Are You An Employee or Are You an Independent Contractor?
Some employees are improperly classified as “independent contractors (IC). Companies sometimes improperly classify their employees as an IC to save the company money and increase profits. The down side is the employee loses out on benefits and legal protections granted to them under our labor laws.
Uber, Lyft, Taxi Drivers: Are They Employees Or Independent Contractors? What's The Difference?In cases involving Taxi,, Lyft or Uber drivers, insurance companies often claims that their driver that caused the crash was an independent contractor and not an employee. This is mainly to limit liability and at times Plaintiff*s access to coverage.
An employer is vicariously liable for the tortious conduct of its employees when committed within the course and scope of the employment. The law is not the same when it comes to *independent contractors. * In the case of an independent contractor, liability is limited.
Employees are sometimes improperly classified as an *independent contractor* because in addition to limiting their legal exposure, the classification also allows the employer to opt out of paying their employee*s disability insurance, unemployment insurance, or social security, adding the extra benefit of saving the company costs.
Are YOU an Independent Contractor under California Law?However, where evidence supports an employee/employer relationship, the label is not dispositive of the employee*s status. Even when the worker is issued a 1099 form rather than a W-2 form, the method of payment is not determinative with respect to independent contractor status. Bottom line: calling some one an independent contractor and paying them as such does not necessarily make them one.
Labor Code Section 3357 creates a presumption that a service provider is presumed to be an employee unless the principal affirmatively proves otherwise. *The determination of employee or independent-contractor status is one of fact.* Thus, the issue is a factual question left for the jury/the trier of fact to decide whose determination may not be disturbed on appeal if supported by substantial evidence.*
The existence of an agency relationship is determinative on a number of factors, control being the primary one. Restatement Second of Agency, section 220, outlines the following factors to consider when determining whether an agency relationship exists:
1. the extent of control exercised by the principal over the details of the work;
2. whether the one employed is engaged in a distinct occupation or business;
3. the kind of occupation: whether the work is one usually done under the direction of the employer
or by a specialist without supervision;
4. the skill required in the particular occupation;
5. whether the employer supplies the instrumentalities, tools, and the place of work for the person
doing the work;
6. the length of time for which the person is employed;
7. the method of payment, whether by the time or by the job;
8. whether the work is a part of the regular business of the employer;
9. whether the parties believe they are creating the relation of master and servant; and
10. whether the principal is or is not in business.
As phrased in the Restatement, the factors on their own do not indicate in whose favor each factor weighs. The factors were drafted in a way to suggest whether an employment relationship exists. As such, the presumption created through Lab. Code section 3357 is a rebuttable presumption. It is necessary to closely examine the facts of each service relationship.
What Are Some Questions TO Ask?When establishing an agency relationship consider the following overarching issues 1) Does the company/employer have the right to control what the worker/employee does during his job 2) Does the company/employer control the business aspects of the worker/employee (i.e. provide tools/supplies, how worker is paid, whether his expenses are reimbursed 3) whether the worker/employee is employed at will or for a specific duration.
You may consider asking the following questions when trying to determine whether an agency relationship exists:
* How does the worker receive work assignments?
* Who determines the methods by which the assignments are performed?
* What are the workers* daily routine
* In case of an accident, who is the worker required to contact
* In case of taxi cabs/Uber drivers where does the worker service his car (i.e. the company*s body
shop, or a designated shop)
* Whether the worker is required to attend any meetings
* If the worker does not attend meetings, are there any penalties
* List the supplies, equipment and property used by the worker to complete the job
* Who provides each of the supplies, equipment and property listed above
* If the equipments are leased, what are the term of the lease
* Whether the company carries worker*s compensation insurance, or disability insurance on the
* Who determines the payment for the services provided
* Can each side terminate the relationship without any penalty
* If the worker is no longer with the company, how did the relationship end (ie. was worker fired, job
completed, contract ended.)
This, of course, is not an exhaustive list, but intended to get you thinking of the type of information you need to establish or support an employee-employer relationship or vice versa. There is no magic or set number of factors that makes the worker an employee or an independent contractor, and no one factor stands alone in making this determination.
ConclusionIn addition to the restatement and common law rules, there are a number of agencies who also regulate and/or determine the status of indepemdnat contractors including Employment Development Department (EDD), Division of Labor Standards Enforcement (DLSE), Franchise Tax Board (FTB), Division of Workers* Compensation (DWC), and Contractors State Licensing Board (CSLB). You may use the guidelines set out by these agencies as an additional resource.
While there is no set legal definition for what makes a worker an independent contractor or employee, labels alone are not determinative of the true worker status. If you have a case involving the question of employee v. independent contractor get familiar with the factors outlined by the restatement and apply the facts to support the existence or non-existence of an agency relationship.
Parisima Roshanzamir is a trial attorney focusing on personal injury and wrongful death cases in San Diego. You may reach Parisima at www.Roshanzamirlaw.com