From the San Diego Tribune, Dan Eaton provides a great summary of what we know and don’t know about independent contractors and offers his recommendations on how to resolve some of the unknowns. Dan writes:
Here’s some of what we know and what we know we don’t know.
- Most online jobs platforms treat those who offer their labor on the platforms as independent contractors. Independent contractors are not entitled to minimum wages, overtime, meal and rest breaks, reimbursement of expenses, workers’ compensation, unemployment benefits, or a range of other benefits provided to employees.
- Independent contractors are free of the burdens of employment. For example, there are no legal restrictions on independent contractors performing services through competing platforms, though such restrictions may be imposed by contract.
- California law presumes that a person providing services for pay is an employee unless the hiring entity proves the worker is an independent contractor. In other words, classification as an employee is the rule; classification as an independent contractor is the exception.
- There are no uniform legal definitions of “employee” and “independent contractor,” and those definitions that exist are mostly unilluminating. The core definition of “employee” in the workers’ compensation law is “every person in the service of an employer. . . ” But defining an “employee” as someone who provides services to an “employer” comes close to defining the word in terms of itself.
- The definition of “independent contractor” is little better, defining the term as “any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.” But that definition does not say how much control the principal may exercise without transforming the worker into an employee.
- In place of uniform definitions, courts and regulators have adopted multi-part tests to distinguish one from the other. There is, however, no single set of criteria the law applies in all areas of the law, though criteria overlap. Parts of these tests are malleable, making it hard to predict the outcome from one case to the other.
- The degree of control exercised over the worker as to the manner and means of accomplishing the work is important in all areas of the law of the workplace; it is the most important criterion in the areas of wages and hours and tax law. The less control exercised over how the worker accomplishes the task, the more likely the worker will be found to be an independent contractor. Another key factor is whether the task is integral to the hiring entity’s business.
- A 2015 ruling by the California labor commissioner found that an Uber driver seeking reimbursement of expenses was an employee. The conclusion rested largely on a finding that, without drivers, there would be no Uber. Because driving is integral to Uber’s business and because driving requires little skill, it did not matter, said the hearing officer, that Uber exercised little control over the driver. For all the attention the ruling got at the time, it resulted in no binding precedent because the parties settled before the Court of Appeal could hear the matter.
- The legal status of workers who earn income through online jobs platforms is uncertain. Resolving whether these workers are employees, independent contractors, or should be labeled something else entirely will resolve a host of other legal questions.
- It is unknown how the business of these online platforms should be defined for purposes of the law of work. There is a strong argument that Uber and Lyft are less in the business of transporting passengers than in the business of enabling passengers to connect with drivers. The more kinds of industries these online platforms touch, the harder it will be to say that the platforms are in the business of providing services the platforms facilitate. The law could recognize an identifiably distinct online jobs platform industry, an industry whose companies employ thousands of employees of their own, but which offer independent contracting opportunities to tens of thousands more.
- If new law is required, it is unclear whether it should come from the state or federal government, and whether any such new rules should be developed mainly by legislation, regulation, or litigation.
Read the full story at Gig economy creates legal puzzles for the courts – The San Diego Union-Tribune