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In a recent decision by the California Labor Commission, the internet/smart phone-based transportation system, Uber, suffered a meaningful set back when the tribunal declared a driver-for-hire using the system to be an employee, instead of an independent contractor. In making its determination, the tribunal noted the degree of control Uber had over drivers’ accounts, including the ability to suspend or cancel the accounts for failing to comply with Uber standards. The administrative court viewed this as sufficiently similar to termination and, combined with the other rules that existed for drivers, found sufficient control existed for Uber to be an employer of the drivers.

You may very well question how a California administrative decision affects your business all the way on the other side of the country. However, this decision is not isolated. It is part of a trend by federal and state agencies to address misclassification of employees. In Florida, the Division of Revenue and the Department of Labor signed a memorandum of understanding in January 2015 with the goal of cooperatively preventing misclassification of employees. In plain speak, that means at least two sets of “government eyes” looking for perceived violations of state and federal law as to how people are identified and paid. A similar agreement has not yet been reached in Georgia, but with the anticipated changes in federal law, this may not matter.

With the increased scrutiny comes increased publicity, not only from decisions like the one against Uber, but from attorneys advertising services to make sure people are getting what they deserve under the law. Although government agencies are stepping up enforcement, there continues to be a sizable enforcement effort through private lawsuits. Often, those suits end up being funded by the very employers attempting to comply with the law, as part of the settlement or judgment will include payment of the employee’s attorneys’ fees by the employer.

Also, the issue of employee classification goes further than wages. It involves payment of certain employment benefits. Further, the requirement for an employer to have workers’ compensation insurance and pay benefits for lost wages and medical care to an injured worker turns on this question.

If you have questions about the law, the classification process, or are up at night worrying about whether you have properly classified your workers, now is the time to take steps to ensure you are compliant. If you have an attorney that can help, call him or her. If you don’t, call us. Part of what we do is help businesses large and small protect what they have built and this is just one of the many ways we can assist.

  Jason C. Taylor
 jtaylor@mcconnaughhay.com 
 (850) 222-8121