California’s Labor Commission recently ruled that Barbara Ann Berwick, a San Francisco Uber driver, was an employee, not an independent contractor. Uber is a ride-sharing company that uses apps on smart phones to connect drivers for the company with people who need a ride.
Ms. Berwick worked for Uber from July 2014 to September 2014. She filed a claim against Uber asking for extra compensation, including reimbursement for certain costs. The Labor Commission denied her claim for extra wages, but granted her claim for reimbursable expenses, including $3,622 for the over 6,000 miles she drove for Uber, and $256 in toll charges. The Labor Commission found that she was an employee instead of an independent contractor, and was entitled to that extra compensation.
Uber is appealing the ruling, and says that the ruling is non-binding and only applies to Ms. Berwick. Uber also points out that the ruling contradicts a 2012 ruling by the Labor Commission, which stated that an Uber driver performed services as an independent contractor, not an employee.
Whether or not Uber’s drivers are employees or independent contractors is critical to the company. If drivers are considered employees, Uber’s costs will increase significantly. Currently, drivers must pay the bulk of their expenses, including the cost of the vehicle itself, maintenance to the vehicle, insurance, and gas. Drivers also must pay more in taxes because they are labeled as independent contractors and must find their own health insurance. If they are considered employees, Uber must pay for most of those expenses, as well as providing workers’ compensation insurance and other benefits.
Uber was founded in 2009, and says that it only provides the technology that matches drivers with riders. However, the Labor Commission found that Uber maintains a great deal of control over its drivers, which is the primary test for whether a worker is an employee or independent contractor. The higher the level of control a company exerts over a worker, the more likely it is that the worker is an employee and not an independent contractor.
Pointing to the factors laid out in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 769 P.2d 399, 404 (Cal.1989), the Labor Commission says that Uber is involved in every aspect of the operation: Uber tells drivers what fares they can charge;’ Uber dictates what models of cars they can use; Uber to some extent, controls how the drivers work; UBer does not allowdrivers to negotiate how the fares are divided between the drivers and the company.
The Uber ruling comes on the heels of a 2014 Ninth Circuit opinion in Alexander v. FedEx, 765 F.3d 981 (9th Cir. 2014), which relied on the same Borello test to hold that FedEx Ground drivers were employees, not independent contractors, because of the control FedEx exercised over its drivers. Liberty Law Office recently posted on the recent settlement in Alexander v. FedEx.
It’s very common for companies to mislabel workers as independent contractors when they are actually employees in an attempt to save money. Workers are often unaware that they have been labeled as independent contractors until tax season, when they discover their employer did not withhold any of their wages and are forced to pay the taxes out of pocket themselves.
If you believe you have been wrongfully classified as an independent contractor when you are actually an employee, you should speak with an employment law attorney. Your employer may be violating the law, and could be held liable for back pay, benefits, and more. At Liberty Law, Micha Star Liberty believes that employers who misclassify employees as independent contractors should be held liable.
Call Micha Star Liberty, Oakland employment attorney, at 510-645-1000 or 415-896-1000 to learn more about your legal options if you have been characterized as an independent contractor. She works with clients throughout the Bay area, including Oakland, San Francisco, Hayward, Tracy, Fairfield, San Jose, and the surrounding areas. Call today for your free consultation. You do not pay any fees until she has obtained a recovery for you.