San Francisco’s city attorney subpoenaed records from Uber and Lyft in a bid to determine whether they are misclassifying drivers as independent contractors. The move follows a decision by the California Supreme Court in April that made it more difficult to classify workers as independent contractors.
In its decision, the court adopted the “ABC” test [1] for determining whether workers are independent contractors.
“The California Supreme Court has spoken on the definition of ‘employee’ in a way that directly affects San Francisco’s worker protection laws, including our Minimum Wage Ordinance and Health Care Security Ordinance,” San Francisco City Attorney Dennis Herrera said in a statement.
“We don’t know whether these ride-hailing companies are breaking the law until they provide the information we seek in these subpoenas,” Herrera continued. “We are going to ensure that these companies comply with the Supreme Court’s ruling and with San Francisco’s laws.”
The subpoenas were filed on May 29, and the City Attorney’s office said they seek:
- A list of drivers who began or ended at least one ride in San Francisco from 2015 to the present.
- Documentation showing whether the company classifies those drivers as an employee or an independent contractor for purposes of San Francisco and/or California law.
- Documentation on hours, wages, healthcare payments and other benefits for drivers classified as employees.
- Proof that any driver classified as an independent contractor meets all three criteria set by the California Supreme Court.
“The argument that these companies have tried to use in the past — that they’re just a technology platform — doesn’t pass the smell test,” Herrera said. “People go to Microsoft or Salesforce for software. People go to Uber or Lyft for a ride.”
Both Uber and Lyft are based in San Francisco.
However, the California Supreme Court’s decision has come under fire from business groups, including the US Chamber of Commerce, which filed an amicus letter [2] calling for the court to grant a rehearing that the ABC test does not apply retroactively.
“The court’s decision to adopt the ABC test is a clear break from prior California law, which for decades has determined independent contractor status under a markedly different standard,” according to the letter. “Giving the decision retroactive effect would threaten businesses’ due process rights by putting thousands of businesses at risk for significant liability for past actions they made in good faith compliance with long-standing California law under circumstances where they had no reason to expect their arrangements with California workers would be subject to Massachusetts’s ABC test.”
Meanwhile, the Western States Trucking Association said it plans to challenge [3] the Supreme Court ruling, which it says will effectively end the use of trucking owner-operators in the state.
While this happens in California and San Francisco, concerns over drivers have cropped up elsewhere. Seattle passed a law allowing drivers to organize with unions, although the law is currently facing legal headwinds [4].
In other independent contractor news:
- Jersey City, NJ., is working on an ordinance [5] similar to a law in New York City to protect freelance workers, NJ.com reported. The ordinance would require written contracts with freelancers for services in excess of $500, payment within 30 days, and prohibit requiring a freelancer to accept a lower amount in return for timely payment. New York recently announced it has recovered $264,866 in wages for freelancers [6].
- New Jersey Gov. Phil Murphy signed an executive order establishing a task force on employee misclassification [7] as independent contractors. The task force will examine and evaluate existing misclassification enforcement within executive departments and agencies; develop best practices to increase coordination of information by departments and agencies and improve the efficiency of enforcement; develop recommendations to improve compliance such as educating the public, employers, and workers about the classification of employees; and conduct a review of the existing laws and procedures regarding misclassification.
- According to The Travel Institute’s TravelMarket report [8], 62% of travel agents today worked as independent contractors. However, 71% worked primarily as employees in 2009. Diane Petras, president of The Travel Institute, which provides training to travel agents, said the increase appears to come from the attractiveness of the concept to newcomers to the travel industry.