All over the country the question is being asked whether Uber drivers are independent contractors or employees of Uber, a company that connects riders to drivers through a smartphone app.
This question has been posed in news stories that explore how courts are being asked to determine whether Uber drivers are, by law, independent contractors or employees of Uber regardless of the intentions of Uber's business model. Courts in California, Georgia, Pennsylvania, Colorado, Texas, New York and Indiana have ruled in several cases with distinct issues and facts on this question. Courts are busy teasing out facts and interweaving them with state laws to best determine whether an employee-employer relationship exists between Uber and its drivers, or whether the relationship is merely that of an independent contractor who is self-employed.
Different courts applying different standards to each different fact pattern could create different results. It is an issue of importance because when someone is an employee, payment of both many benefits and taxes are triggered.
When someone is an employee and driving is a component of the work involved, under some circumstances a company could also be held liable in an auto accident involving negligence of the employee. An experienced Massachusetts accident attorney knows such distinctions could make a significant difference for a victim injured in a car wreck involving an Uber driver.
In Massachusetts, a set of rules to help settle the question of whether a person is an employee or an independent contractor has been put into law. Massachusetts General Law chap. 149 s. 148B was written to answer this question. MGL s. 149 s. 148B sets forth three prongs, or questions, that will determine whether someone is an employee of a company or merely an independent contractor. This law is often referred to as the Massachusetts Independent Contractor Law or the Massachusetts Misclassification Law. It was first enacted in 1990, and subsequent versions have followed.
Per MGL s. 149 s. 148B when a worker performs a service for an employer, three issues are considered when classifying a worker as independent contractor or employee. All three prongs must be confirmed in the affirmative for a worker to be a contractor - if one prong is not satisfied then the classification stands as employee. When the question arises, the burden is on the employer to show that someone working for the employer as a contractor and being paid by the employer as a contractor is an independent contractor and therefore less, in terms of obligation for the employer, than an employee. The issues to be considered are listed in the statute.
What Massachusetts Law States about Employees vs. Independent Contractors
Under MGL. ch. 149 s. 148B you are an employee unless:
1) The worker "is free from the control and direction in connection of the performance of the service both under his contract for the performance of service and in fact;"
AND
2) "the service is performed outside the usual course of the business of the employer;"
AND
3) the worker "is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed."
If any of the listed prongs are not satisfied, (the answer to its implicit question is "no") then a worker is an employee.
According to the structure of MGL. ch. 149 s. 148B provides, the first determination that must be made is the degree to which the worker directs his own work during the course of service versus the degree to which the business owner controls or supervises him.
Another way of thinking of this is to determine whether the business owner controls the result of the work but not how or what will be done. If the business owner controls how and what will be done, the requirements of the first prong may not be met. The worker will be considered an employee even if the worker is not closely supervised. If the worker is free to perform the work as he sees fit and without direction from the employer, he is more likely to be determined more of an independent contractor as the first prong is more likely to be satisfied.
The second prong requires a consideration of what is the usual course of the employer's business and how the work the individual worker is doing relates to it. In a case involving newspaper carriers and a newspaper business entity, the Massachusetts Supreme Judicial Court found that newspaper carriers were workers within the usual course of the newspaper business. Athol Daily News v. Division of Employment and Training, 439 Mass. 171 (2003). Massachusetts courts have not had many opportunities to determine "usual course of business" for these purposes, but common sense can surely be used. If upon consideration, a worker's services are found to be within "the usual course of the business of the employer" the second prong would not be satisfied and the worker will be classified as an employee, even if only the second prong was not satisfied.
The third prong of the statute requires consideration of the worker's trade, occupation, profession or business and the services he customarily offers. One question to consider is did the worker provide similar services and skills to others or only once and for this lone employer? If he has provided his skills and services as used to others, it is likely that the prong will be answered in the affirmative and the worker may be an independent contractor. If he has not, it is likely that the prong is not be satisfied, and the worker will be considered an employee.
In Coverall v. Division of Unemployment Assistance, the Massachusetts Supreme Judicial Court considered a similar statute and noted that one clue in this sort of determination could also be to consider whether the "nature of the business compels the worker to depend on a single employer for the continuation of the services." Coverall v. Division of Unemployment Assistance, 447 Mass. 852, 867-58 (2006).
It is important that workers be properly categorized as an employee or as an independent contractor. Employees enjoy many benefits, such as vacation days, sick time, overtime pay, unemployment insurance, employer-provided health insurance or workers' compensation benefits, to name only a few. Independent contractors do not. Furthermore, that worker will not have the advantages an employee enjoys when it comes time to look for similar work in the future somewhere else. Additionally, when a worker is misclassified by an employer as an independent contractor the Commonwealth is deprived of payroll taxes that would be paid by an employer for an employee. This hurts not only the worker, but also other businesses who play by the rules and thus have higher expenses. It is critical that those who are truly employees when working for an employer be identified and treated as such. When an employer skirts the rule and treats someone truly working as an employee as an independent contractor, that worker, other businesses, and the wider community all lose out.
If you or a loved one was injured in a car accident involving an Uber driver, call 1-800-WIN-WIN-1 or visit www.marksalomone.com for a free consultation.