Employment law – who is an independent contractor
Two developments from California this week are significant to Colorado employment and unemployment law. Both developments have employers paying a price for trying to call their workers independent contractors rather than employees.
The American Bar Association reports FedEx agreed to settle multiple lawsuits alleging that it misclassified its delivery drivers in California as independent contractors. The settlement amount is $227 million. Because of the classification of drivers as independent contractors, drivers had been unable to receive many employment benefits, including sick leave. Plaintiffs alleged that in some cases, drivers were forced to pay the wages of their replacements when they were ill and unable to work. Unpaid OT based on misclassification is rampant. Employers in many industries try to avoid taxes and overtime by saying, “You are management on salary, now you work 60 hours a week making donuts, but no OT.” Or “I will pay you without deducting taxes or Social Security, and give you a 1099 instead of a W2.” This is unjust and, as FedEx learned, unlawful.
The national media reported this week that UBER is taking California to court after the California agency in charge of unemployment ruled that Uber is the employer of its California drivers, so they are entitled to unemployment benefits. Uber has argued for years that its drivers are independent contractors, not employees, and that it is “nothing more than a neutral technology platform.” But California said Uber controls the tools driver use, monitors their approval ratings and terminates their access to the system if their ratings fall below 4.6 stars. This sort of control makes Uber an employer.
The Uber decision will not be binding on Colorado, but it may influence the decisions who is an employer and who is an employee for unemployment benefits law in our State.