Presented by Cameron Roberts and Sean Brew, Roberts & Kehagiaras - - PowerPoint PPT Presentation

HTC Annual Legal Review November 5, 2015 Presented by Cameron Roberts and Sean Brew, Roberts & Kehagiaras LLP

 UBER puts willing passengers together with

independent drivers.

 UBER’s smartphone app is essential and only

approved drivers can use it.

 UBER monitors drivers’ approval ratings and

terminates their access to the application if their ratings fall below a certain level or the driver is inactive for more than 180 days.

 UBER vets prospective drivers, undertaking

background and DMV checks, and requires the use of late model vehicles.

 Klout ranked UBER as the 48th most powerful

company in America in 2014. https://sg.finance.yahoo.com/news/50- most-powerful-companies-america- 150200135.html

 By mid-2015, UBER was estimated to be

worth $50B $50B. http://www.bloomberg.com/news/articles/2 015-05-09/uber-said-to-seek-1-5-billion- in-funds-at-50-billion-valuation

• 1) Who has the right

ight to contr ntrol

• l the worker’s manner

and means of performing his or her duties – an independent contractor has more control over the day-to-day details of his or her job than an employee;

• 2) The skill required in the worker’s job –

independent contractors often perform highly skilled jobs;

• 3) Whether the worker is engaged in a distinct

business or occupation – if the worker is engaged in a distinct business or occupation, it is more likely the worker is an independent contractor;

• 4) Whether the work

rk is done e under er superv pervisio ision n – the more an employer is directly supervising the worker, the more likely he or she is an employee;

• 5) Whether the worker can be discharged at will or

for cause – allowing discharge at will often weighs in favor of an employer-employee relationship;

• 6) Who
• suppli

plies es the e tools,

• ls, instrum

strumentalit entalities ies and place ace of work rk – if the wor

• rker

er supplies pplies these, se, he or she is mo more re lik ikel ely y an independent dependent contr ntract ctor

• r;
• 7) The length of time the services are to be

performed – discrete jobs are generally performed by independent contractors;

• 8) Th

The me method hod of paymen ment, t, whether ther by time me or by the job – payment ment by time e generally erally sign gnals als an empl ployee

• yee

relat lation ionshi ship;

• 9) Whether the work is part of the regular business of

the principal – if it is, the worker is more likely an employee, and

• 10)Whether the parties subjectively believe they are

creating an employer-employee relationship.

 See S. G. Borello & Sons, Inc. v. Dep’t of Indus.

Relations, 48 Cal.3d 341, 350-51 (1989); 38

• Cal. Jur. 3d Independent Contractors §3.

 On June 16, 2015, Uber Technologies, Inc.

(“UBER”) appealed a June 3, 2015, order by the California Labor Commissioner (“LC”) holding that former UBER driver Barbara Ann Berwick was an UBER employee rather than an independent contractor. The Labor Commissioner ordered Uber to reimburse Berwick $4,152.20 in business expenses she incurred in fuel and tolls during the eigh ght we weeks ks she worked as an UBER driver.

 The LC discounted the fact that Berwick made

her own hours, used her own vehicle to transport passengers, and paid for her own fuel and vehicle maintenance.

 The LC held that employment should be

found when the work done is an integral part

• f the regular business of the employer and

when the worker, relative to the employer, does not furnish an independent business or professional service.

 The LC then determined that Berwick’s work

was integral to UBER’s business and that without drivers, UBER’s business would not

• exist. The LC also determined UBER was

involved in “every aspect” of the operation— from vetting prospective drivers, undertaking background and DMV checks, and controlling the tools drivers used by requiring use of late model vehicles.

 Same business model as

Uber:

 Lyft is a San Francisco-

based transportation network company that facilitates peer-to-peer ridesharing through its mobile-phone application (the "Lyft App") by connecting passengers who need a ride to drivers who have a car.

 Loewen v. Lyft: United States District Court in

San Francisco (2015 U.S. Dist. LEXIS 123131)

 Cotter v. Lyft: United States District Court in

San Francisco (USDC Case No. 13-cv-04065- VC).

 Plaintiff files class action alleging they were

cheated out of bonuses.

 First Issue: Mandatory Arbitration? Drivers

signed TOS (Terms of Service) with arbitration clause and waiver of class action rights

 Held: Arbitration required, case dismissed

 Implications for IC model: Whether viewed as

employment dispute or consumer complaint, arbitration enforceable

 Make sure IC contract has this clause.

Arbitration quicker, cheaper, no jury, no class action.

 Deterrent to lawsuits  Class action/representative action waiver

(PAGA) distinction

 Class action for all former Lyft drivers. They

contend Lyft owes them money because it should have paid them as employees rather than independent contractors (i.e., minimum wage, w.comp, overtime, etc.)

