HTC Annual Legal Review November 5, 2015 Presented by Cameron Roberts and Sean Brew, Roberts & Kehagiaras LLP
UBER puts willing passengers together with independent drivers. UBER’s smartphone app is essential and only approved drivers can use it. UBER monitors drivers’ approval ratings and terminates their access to the application if their ratings fall below a certain level or the driver is inactive for more than 180 days. UBER vets prospective drivers, undertaking background and DMV checks, and requires the use of late model vehicles.
Klout ranked UBER as the 48th most powerful company in America in 2014. https://sg.finance.yahoo.com/news/50- most-powerful-companies-america- 150200135.html By mid-2015, UBER was estimated to be worth $50B $50B. http://www.bloomberg.com/news/articles/2 015-05-09/uber-said-to-seek-1-5-billion- in-funds-at-50-billion-valuation
◦ 1) Who has the right ight to contr ntrol ol the worker’s manner and means of performing his or her duties – an independent contractor has more control over the day-to-day details of his or her job than an employee; ◦ 2) The skill required in the worker’s job – independent contractors often perform highly skilled jobs; ◦ 3) Whether the worker is engaged in a distinct business or occupation – if the worker is engaged in a distinct business or occupation, it is more likely the worker is an independent contractor;
◦ 4) Whether the work rk is done e under er superv pervisio ision n – the more an employer is directly supervising the worker, the more likely he or she is an employee; ◦ 5) Whether the worker can be discharged at will or for cause – allowing discharge at will often weighs in favor of an employer-employee relationship; ◦ 6) Who o suppli plies es the e tools, ols, instrum strumentalit entalities ies and place ace of work rk – if the wor orker er supplies pplies these, se, he or she is mo more re lik ikel ely y an independent dependent contr ntract ctor or; ◦ 7) The length of time the services are to be performed – discrete jobs are generally performed by independent contractors;
◦ 8) Th The me method hod of paymen ment, t, whether ther by time me or by the job – payment ment by time e generally erally sign gnals als an empl ployee oyee relat lation ionshi ship; ◦ 9) Whether the work is part of the regular business of the principal – if it is, the worker is more likely an employee, and ◦ 10)Whether the parties subjectively believe they are creating an employer-employee relationship. See S. G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal.3d 341, 350-51 (1989); 38 Cal. Jur. 3d Independent Contractors §3.
On June 16, 2015, Uber Technologies, Inc. (“UBER”) appealed a June 3, 2015, order by the California Labor Commissioner (“LC”) holding that former UBER driver Barbara Ann Berwick was an UBER employee rather than an independent contractor. The Labor Commissioner ordered Uber to reimburse Berwick $4,152.20 in business expenses she incurred in fuel and tolls during the eigh ght we weeks ks she worked as an UBER driver.
The LC discounted the fact that Berwick made her own hours, used her own vehicle to transport passengers, and paid for her own fuel and vehicle maintenance. The LC held that employment should be found when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service.
The LC then determined that Berwick’s work was integral to UBER’s business and that without drivers, UBER’s business would not exist. The LC also determined UBER was involved in “every aspect” of the operation— from vetting prospective drivers, undertaking background and DMV checks, and controlling the tools drivers used by requiring use of late model vehicles.
Same business model as Uber: Lyft is a San Francisco- based transportation network company that facilitates peer-to-peer ridesharing through its mobile-phone application (the "Lyft App") by connecting passengers who need a ride to drivers who have a car.
Loewen v. Lyft : United States District Court in San Francisco (2015 U.S. Dist. LEXIS 123131) Cotter v. Lyft : United States District Court in San Francisco (USDC Case No. 13-cv-04065- VC).
Plaintiff files class action alleging they were cheated out of bonuses. First Issue: Mandatory Arbitration? Drivers signed TOS (Terms of Service) with arbitration clause and waiver of class action rights Held: Arbitration required, case dismissed
Implications for IC model: Whether viewed as employment dispute or consumer complaint, arbitration enforceable Make sure IC contract has this clause. Arbitration quicker, cheaper, no jury, no class action. Deterrent to lawsuits Class action/representative action waiver (PAGA) distinction
Class action for all former Lyft drivers. They contend Lyft owes them money because it should have paid them as employees rather than independent contractors (i.e., minimum wage, w.comp, overtime, etc.) Issue: Are Lyft drivers employees or Independent Contractors? Both parties filed Motions for Summary Judgment.
Court analyzed all Borello factors (i.e., all “necessary” control, right to terminate, skill required, etc. “These factors "[g]enerally . . . cannot be applied mechanically as separate tests; they are intertwined and their weight depends often on particular combinations . . . [T]o determine whether a worker is an employee or independent contractor, a court should evaluate '[e]ach service arrangement . . . on its facts, [recognizing that] the dispositive circumstances may vary from case to case.'"
Held: Factors “cut in both directions.” Both Motions denied: Jury required. “under California law, the question of how to classify a worker is typically for a jury. A court may only decide the question as a matter of law if application of the multitude of relevant factors would requi uire re any reasona onable le juror or to re reach ch the same concl clus usion on. Here, because the numerous factors for deciding whether a worker is an employee or an independent contractor point in decidedly different directions, a reasonable jury could go either way. Accordingly, there must be a trial. “
Court telegraphs Sacramento: “ As should now be clear, the jury y in this case will be ha hand nded a sq square re peg and aske ked to c choose between ween two round nd holes. The test the California courts have developed over the 20th Century for classifying workers isn't very helpful in addressing this 21st Century problem. . . [P]erhaps Lyft drivers should be considered a new category of worker altogether, requiring a different set of protections. But absent nt legisla lati tive ve intervent vention on, Californ rnia' a's outmoded ded test t for classifying ifying worke kers rs will apply in cases like this. And because the test provides nothing hing remotel tely y close se to a clear ar answ swer, r, it will often be for juries to decide. That is certainly true here .”
Driver ◦ FMCSA or UBER driver qualifications? Tools of the trade ◦ Clean truck or late model sedan? Necessary ◦ Integral - without drivers would the business exist? Broker Replacement - $2.5M to CONVOY ◦ http://www.businessinsider.com/convoy-raises- 25-million-seed-round-2015-10 ◦ http://fleetowner.com/blog/broker-beware-new- apps-aim-replace-middleman?page=1 ◦ https://convoy.com/about.html - MC 917364
GOREE – WORKERS COMP. Broker – Carrier Agreement; Goree Logistics Inc. – MC as motor carrier and broker; Independent Contractor; NC law – “primary contractor;” Workers Compensation Insurance OAC Insurance and Contingent Workers Compensation.
In October, Gov. Brown signed the Motor Carrier Employer Amnesty Program into law. The Amnesty Program is sponsored by the California Teamsters. The new law provides eligible drayage companies with amnesty from statutory and civil penalties, including Private Attorneys General Act penalties (PAGA), if they conduct a voluntary self-audit and reclassification.
An “eligible” drayage company shall not have any of the following on the date it applies to participate in the Amnesty Program: ◦ (A) A civil lawsuit that was filed on or before December 31, 2015, pending against it in a state or federal court that alleges or involves a misclassification of a commercial driver. ◦ (B) A penalty assessed by the department pursuant to Section 1128 that is final imposition of that penalty.
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