Workers’ compensation provides benefits for employees who are hurt on the job to compensate them for their injuries and lost wages. It’s an insurance program, governed by state law, which all New Jersey employers are required to support with premium payments. Generally, employees are barred from suing their employer for work-related injuries; instead, injured employees must seek recovery for partial lost wages, paid medical care, and partial or total permanent disability benefits, if appropriate, from the workers’ compensation policy carrier. However, not everyone who works for a company has the legal status of an employee.
Who Is Entitled to Workers’ Compensation Benefits?
Workers’ compensation is available only to employees, not to independent contractors. Independent contractors also lack a number of other legal protections that employees enjoy, including
- Wage and hour laws, which guarantee a minimum wage, overtime pay, and work breaks
- Paid or protected leave, including sick leave and family leave
- Unemployment benefits
- Coverage by workplace discrimination laws, including the NJLAD and Title VII of the Civil Rights Act
Workers who are classified as employees are entitled to all these New Jersey and federal legal protections. Drivers for ride-hailing companies like Uber and Lyft, however, are typically classified as independent contractors and aren’t covered by these laws. On the other hand, they enjoy a greater degree of freedom in how they do their jobs and can deduct business expenses on their income tax returns.
How Do You Know Whether You’re an Independent Contractor or Employee?
Whether you’re an independent contractor or an employee depends on certain criteria. New Jersey uses a three-pronged test to determine whether a worker is properly considered an independent contractor:
- The employer doesn’t control or direct how the worker performs the service,
- The service is either outside the usual course of the business or performed outside of all the places of business of the company, and
- The worker in question is customarily engaged in an independently established trade, occupation, profession, or business.
Workers for ride-hailing businesses frequently work at other occupations and drive as a side job, meeting the third part of the test. Additionally, the companies maintain that their primary business service is not driving passengers, but rather acting as a broker-agent between available drivers and potential riders. What’s usually contested in lawsuits and complaints to state bureaus of labor and industry is the first aspect of the test: how much control the companies have over how the drivers conduct business.
Although drivers are free to work as many or as few hours as they choose and decide when and where they drive, both Uber and Lyft have some rules the drivers must follow, such as submitting to initial and periodic background checks, and determine the rates for fares, which it collects. These policies demonstrate a level of control by the companies over how the drivers perform their work, but so far, the courts have not considered it enough to require the drivers to be classified as employees.
Are Uber and Lyft Drivers Independent Contractors or Employees?
The courts in New Jersey look at a number of different factors to decide cases such as these, including the extent of supervision needed for a worker, who furnishes the equipment, how the worker is paid, whether there is paid vacation and sick time, whether the employer pays Social Security taxes, and the intention of the parties. In a 2015 case involving a limousine driver, the New Jersey Appellate Court balanced very similar facts and determined that the worker was properly classified as an independent contractor. The court noted he was able to set his own schedule, worked as many or as few hours as he wanted, supplied his own equipment (vehicle, uniform, insurance, gas, etc.), and was free to pick up or refuse passengers at will. Although the company directed what kind of vehicle he drove and what he wore, supplied him with a small computer to connect to and track passengers, and set the fares, the court did not agree that it asserted enough control over his work to properly deem him an employee.
How Can These Drivers Recover for Workplace Injuries?
If you work for Uber or Lyft and are injured in a traffic accident, you may be able to recover damages in a lawsuit against another driver or responsible party. While New Jersey workers’ compensation insurance provides only medical benefits and partial wage reimbursement, a personal injury award could include reimbursement for medical bills, out-of-pocket expenses, lost wages, and compensation for pain and suffering. Your automobile insurance policy may also provide coverage for medical expenses and perhaps even some weekly wage replacement.
If you’ve been involved in an accident of any kind, talk to an experienced personal injury attorney to make sure your rights are protected. There may be more than one way to recover compensation for your injuries, and an attorney can help you plot the best course. Learn about the Mark Law Firm’s personal injury representation, or read articles about personal injury law on our blog.
 NJ Rev Stat § 10:5–12 (2022).
 Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e–2000e17 (as amended).
 Faris Babekr v. XYZ Two Way Radio, 2015.