Uber and Lyft consider their drivers to be independent contractors, not employees. They view their role as connecting willing riders with willing independent drivers. The arrangement helps them avoid many significant expenses to which taxi and other transportation companies are subject.

Uber classifies drivers as independent contractors primarily to reduce operational costs and maintain a flexible business model. As contractors, drivers are not entitled to minimum wage, overtime pay, or health insurance, and Uber avoids paying payroll taxes, workers' compensation, and unemployment insurance. This "gig economy" structure shifts the burden of business expenses—such as vehicle maintenance, fuel, and insurance—entirely onto the driver. Economically, this allows Uber to scale rapidly without the massive overhead of a traditional workforce. In 2026, Uber continues to argue that this classification provides drivers with the "entrepreneurial freedom" to set their own hours, though labor advocates argue it creates an uneven playing field and leaves workers without a social safety net.