Class action lessons from Lyft

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From Lexology, Scott P. Jang from Jackson Lewis discusses some of the lessons from the recent decisions regarding Uber and Lyft in California.  Scott describes the standard in California and offers recommendations for companies who wish to engage with independent contractors.  Scott writes:

In California, the distinction between an employee and an independent contractor depends on numerous factors. The primary question is whether the putative employer has the right to control the “manner and means” of the work. S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal.3d 341, 350. Secondary considerations include: (1) whether the worker is engaged in a distinct occupation; (2) whether the work, in that locality, is typically performed absent supervision; (3) the skill required; (4) whether the worker supplies the instrumentalities of work; (5) the work’s duration; (6) whether payment is by time or by job; (7) whether the work is part of the putative employer’s business; (8) whether the parties believe they created an employer-employee relationship; and (9) the worker’s prospects for profit or loss depending on managerial skill. Id. at 351, 355.  The O’Connor and Cotter courts evaluated these factors and denied Uber’s and Lyft’s motions for summary judgment, ruling that, based on the facts presented, the drivers could not be deemed independent contractors as a matter of law.

Businesses in the on-demand economy should take-away two lessons from this. First, businesses interested in maintaining independent contractors should:

  • Surrender the power to terminate the worker at-will;
  • Surrender the power to control whether the worker accepts a job;
  • Surrender the power to control the worker’s schedule;
  • Surrender the power to control the details of how jobs are performed;
  • Surrender the power to impose restrictions on appearance;
  • Require the worker to provide all instrumentalities needed for the job;
  • Allow the worker to accept other employment; and
  • Communicate independent contractor status clearly and consistently.

Second, determining an independent contractor’s status is fact-intensive. Thus, while surrendering control over an independent contractor can undercut a business’ branding and quality control efforts, failure to do so can lead to significant class action liability….

Read  the full story at Class action lessons from Lyft

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