Updated June 17, 2015: The California Labor Commission has found that a driver for Uber in San Francisco is an employee of the company.
Deciding whether to treat workers as employees or independent contractors is tricky in general and even more so in the context of the new so-called sharing economy. In recent decisions, courts have refused to resolve whether the drivers for Lyft and Uber should be treated as employees or independent contractors, leaving it for juries to tackle the question. And the answer could majorly impact the companies’ highly successful business model.
Updated 2/5/19: The California Supreme Court’s decision in Dynamex Operations W., Inc. v Superior Court (2018) 4 C5th 903 held that workers are presumed to be employees for wage order purposes, and the burden is on the employer to prove they are not.
Part of the fallout of the economic downturn is the emergence of the “freelance economy.” This is largely fueled by the financial advantages of hiring independent contractors instead of employees. But employers beware: Getting your classifications wrong can be costly.