 Issue: Are Lyft drivers employees or

Independent Contractors? Both parties filed Motions for Summary Judgment.

 Court analyzed all Borello factors (i.e., all

“necessary” control, right to terminate, skill required, etc.

 “These factors "[g]enerally . . . cannot be applied

mechanically as separate tests; they are intertwined and their weight depends often on particular combinations . . . [T]o determine whether a worker is an employee or independent contractor, a court should evaluate '[e]ach service arrangement . . . on its facts, [recognizing that] the dispositive circumstances may vary from case to case.'"

 Held: Factors “cut in both directions.”  Both Motions denied: Jury required.

 “under California law, the question of how to classify a worker is

typically for a jury. A court may only decide the question as a matter

• f law if application of the multitude of relevant factors would

requi uire re any reasona

• nable

le juror

• r to re

reach ch the same concl clus usion

• n. Here,

because the numerous factors for deciding whether a worker is an employee or an independent contractor point in decidedly different directions, a reasonable jury could go either way. Accordingly, there must be a trial. “

 Court telegraphs Sacramento: “As should now be clear, the jury y in this case will be ha hand nded a sq square re peg and aske ked to c choose between ween two round nd holes. The test the California courts have developed over the 20th Century for classifying workers isn't very helpful in addressing this 21st Century problem. . . [P]erhaps Lyft drivers should be considered a new category of worker altogether, requiring a different set of protections. But absent nt legisla lati tive ve intervent vention

• n, Californ

rnia' a's outmoded ded test t for classifying ifying worke kers rs will apply in cases like this. And because the test provides nothing hing remotel tely y close se to a clear ar answ swer, r, it will often be for juries to

• decide. That is certainly true here.”

 Driver

• FMCSA or UBER driver qualifications?

 Tools of the trade

• Clean truck or late model sedan?

 Necessary

• Integral - without drivers would the business exist?

 Broker Replacement - $2.5M to CONVOY

• http://www.businessinsider.com/convoy-raises-

25-million-seed-round-2015-10

• http://fleetowner.com/blog/broker-beware-new-

apps-aim-replace-middleman?page=1

• https://convoy.com/about.html - MC 917364

 GOREE – WORKERS COMP.  Broker – Carrier Agreement;  Goree Logistics Inc. – MC as motor carrier and

broker;

 Independent Contractor;  NC law – “primary contractor;”  Workers Compensation Insurance  OAC Insurance and Contingent Workers

Compensation.

 In October, Gov. Brown signed the

Motor Carrier Employer Amnesty Program into law. The Amnesty Program is sponsored by the California Teamsters. The new law provides eligible drayage companies with amnesty from statutory and civil penalties, including Private Attorneys General Act penalties (PAGA), if they conduct a voluntary self-audit and reclassification.

 An “eligible” drayage company shall not have

any of the following on the date it applies to participate in the Amnesty Program:

• (A) A civil lawsuit that was filed on or before

December 31, 2015, pending against it in a state or federal court that alleges or involves a misclassification of a commercial driver.

• (B) A penalty assessed by the department pursuant

to Section 1128 that is final imposition of that penalty.

 The bill takes effect on January 1, 2016 and

expires on January 1, 2017.

• Drayage companies must submit an application to

the Labor Commissioner and conduct a self-audit

• f its driver classifications. Upon submission of the

application, drayage companies are provided a safe harbor from any claim for PAGA penalties; unless the application is denied.

• (1) documentation

cumentation of the reclassificati classification,

• n, (2) the

identifi entificati cation

• n of all

l drivers ivers reclassified classified and the resul sultin ting g comp mpensati ensation

• n paid

id to them, m, and d (3 (3) ) a report port of the self lf-audit. audit.

• If the application is denied there is no safe harbor.

 CA Assembly floor analysis

reads: This bill is sponsored by the California Teamsters Public Affairs Council, who argues that nearly all of the so-called "owner-operator" truck drivers that haul intermodal freight to and from the ports of California have been misclassified.

 http://leginfo.legislature.ca.gov/fac es/billAnalysisClient.xhtml?bill_id=2 01520160AB621

 Details of the final bill can be found at:

http://leginfo.legislature.ca.gov/faces/billNav Client.xhtml?bill_id=201520160AB621

 Legislative Counsel’s Digest when the bill was

first introduced: http://www.leginfo.ca.gov/pub/15- 16/bill/asm/ab_0601- 0650/ab_621_bill_20150224_introduced.htm

OR

Came meron ron W. Rob

• bert

erts, s, Esq. q. Sean n Brew, w, Esq. q. Rob

• bert

rts s & Ke Keha hagiaras giaras LLP 310 310-642 642-9800 9800 ww www. w.tradeandcar tradeandcargo.c go.com

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