They don't. The distinction between a contractor[1] and employee[2] has a broad rule at the federal level[3]. Contractors decide their rates and how they're paid, and they determine how, when and where their work is done.
People who work for Uber outside of a part of a single state can't set their rates or how they're paid, nor can they determine how or where their work is done because Uber only allows drivers to use certain vehicles.
California imposes a legal standard called the “ABC” test, which not all States apply.
“States will vary on exactly what parts of the test they apply and when they apply the test to workers. In September 2019, California put into place Assembly Bill 5, which found that a worker could only be an independent contractor if they met each of these three factors...”
1) The worker is free from the control and direction of the hiring entity in connection with the work's performance, both under the contract for the performance of the work and in fact.
2) The worker performs work that is outside the usual course of the hiring entity's business.
3) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
IANAL but this ABC test reads to me as markedly different from the typical IRS “balance of factors” tests and significantly narrows the scope of “independent contractor”.
The feds seem satisfied to allow Uber to classify workers as contractors so far, and California doesn't, so yes, the rules do vary.
People who work for Uber as contractors can accept or decline rides, and only accept rides at a rate they want, so yes they are setting their rates. Just as a software contractor can accept or decline a job based on the rate offered. You're entitled to accept work at a rate you want, but you are not entitled to be guaranteed work at the rate you want.
They don't. The distinction between a contractor[1] and employee[2] has a broad rule at the federal level[3]. Contractors decide their rates and how they're paid, and they determine how, when and where their work is done.
People who work for Uber outside of a part of a single state can't set their rates or how they're paid, nor can they determine how or where their work is done because Uber only allows drivers to use certain vehicles.
[1] https://www.irs.gov/businesses/small-businesses-self-employe...
[2] https://www.irs.gov/businesses/small-businesses-self-employe...
[3] https://www.irs.gov/businesses/small-businesses-self-employe...