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Uber Moves to Comply with Dynamex, but Wants California to Pay

Uber’s Chief Executive Officer, Dara Khosrowshahi, recently gave a talk that offered some interesting hints that Uber is moving to comply with the new rules established by Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (Cal. Supreme Court April 30, 2018).

Dynamex established new rules in California with respect to how “employees” and “independent contractors” are defined. Essentially, all workers are now to be considered “employees” unless the hiring entity can demonstrate three facts:

  • The hiring entity exercises no or very little control over the workers,
  • The work being performed is outside of the “usual course of business” of the hiring entity and
  • The workers have some form of independent licensure.

Uber is a very popular service that offers various software and online payment support for ride-sharing. It has been long argued by the drivers that they are employees. If they are employees, then they are entitled to various protections under the California labor laws. Under the Dynamex standard, it is pretty clear that Uber drivers are now and will eventually be officially classified as employees. It is difficult to imagine how Uber will meet the second and third Dynamex criteria.

As noted, the media reports Uber’s upper management is beginning to establish policies that begin to treat its drivers as employees. See Fortune Magazine report here. Here is a quick discussion.

Insurance and Workers’ Compensation

Among the ideas being discussed is how to provide health and accident insurance coverage. Uber is already required to provide health insurance coverage for its drivers in Europe. So, Uber is transferring some of those ideas here to California. In a “normal” employer-employee relationship, both types of insurance coverage would be provided. As an example, if an employee made deliveries with the company delivery van, the van and the employee would be covered by hazard and accident insurance.

The issue for Uber is the fact that so-called “gig economy” workers often have multiple “gigs.” The other issue relates to the “nomadic” nature of gig employment. Many gig workers only work for a given employer for a short time — a few days, a couple of weeks. Thus, Uber wants to establish some sort of framework where Uber is only paying its percentage share of the insurance for the time that its drivers are working for Uber. Uber is also pitching the idea that state governments — like California — should pay for part of the benefits or help establish the framework. A similar issue exists with workers’ compensation benefits.

Parental, Sick Leave, and Disability Benefits

If Uber drivers are considered employees, among the benefits to which they are entitled are various leaves — paid and unpaid — that are required by federal and California statutes. According to reports — see here — Uber is already offering some of its European drivers parental leave benefits and some medical, sick leave, and disability compensation. The benefits are available/given to drivers who have completed 150 trips over the previous eight weeks. This amounts to about 150,000 drivers. (As an aside, a minimum number of trips over a defined time period is one method of addressing the “nomad” issue.)

From a practical standpoint, however, the question of leaves and breaks is problematic given the nature and structure of Uber employment. Since the drivers set their own hours and work when they want to, it is problematic to turn around and “require” Uber — as the employer — to give leave and break benefits.

Contact San Diego Corporate Law

For more information, contact attorney Michael Leonard of San Diego Corporate Law. Mr. Leonard’s law practice is focused on business, transactional, and corporate matters. To schedule a consultation, contact Mr. Leonard via email or call at (858) 483-9200. We here at San Diego Corporate Law will continue watching with interest these developments with Uber and Dynamex.

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