by G. Spencer Mynko, Esq.
Here at Transportation Attorneys, we pay close attention to legal developments and major cases that can have a direct impact on the trucking and transportation industry. Uber is an American international transportation network company headquartered in San Francisco, California. It develops, markets and operates the Uber mobile app, which allows consumers to submit a trip request which is then routed to sharing economy drivers. Recently, the California Labor Commission ruled that Uber drivers have been misclassified as Independent Contractors: they are really employees. While this business may not seem to have much in common with motor carriers hauling freight, I believe there are important issues regarding misclassification that will be decided by California courts involving this case that will affect the law regarding the distinction between Independent Contractors and Employee drivers.
Recently, a California Labor Commissioner concluded that an Uber driver was misclassified as an independent contractor, and therefore was an employee. San Francisco resident Barbara Berwick filed a Labor board complaint against Uber alleging that the company misclassified her as an independent contractor, therefore making her entitled to Worker’s Compensation benefits, unemployment benefits, over time, and other protections associated with being an employee. The commission awarded Ms. Berwick $4,152.20 in employee expenses, including mileage reimbursements, toll charges and interest. Uber has appealed the ruling in Superior Court
Of course, Uber treats their drivers as independent contractors, and probably for good reason.
Uber drivers choose when to work, when to start working and when to finish working. Their smart phones receive a message from a remote center that someone needs a ride. You can accept or reject as many rides as you wish. Once each ride is completed, uber deposits a pre-negotiated fare rate into your bank account. You are responsible for your car, gas, maintenance, and insurance. Obviously, you get to use your car for personal purposes as you like.
Uber requires their drivers to pass a background check, their car has to be reasonably new, and they have to carry a 1 million dollar insurance policy. If your passengers are dissatisfied with your your service, you run the risk of getting no more assignments.
In Berwick’s case, Uber argued that it is just a “technological platform” for private vehicle drivers to facilitate private transactions, that drivers are independent contractors, that Uber has no control over the hours drivers work, and that the company does not have to reimburse drivers for any “expenses related to operating their personal vehicles.”
But the labor commission disagreed and found that Berwick is in fact an employee of Uber, saying, “Without passengers such as Plaintiff [Berwick], Defendant’s [Uber’s] business would not exist.” Relying on precedent that applied to cabdrivers and pizza delivery employees, the commission ordered Uber to reimburse Berwick for 6,468 miles she drove while working as an Uber driver, at a rate of $0.56 per mile. Berwick was also awarded toll charges of $256.00, and $274.12 in interest.
The hearing officer applied California’s legal test for distinguishing between an employee and an independent contractor, concluding that a Berwick, was an employee. California presumes that workers are employees unless the hiring party can show the workers are independent contractors. The hearing officer concluded that drivers were integral to Uber’s business, notwithstanding the company’s contention that all it did was generate a lead for the driver and facilitate a ride for the passenger. California presumes that workers are employees unless the hiring party can show the workers are independent contractors. According to the hearing officer, Uber is “in business to provide transportation services to passengers.” The hearing officer said that, by obtaining the clients who needed the driver’s services, Uber “retained all necessary control over the operation as a whole,” making the driver Uber’s employee under California law. In essence, without drivers, Uber would not exist.
However their may be a happy ending: Uber is going to appeal this ruling and fight back hard. If Uber is successful at overturning this ruling and others like it, and if they are successful at convincing the courts that their drivers truly are Independent Contractors, then trucking companies will be able to make those same arguments and hopefully reverse the tide that has so damaged the Independent Contractor business model for California trucking companies.
You can count on us to closely follow this matter as it makes it way through the courts.
We here at Transportation Attorneys can help you with your Independent Contractor business model and your ability to withstand the toughest scrutinization of anyone alleging your company is misclassifying its drivers.
Contact Transportationattorneys.net today!