If you are a working person in the state of California, you probably have a great many responsibilities, so it’s important to take the time to understand your rights as well. Federal and state laws protect legal employees in California at every stage of employment from hiring through termination. Thus, people who work in this state need to know: Does your employer classify you as a “legal employee” or as an independent contractor?
You need to know because while legal employees in the state of California have extensive legal protection, and a number of legal rights, independent contractors in this state have little protection and few legal rights. If you are a legal employee in California but your employer treats you as an independent contractor, you may need to speak with a San Francisco employment rights attorney because you are entitled to rights and benefits that you may not be receiving, which may include:
- the legal protection that federal and state wage and hour laws provide
- the legal protection that antidiscrimination statutes provide
- payroll withholdings including tax withholdings
- unemployment benefits and workers’ compensation benefits
California offers more legal protection to employees than perhaps any other state, and it defines more working people as employees than some states. For example, California-based drivers for the ride service Uber may legally be employees rather than independent contractors, according to the California Labor Commissioner (CLC). Since its beginning, Uber has classified its drivers as independent contractors, a practice that’s been upheld in Georgia, Texas, and also in New York. The CLC, however, found that at least one Uber driver met California’s legal definition of an “employee.”
SO, ARE UBER DRIVERS EMPLOYEES OR CONTRACTORS?
In 2014, a San Francisco Uber driver named Barbara Ann Berwick submitted a wage complaint to the California Labor Commissioner. Ms. Berwick requested reimbursement for outstanding business expenses – for gas receipts and tolls. Uber’s position is that Ms. Berwick was not an employee but was instead a self-employed independent contractor, which would mean Uber had no legal obligation to reimburse those expenses.
The California Labor Commissioner ruled in favor of Ms. Berwick in 2015 and awarded her more than $4,000 in business expenses and interest. The CLC applied the “economic realities” test used by California’s Supreme Court in a 1989 case – S.G. Borello & Sons, Inc. v. Department of Industrial Relations. Based on the ruling in that case, the CLC spelled out a number of questions that must be answered to decide if someone is an independent contractor or a legal employee in California. Those questions include:
- Is the worker in an occupation or business distinct from that of the employer?
- Is the work part of the employer’s regular business?
- Who owns or provides the materials, tools, and equipment?
- Has the worker invested in materials or equipment for the work?
- Is a special skill required?
- Is supervision by the employer required?
- For how long will services be performed?
- Is the worker paid by the hour or by the job?
- What is the current understanding of the relationships between the two parties?
Based on the answers to these questions, the CLC ruled that Ms. Berwick was already a de facto employee of Uber. Drivers are not only essential to Uber’s business, the CLC determined, but Uber also provides its drivers with iPhones, monitors their ratings by consumers, and deactivates their accounts if they are inactive for too long or if their approval ratings drop too far. No special skill is required to drive, and Uber alone has the authority to decide what amount customers pay. The CLC was not convinced by Uber’s claims that drivers are independent contractors because they set their own hours, work without supervision, and may decline to accept customers.
The “economic realities” test is individualized, so the CLC’s determination for Ms. Berwick does not automatically make all Uber drivers in California legal employees of Uber. However, Uber could be looking at hundreds of claims by drivers and ex-drivers as a result of the decision, so it’s no surprise that the company has filed an appeal. Depending on the outcome of the appeal, Uber may not be the only company impacted. Conceivably, the final outcome could affect all kinds of companies beyond the ridesharing industry.
WHAT RIGHTS DO CALIFORNIA EMPLOYEES ENJOY?
What rights do legal employees have in California that are not shared with independent contractors? They have the right to be free from employer and workplace discrimination and harassment. Employers cannot deny anyone employment based on a factor like religion, gender, orientation, race, national origin, disability, or pregnancy. In job interviews, employers may not ask about an applicant’s marital status, children, or orientation. Employers may hire whom they please, but a rejection must be for a job-related reason unrelated to discrimination.
Legal employees also have the right to the current minimum wage in California – $10.00 per hour – and several cities enforce a higher minimum wage. Even employees who receive tips must receive the minimum wage. Legal employees in California also have the right to a reasonably safe work environment, and employees injured on the job are entitled to workers’ compensation without having to prove an employer was negligent.
IN WHAT OTHER FIELDS ARE CONTRACTORS NOW LEGAL EMPLOYEES?
California continues to expand the categories of working people who are now protected as legal employees. In 2015, for example, the CLC not only ruled in favor of Barbara Ann Berwick in her claim against Uber, but Governor Jerry Brown also signed legislation that makes cheerleaders for professional sports teams based in this state legal employees eligible for overtime, sick days, and other rights and benefits.
The new law was drafted and passed in response to a lawsuit filed against the Oakland Raiders that ended with the team paying $1.25 million to ninety cheerleaders. The women claimed that they had been wrongly treated by the Raiders as independent contractors who received only a small fee for a year’s worth of cheerleading with no minimum wage, overtime pay, or sick leave rights.
When California workers who are classified as independent contractors claim employee status, the courts in California strive to make certain that employers are in compliance with the law. An experienced San Francisco employment rights attorney can help any worker in California who believes that he or she has been misclassified and any worker who simply needs more information about employment rights in our state.