An Employee By Any Other Name… Is Still An Employee
July 6, 2015 by Stephanie Platenkamp
On June 3, 2015, the Department of Labor Standards Enforcement ruled that Uber driver Barbara Berwick is legally an employee. Under California Labor Code Section 2802, employers must reimburse employees for all necessary business expenses. Berwick was awarded $3,878 plus interest for reimbursable mileage and toll expenses. Uber is appealing the decision in the San Francisco Superior Court.
So it seems the “party” may be ending for Uber in California. Uber’s low-fare business model depends, in large part, on the relatively low expense of its workforce. By classifying its drivers as independent contractors, Uber does not pay minimum wage or employment taxes. The DLSE decision could force Uber to change the way it does business in the state. Other drivers will likely file wage claims, and the DLSE’s decision could be persuasive in ongoing class action litigation Uber faces in federal court. Additionally, under the Affordable Care Act’s new requirements, Uber could be on the hook for penalties for not providing health care for its employees.
Misclassification of employees as “independent contractors” is an issue affecting many California workers. When an employer misclassifies an employee as an independent contractor, that employer sidesteps the many responsibilities placed on employers by federal and state law–Social Security taxes, unemployment insurance taxes, workers compensation coverage and even healthcare. Such an arrangement also causes employees to shoulder the “cost of doing business” ordinarily borne by the employer–for drivers, gasoline, tolls, liability insurance, and normal wear and tear on the vehicle. And independent contractors, unlike employees, have no right to be free from workplace discrimination or to form a union.
How to tell if a worker is an employee under California law? Under California’s “Borello test,” an employment relationship exists where the employer maintains substantial control over the details of the putative employee’s work. This is shown by many different factors including whether the employer trains the worker, whether the worker uses the employer’s equipment, whether the employee is unable to work for another employer, whether the work requires special skill, and whether the duties performed by the worker are part of the employer’s regular business.
Even without control over work details, the DLSE will also find an employment relationship if [1] the employer “retains pervasive control over the operation as a whole, [2] the worker’s duties are an integral part of the operation, and [3] the nature of the work makes detailed control unnecessary.” (Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288.) Where, as with the case of Berwick, the job does not require a high level of skill, even minimal control over the details of work can be sufficient.
If you think that you may be misclassified as an independent contractor, please call us for a confidential consultation at one of our offices in Oakland, Sacramento or Syracuse, NY.
The material on this website is provided by Beeson, Tayer & Bodine for informational purposes only and does not constitute legal advice. Readers should consult with their own legal counsel before acting on any of the information presented. Some of the articles are updated periodically, and are marked with the date of the last update. Again, readers should consult with their own legal counsel for the most current information and to obtain professional advice before acting on any of the information presented.
