Senate bill (SB25) introduced February 2, 2015 proposes a uniform standard for determining IC/employee status under the wage and hour, unemployment compensation and workers’ compensation statutes. Required are seven factors: (a) the individual is free from control and direction in connection with the performance of the service; (b) the individual customarily is engaged in an independently established trade, occupation, profession, or business; the individual is a separate and distinct business entity from the entity for which the service is being performed or, if the individual is providing construction services and is a sole proprietorship or a partner in a partnership, the individual is a legitimate sole proprietorship or a partner in a legitimate partnership; (d) the individual incurs the main expenses and has continuing or recurring business liabilities related to the service performed; (e) the individual is liable for breach of contract for failure to complete the service; (f) an agreement, written or oral, express or implied, exists describing the service to be performed, the payment the individual will receive for performance of the service, and the time frame for completion of the service; and (g) the service performed by the individual is outside of the usual course of business of the employer.
President Obama’s proposed 2016 budget targets independent contractor misclassification as part of the “fissured workplace.” Labor Department’s Wage and Hour Division (WHD) submitted a robust budget justification to Congress the revenues to be gained from detecting and penalizing instances of misclassification.
Bill (SB927) introduced in the state Senate on March 9, 2015 contains penalties for failure to properly classify workers as independent contractors or employees. Worth noting, “An individual performing a service for wages or under an express or implied contract of hire is presumed to be an employee of the person for whom the service is performed.” However, if proven “to the satisfaction of the commission that the individual’s performance of the service has been and will continue to be free from control or direction under the contract and in fact” then the classification may be upheald.
As we’ve discussed in recent articles, the development of the “on-demand economy” hasn’t diminished the importance of compliance with worker classification laws. Two recent rulings in California federal courts last week involving the ride-sharing companies Uber and Lyft illustrate the increasing significance of these laws to the on-demand economy. John Rodgers of Bradley Arant Boult Cummings LLP discusses the matter in a recent JD Supra article.
Recently, drivers for the Uber and Lyft brought class action lawsuits in a California federal court suing their companies and alleging that they were misclassified as independent contractors, instead of employees.
Uber and Lyft responded by filing summary judgments, claiming that the