I often think of the worker classification case I was involved with as a new attorney at the Employment Development Department. One of my witnesses, an independent contractor truck driver, testified that he netted over $30,000 more per year than I was grossing as a state attorney. I realized at that moment that I was involved in restricting this gentleman from engaging in a lawful business which worked very well for him. The California legislature may soon be faced with a similar burden.
In January, 2015, the California Supreme Court granted review of Dynamex Operations West, Inc. v. Superior Court (Lee) (2014) 230 Cal.App.4th 718.
U.S. Secretary of Labor Alexander Acosta announced on June 7, 2017 that the Department will no longer follow the informal guidance issued as Administrator Interpretation Letters in 2015 and 2016 regarding joint employment and independent contractors [here], signaling an easing of the federal guidance on the use of contract labor. According to its press release, "The Department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act." To read the full press release, click here.
Employers who wish to utilize independent contractors in their business model may often do so, however, adequate review of the employers' documents and practices is crucial to a successful business plan based on an independent contractor workforce. This week, Uber learned this lesson the hard way.
Entrepreneurs who participate in the "Sharing Economy" may be granted a new worker status as the traditional classifications of employee and independent contractor no longer fit this modern group of workers. Also known as the Gig Economy or the On-Demand Economy, workers in this sector have more independence from the control of their employer than a traditional employee, but they also do not maintain all of the characteristics of independent contractors who do not enjoy the protections of labor laws.
This is a question that many business owners have, and finding the correct answer is extremely important. At the Law Office of Williams & Associates, P.C. we help business owners answer this question and many others so that they are in compliance with state and federal employment tax laws.
The Law Office of Williams & Associates, PC has been informed that the California Employment Development Department has recently won at least two administrative decisions against Uber in appeals of Obstructed Claims for Unemployment Insurance Benefits, before the California Unemployment Insurance Appeals Board. In plain English, this means that the state of California determined that Uber drivers are misclassified as independent contractors, that Uber should have paid state employment taxes and withholding on the payments rendered to those drivers.
On June 3, 2015, the California Labor Commissioner found an Uber driver to be an employee, and thus eligible for reimbursement for mileage and other expenses while providing rides for the tech company, which claims to be engaged in the business of providing lead generation to transportation providers using its mobile application. (Berwick v. Uber Technologies, Inc., Labor Commissioner Case No.: 11-46739 EK http://cdn.arstechnica.net/wp-content/uploads/2015/06/04954780-Page0-20.pdf) Uber Technologies Inc. is appealing the decision in the Superior Court of California, County of San Francisco. This case coincides with recent federal court wage and hour claims, in which Uber and a similar provider, Lyft, are defending claims that the transportation providers are employees and misclassified as independent contractors. (O'Connor v. Uber Technologies, Inc., No. 3:13-cv-03826-EMC (N.D. Cal. Mar. 11, 2015); Cotter v. Lyft, Inc., No. 3:13-cv-04065-VC (N.D. Cal. Mar. 11, 2015))
If you have ever thought of becoming an independent contractor, the following are some considerations to make before starting on what is essentially your own business:
In a decision dated August 27, 2014, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit found that FedEx had a "right to control" the activities of 2,300 of its drivers. Normally, in the logistics and delivery business, this would not be exceptionally important news, except for the fact that FedEx has litigated this issue extensively in the past, and has gone to great lengths to devise an independent contractor based business model which would comply with California law.