Could California Uber and Lyft Drivers Receive Employment Status?

Uber, Lyft and similar ridesharing companies have long argued they are tech companies, not transportation companies, thereby classifying their drivers as independent contractors. This has been a beneficial legal development for these companies since the companies can avoid paying drivers wages and additional benefits.

And, more importantly for the purposes of personal injury law, companies are generally not liable for the negligent acts of an independent contractor. By contrast, negligent actions often give rise to employer liability. As such, there are many reasons ridesharing companies wish to maintain the independent contractor status of drivers, but a new California law may change the legal status of rideshare drivers.

Will Uber and Lyft Drivers Become Employees?

In what is being hailed as a major decision from the Supreme Court of California, the case of Dynamex Operations West, Inc. v. Superior Court, No. S222732, the California court replaced a decades-old legal test to determine whether a worker should be viewed as an independent contractor or employee.

In the case, the California Supreme Court ruled in favor of drivers who were seeking employment status as drivers for a document delivery company. The case was originally filed a decade ago, showing that this was a long and often contentious legal dispute. Dynamex, like Uber and Lyft, argued that the drivers had the ability to set their hours and drive for other companies, which served to justify their status as a contractor rather than an employee.

This is crucial since California’s Industrial Welfare Commission sets standards for minimum wage and overtime that apply to all employees, yet these same standards are not applicable to independent contractors.  In the case, the Court was unpersuaded by Dynamex’s legal argument, arguing that companies must do the following to prove a worker is an independent contractor:

• Free from company control and direction in "everyday tasks"
• The work is outside of the usual course of the hiring entity’s business
• The worker regularly engages in an independent business or occupation that is typically performed for the company

What the Dynamex Decision Could Mean Moving Forward

As you can see, these requirements could prove problematic for Uber and Lyft’s ability to assert their drivers are independent contractors. It is reasonable to conclude that workers who only drive for one ridesharing company, for example, may be considered employees based on the above requirements.

It remains to be seen what ridesharing companies will do in response to this legal development, but the decision is, in some respects, a surprising one. Recent cases (including a case decided by a federal judge in California in a lawsuit involving GrubHub drivers) have tended to side with viewing delivery drivers for app-based tech companies as independent contractors.

If, however, this legal decision from California’s highest court gains traction across the country, it could lead to industry-shifting policies regarding driver employment status. And, by extension, this could bring significant changes to ridesharing accident ability, the liability policies provided by these companies and the path toward receiving legal compensation as an accident victim.

For more information about ridesharing employment status or to discuss your legal claim after a ridesharing accident, contact us to speak with a ridesharing accident lawyer at The Ledger Law Firm today.