Uber and Progressive Federalism

As Jon reported last night, an individual arbitrator has issued an award finding a California Uber driver to be an independent contractor rather than an employee.  The award is wrongly decided. I won’t engage in a complete analysis here, but, to find employee status, the arbitrator relies primarily on four California cases, three of which involved FedEx drivers. The arbitrator concludes that the facts of the Uber case resemble previous cases in which workers were found to be independent contractors. She holds:

Uber drivers are not supervised; supply the cars they drive; do not wear Uber uniforms or signage; can drive simultaneously for any competitor, including Lyft, Uber’s biggest competitor; are paid for each ride and have the unfettered option to work as little or as much as they want and whenever they want in the geographical location assigned to their platform.

But to find independent contractor status on this basis, the arbitrator has to ignore some other highly relevant cases, including a 2006 California decision involving drivers who worked for a courier company, JKH Enterprises, Inc. v. Dep’t of Industrial Relations. In JKH, the court found that the drivers were employees despite the following:

[T]he drivers are free to decline to perform a particular delivery when contacted by the dispatcher, even if the driver has indicated his or her availability for the day . . . .  All drivers [] use their own vehicles . . . They pay for their own gas, car service and maintenance, and insurance . . . . The drivers’ cars do not bear any JKH marking or logo. And the drivers themselves do not wear uniforms or badges that evidence their affiliation or relationship with JKH.  Some of the drivers perform delivery services for other companies as well . . . .  The drivers receive no particular training. . . . All drivers set their own schedules and choose their own driving routes.  Their work is not supervised.  Indeed, JKH only has a vague idea of where its working drivers are during the business day. . . . The drivers take time off when they want to and they are not required to ask for permission in order to do so.

So, this particular Uber arbitration award is wrongly decided. Of much broader importance, however, the award brings home something critical about progressive federalism: namely, progressive states need to clarify that gig workers, like Uber drivers, are employees within the meaning of state employment law. Continue reading

A New Category of Worker for the On-Demand Economy?

As legal challenges to the “1099 economy” mount, and as it becomes more and more likely that companies like Uber and Lyft will be deemed employers of their drivers and delivery workers, some participants in the debate are beginning to push for a new legal category of worker.  In a helpful piece on BuzzFeed last week, Caroline O’Donovan surveys the development of this trend, and Senator Mark Warner (most recently, in response to the recent Uber ruling) has been floating some legislative ideas.

There may well be a need to experiment with a new, intermediate category of worker: a legal status somewhere in between “employee” and “independent contractor,” a status that would ensure sufficient protection to people working in the on-demand economy.

In the initial discussions of this idea, though, a number of participants have identified “dependent contractor” as a candidate for the new classification.  Back in January, the Wall Street Journal raised the possibility, the Washington Post did so in March, and O’Donovan’s piece also names dependent contractor as the leading candidate for the new status.  Now, in some ways, dependent contractor is serving as a placeholder for a yet-to-be-named and yet-to-be-defined category.  That’s appropriate, and that’s where we are in this debate and discussion.  We may need something, even though we don’t yet have a handle on what.

But, it’s also important to recognize that “dependent contractor” is an actual legal category in other countries, and its a legal category that may not make sense for what we need in the United States. Continue reading