Are taxi drivers employees or independent contractors? Watch out for labor law potholes.
Andrew Girard pulls a green Yellow Cab Nissan into a gas station on Sebastopol Road in Santa Rosa after an all-night shift that lasted 14 hours.
'We all work for ourselves,' said Girard, who has been driving a cab for five years. Usually he drives nights from 7 p.m. to 7 a.m., including lucrative weekend night shifts. 'We go anywhere.' One ride last year took him from Santa Rosa to Oregon and yielded a $1,500 fare.
'On Fridays and Saturdays, if you're hustling and it's good — $400 or $500' in fares, Girard said. He pays Santa Rosa-based Yellow Cab company $120 per 12-hour shift, $480 a week, including use of a company cab. The company has 25 drivers.
Girard competes with drivers who find riders through Uber or Lyft, San Francisco-based ride-hailing companies that rear-ended the cab industry. In cases involving Uber and other ride providers, the issue of whether drivers are employees or independent contractors swirls as a threat to the business model.
In 2014, former Uber driver Barbara Berwick in San Francisco filed a claim with the California labor commissioner against Uber, demanding unpaid wages and mileage expenses. In that case the hearing officer determined that Uber's relationship to Berwick is employer/employee, not an independent contractor. The commissioner awarded Berwick $4,152. Uber hired Littler Mendelson law firm and appealed the case in June 2015. The case settled in November 2016 and was dismissed with prejudice.
A-C Transportation Services in Santa Rosa faced a similar case with the labor commissioner, agreeing in December to pay a $200,000 fine. The company went out of business on Dec. 31. A-C had about 30 drivers misclassified as independent contractors, according to the commissioner, and A-C owners Kevin and Jennifer Kroh failed to provide workers' compensation insurance.
'My office will not tolerate the misclassification of employees as a business model,' said California Labor Commissioner Julie Su in a December statement. Enforcing labor code sections in the state, the commissioner's hearing officers as well as courts start cases with the presumption that each worker is an employee, not a contractor, Su said in a Feb. 1 interview with North Bay Business Journal. 'It is up to businesses using independent contractors to satisfy this test' and prove a contractor relationship.
Su said the commissioner's office has more than 30 cases involving Uber, Lyft and other ride-sharing companies. All except the Berwick case settled or are still pending, she said. 'We cannot conclude that as a blanket matter' Uber's relationship to its drivers is as an employer, Su said. 'The test of whether someone is an employee or independent contractor is very fact-based. We apply a multifaceted test.'
One key factor in that test is 'whether the work is an integral part of the business,' Su said. Berwick's work was integral to Uber's business, the commissioner found. How much the company controls the worker is another key factor. Uber 'retained all necessary control over the operation as a whole,' the commissioner found. Uber holds itself out as 'nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation,' the commissioner said.
Classifying drivers as contractors may provide a business advantage over ride companies that have employee drivers and pay for mileage expenses, workers' compensation and unemployment insurance, health insurance, minimum wage, overtime, as well as half of Social Security and Medicare taxes. Employees may benefit from laws that protect them from discrimination or harassment.
Girard, the Yellow Cab driver, sees his driving as self-employed. Often on Fridays and Saturdays, Girard takes no leads from the Yellow Cab dispatcher, finding riders entirely on his own. In its business model, Uber drivers usually obtain riders through its app.
'There are various places you want to be depending on what time it is,' Girard said. 'Monday nights I go to Hopmonk (in Sebastopol) because at around 1 a.m. there's nothing else. I go to the jail at around 4 in the morning. They like to release them between four and six.'
Girard and two dozen other drivers for Yellow Cab company in Santa Rosa use cars owned and insured by company owner Mark Neese, who started working for the company as a mechanic and has owned it for the past 20 years.
'In Santa Rosa, I'm the only company left,' Neese said. 'They're not independent. They're self-employed,' he said of drivers. 'They have their own franchise permit with the Santa Rosa police department.'
'I don't split' fares with drivers, Neese said. 'That's a big no-no. It's a fixed fee paid up-front per 12-hour slot,' from $90 to $120. A company's earnings should not depend on the driver's earnings, he said.