What Startups Can Learn From Uber's Employee Misclassification Mess

Uber's on-demand business model is under increased scrutiny, as a class-action lawsuit from a group of drivers moves through the California court system. 

The drivers say the company has misclassified them as independent contractors, when in fact they should be entitled to all the benefits afforded to employees. A federal court judge permitted drivers to proceed with various claims against the ride-sharing business. 

The matter should raise alarms for on-demand businesses, since they tend to rely on contract workers, as well as any tech founders who depend on independent contractors. 

Startups planning to scale up into a larger operation also take note: It's easier for a small company to reclassify workers than larger organizations. Avoiding this gray area now could sidestep big issues down the road.