Your Legal Rights

From the Law Office of Beeson, Tayer & Bodine

An Employee by Any Other Name... Is Still an Employee

Employers who have misclassified their employees as “independent contractors” have been in the news lately.

On June 3, 2015, the California Department of Labor Standards Enforcement (DLSE) 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. This DLSE decision may force Uber to change its business model, which, in large part, depends on the relatively low expense of its workforce because it saves money by classifying employees as independent contractors.

FedEx has also faced significant legal issues regarding misclassifying its employees in recent years. Last year, the Ninth Circuit Court of Appeals held that 2,300 FedEx Ground drivers in California were misclassified as independent contractors. The court made this finding based on the fact that FedEx required its drivers to wear FedEx uniforms, drive FedExapproved vehicles, and abide by FedEx appearance standards. Also, the Court found that FedEx exercised a great deal of control over how the drivers work by telling them what packages to deliver, what days and times to deliver, and forbidding drivers from operating multiple routes or hiring third parties to assist in performing the work without FedEx’s consent.

The problem with misclassification

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 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.

Beeson, Tayer & Bodine — Oakland: 510-625- 9700. Sacramento: 916-325-2100.