Podcast: Are Uber Drivers Employees or Contractors?

SMITH BRAIN TRUST -- A decision by the California Labor Commission has opened the debate on whether Uber drivers should be considered employees or independent contractors. Knowledge@Wharton on SiriusXM Business Radio (Channel 111) recently hosted a conversation between Brent Goldfarb, a professor at the University of Maryland’s Robert H. Smith School of Business, and Shannon Liss-Riordan, a labor attorney who represents drivers in a class-action lawsuit against Uber.

Liss-Riordan says classifying drivers as employees would add transparency to Uber’s compensation system because it would force the company to separate wages from mileage reimbursements. “The people who are being recruited into the system are not always those entrepreneurial people who understand how a business works and how much expenses are going to add up to,” she says. Liss-Riordan also says classifying drivers as employees would entitle them to unemployment benefits, injury compensation and other protections.

In his response, Goldfarb cites a survey showing that Uber has made life better for 74 percent of its drivers, while only 5 percent claim that Uber has made their life worse. “One could say that if this class action were to go through and be successful, those 5 percent would be better off,” says Goldfarb, academic director of the schoool's Dingman Center for Entrepreneurship. “But perhaps the 74 percent would be worse off.”

Following is an excerpt from the conversation, hosted by Dan Loney.