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

Transcription

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

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3 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.

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5 Klout ranked UBER as the 48th most powerful company in America in most-powerful-companies-america html By mid-2015, UBER was estimated to be worth $50B /uber-said-to-seek-1-5-billionin-funds-at-50-billion-valuation

6 1) Who has the right to control 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;

7 4) Whether the work is done under supervision 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 supplies the tools, instrumentalities and place of work if the worker supplies these, he or she is more likely an independent contractor; 7) The length of time the services are to be performed discrete jobs are generally performed by independent contractors;

8 8) The method of payment, whether by time or by the job payment by time generally signals an employee relationship; 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, (1989); 38 Cal. Jur. 3d Independent Contractors 3.

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11 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, in business expenses she incurred in fuel and tolls during the eight weeks she worked as an UBER driver.

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

13 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.

14 Same business model as Uber: Lyft is a San Franciscobased 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.

15 Loewen v. Lyft: United States District Court in San Francisco (2015 U.S. Dist. LEXIS ) Cotter v. Lyft: United States District Court in San Francisco (USDC Case No. 13-cv VC).

16 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

17 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

18 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.

19 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.'"

20 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 of law if application of the multitude of relevant factors would require any reasonable juror to reach the same conclusion. 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.

21 Court telegraphs Sacramento: As should now be clear, the jury in this case will be handed a square peg and asked to choose between two round 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 legislative intervention, California's outmoded test for classifying workers will apply in cases like this. And because the test provides nothing remotely close to a clear answer, it will often be for juries to decide. That is certainly true here.

22 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 25-million-seed-round MC

23 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.

24 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.

25 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.

26 The bill takes effect on January 1, 2016 and expires on January 1, Drayage companies must submit an application to the Labor Commissioner and conduct a self-audit of 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 of the reclassification, (2) the identification of all drivers reclassified and the resulting compensation paid to them, and (3) a report of the self-audit. If the application is denied there is no safe harbor.

27 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. es/billanalysisclient.xhtml?bill_id= AB621

28 Details of the final bill can be found at: Client.xhtml?bill_id= AB621 Legislative Counsel s Digest when the bill was first introduced:

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30 Cameron W. Roberts, Esq. Sean Brew, Esq. Roberts & Kehagiaras LLP