Uber may look twice at the contracts it has with drivers in New Zealand if a lawsuit in the US rules almost 200,000 Californian drivers as employees rather than contractors, says an employment law expert.

According to Bloomberg News, the taxi giant is fighting a lawsuit that seeks to reimburse 160,000 drivers for tips and mileage.

The decision on whether a class action will proceed however, hinges on the broader issue of whether Uber drivers are independent contractors, as the company claims, or employees. As employees they would be entitled to unemployment and workers' compensation as well as the right to unionise.

New Zealand lawyer Carolyn Ranson said a ruling in favour of the drivers might make Uber review agreements it has here in New Zealand.


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"It would definitely make Uber [review] the contracts they have with their contractors and make sure they have got it nailed down in terms of New Zealand law so that those contractors couldn't claim that they were employees," she said.

New Zealand employment law expert and partner at law firm Hazel Armstrong Law Ben Thompson said that while a decision in favour of drivers wouldn't have a direct effect here in New Zealand, there would be the potential for cases to be run here using the lawsuit as an example.

The test in New Zealand is the real nature of the relationship. It is all about control and it is a grey area in New Zealand.

"The American decision won't have direct precedence over New Zealand employment law because we are technically applying different statutes and we have our own system of precedence," he said.

"But this could be referred to as an example of how a relationship [between Uber and its drivers], which sounds similar, Uber run things here the same as they do in America, it could be used as an example of how that relationship is viewed it in terms of contractor versus employee."

Thompson said there were a number of factors indicative of an employee relationship between Uber and its drivers.

"If you look at things on one side of a coin, yes Uber drivers can choose their own hours, they pay their own tax, they own their own car, they are free to take on extra work and that all looks like a contractor and fits with that Uber has on its website.

"On the other side you have the points that the court relied on in the US. Uber sets the charge-out rate, they provide a key piece of equipment in the smart phone, they set rules for the drivers such as you are not allowed to accept tips, and the drivers don't operate through a company structure like a lot of contractors do so they are not GST registered and Uber facilitates all the transactions between the clients and the drivers then they pay the driver on a weekly basis so that looks like an employee relationship," he said.


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Ranson said New Zealand courts would need to examine the real relationship between the company and its drivers before a decision on whether they were contractors or employees could be made.

"The test in New Zealand is the real nature of the relationship. It is all about control and it is a grey area in New Zealand.

"What the courts look at is whether or not the contractor pays its own tax, whether it invoices the company, whether it can accept similar work from another company, whether it can sub contract its work, whether it makes a profit or a loss itself.."

Ranson said it was "not a black and white situation" in New Zealand.

"It really hinges on the specific facts in each case but those are the sorts of things that the courts will look at to determine what the real nature of the relationship is."