Not long ago one Tip addressed the issue of whether a worker constituted an Employee (EE) or an Independent Contractor (IC). (That Tip was entitled: “Is the Worker an Employee or IC?--Why Companies Care!”)
That Tip examined the recent Case of Dynamex Operations West, Inc., where the California Supreme Court determined that drivers for Dynamex deliveries were considered to be EEs and not ICs. Subsequently, California successfully took the position that legislation should be passed to support the EE position.
As mentioned in the prior Tip, this issue is of great significance to many companies, such as Amazon, Uber, Lyft, UPS, et al. Recently, California filed suit against Uber and Lyft to resolve the question as to whether a worker is an EE or IC.
A resolution of this issue against the Company could mean that the then Company would be liable for employment taxes, sick leave, paid vacations, unemployment charges, and much more. Thus, the cost factor to a company, such as Uber or Lyft, would be a huge financial burden and could cripple the company.
Various cities within California have joined in the claim against Uber and Lyft, knowing that a decision in favor of the government will mean a substantial increase in tax revenue and the sharing of other financial burdens by Uber and Lyft.
Uber and similar companies recognize how important it is for them to be successful in classifying their workers as IC. The Defendants, Uber and Lyft, with others, have raised a large war chest to support an attempt in California to reverse the current legislative position supporting the EE treatment, labeled as Assembly Bill 5, and to hold that the workers are IC when functioning for Uber and Lyft.
Other companies are now battling governmental bodies on this issue of whether a worker is an EE or IC. For example, there are a number of such actions in NY and New Jersey. Many other companies, beyond Uber and Lyft, are monitoring this dispute very closely. Other companies will be impacted by a decision on this demarcation of a worker being considered an EE or IC.
By
Dr. Mark Lee Levine,
Professor, University of Denver