of the employee’s or agent’s employment. Such liability does not exist in the employer-independent contractor relationship.
Not only does this mean that Uber does not have to pay for traditional workers’ compensation insurance, but it also makes suing Uber directly much more difficult. For instance, in terms of motor vehicle insurance coverage, Uber requires all of its drivers to carry their own personal automobile insurance. It is only in particular situations that the company’s own tiered coverage is triggered. Specifically, an Uber driver will not be covered by Uber’s policy if involved in a car accident while her app is turned off as she is off duty. This accident would be covered by her personal automobile insurance. However, from the time that the driver turns on her app and accepts a passenger’s ride request to the time that the driver drops the passenger off at their final destination, the Uber driver is covered under Uber’s policy. However, claimants’ difficulties lie in cases with catastrophic losses that cannot be fully satisfied through these limits, such as wrongful death cases.
While Philadelphia and Florida courts have found that drivers for Uber are independent contractors, other states like California and New York have determined drivers are employees under those states’ laws. Maryland courts have yet to make a formal determination as to whether ride-sharing drivers are officially to be recognized as employees. The litigation surrounding these issues will continue to reflect the complicated nature of this growing market. One thing is for certain, the times they are a-changing when it comes to this competitive and revolutionary field.
For more information about this article, please contact Miranda Russell at 410.230.1092 or mrussell@fandpnet.com.
[1] “Uber shall not be liable for indirect, incidental, special, exemplary, punitive, or consequential damages, including lost profits, lost data, personal injury, or property damage related to, in connection with, or otherwise resulting from any use of the services, regardless of the negligence (either active, affirmative, sole, or concurrent) of Uber, even if Uber has been advised of the possibility of such damages.” Uber’s U.S. Terms of Use, effective December 13, 2017.
