The Independent Contractor Versus Employee Debate "Lyfts" Itself to the Jury

Posted on April 9, 2015

By: Alis M. Moon

On March 11, 2015, a California District Court held that whether or not Lyft drivers are legally employees rather than independent contractors will be decided by the jury. Cotter v. Lyft, Inc., CV13-04065 (N.D. Cal.)

Although there is a rigorous test consisting of numerous factors that can help determine whether or not an individual is an employee versus an independent contractor, ultimately, the true test depends upon the employer's right to control (regardless of whether such control is in fact exercised).

Whether a worker is classified as an employee or an independent contractor has great consequences. California law gives many benefits and protections to employees; while independent contractors get virtually none. In this case, Lyft drivers argue that they are in fact employees of the company and should be entitled to minimum wage and overtime compensation, meal and rest periods, reimbursement for necessary business expenses and workers' compensation.

Lyft argues that its drivers are clearly independent contractors because the drivers can work as little or as much as they want, and can schedule their driving around other activities, including other jobs. An individual might treat driving for Lyft as a side activity, to be fit into his or her schedule when time permits and when he or she could use the extra income. According to Lyft, these facts weigh of favor of finding that its drivers are independent contractors, not employees.

Generally, an independent contractor is thought of as an individual that has a special skill that gives him or her superior bargaining power, who serves multiple clients, performing discrete tasks for limited periods, while exercising an immense amount of discretion over the way the work is performed. With regard to Lyft drivers, they use no special skill when they give rides to the public, Lyft exercises a significant amount of control over the way Lyft drivers perform their jobs, and although Lyft drivers provide their own vehicles, such vehicles are required to comply with Lyft's requirements. Thus, it is clear that there are also factors that weigh in favor of finding that Lyft drivers are employees, not independent contractors.

The court casted doubt on this heated debate and stated that the test the California courts have developed over the 20th Century for classifying workers is not very helpful in addressing this 21st Century problem. As the court explained, the fact that some factors point in one direction, some point in the other, and some are ambiguous is precisely the reason why this case will be up to the jury to decide.

The decision, which will be left in the fate of the jury's hands, will have an impact on not only the drivers and the protections, if any, they are entitled to received under California law, but it will also effect the business model of Lyft (and similar companies like Uber) going forward.

This case emphasizes the importance of ensuring that employers are complying with California when choosing to hire individuals as independent contractors rather than employees.

Alis Moon is an Associate with Kring & Chung, LLP's CA office. She can be reached at (949) 261-7700 or amoon@kringandchung.com.