Independent Contractor Misclassification and Compliance News: March, 2019

By MBO Partners | March 29, 2019

Independent Contractor Misclassification and Compliance News March, 2019

As the independent workforce continues to grow, so do the issues of worker compliance and misclassification. It is important for enterprises to remain informed about the latest laws, regulations, and developments surrounding these topics. Each month, we’ll bring you the latest news stories from around the web.

1. Highly Skilled Consultants are Independent Contractors

The Fifth Circuit Court of Appeals said that highly-skilled directional drillers are independent contractors based on the totality of the circumstances and assessment of the economic dependence/independence of the workers. The court reviewed factors including:

(1) The degree of control exercised by the company

(2) The extent of the relative investments of the worker and the company

(3) The degree to which the worker’s opportunity for profit or loss is determined by the company

(4) The skill and initiative required in performing the job

(5) The permanency of the relationship.

After reviewing these factors, the court concluded that the workers were independent contractors.

This is an important case for companies who want to engage with independent professionals. This court viewed the degree of control, the opportunity for profit or loss, and the skill and the permanency of the relationships as factors indicating independent contractor status. While each case depends on its individual facts, the facts in this case are similar to the facts for many highly-skilled consultants.

2. Uber Settles with Drivers for $20 Million

Last year, Uber reached a settlement with drivers in response to claims that the drivers had been misclassified. Depending on some contingencies, Uber agreed to pay $100 million to the drivers. Unfortunately for the drivers, the judge did not accept these terms because the settlement proposed to reconcile claims brought under California’s private attorney general act and the judge did not feel that enough of the settlement went to resolve those claims.

Since then, an appeals court upheld Uber’s arbitration agreement and this year Uber was able to settle with a smaller number of drivers—those who opted out of an arbitration agreement, for $20 million. This case shows the value of a well-crafted arbitration agreement. Companies should have an arbitration agreement with workers that precludes a class action lawsuit.

3. Swift Settles Misclassification Claims for $100 Million

Swift Transportation agreed to settle misclassification claims for $100 million after the United States Supreme Court said that workers engaged in the transportation industry were not bound to arbitrate agreements under the Federal Arbitration Act. Swift had been trying to compel arbitration before the Supreme Court’s decision. While workers in the transportation industry are not subject to the Federal Arbitration Act, this type of case highlights the benefits of an arbitration agreement for workers engaged as independent contractors.

4. Teamsters Lobby While Exotic Dancers Protest Against California Classification Bill

California Teamsters have been lobbying in favor of Assembly Bill (AB) 5, a bill in the California legislature to codify the decision of the California Supreme Court adopting the ABC test for determining whether workers are employees or independent contractors. At the same time, exotic dancers were protesting the bill wanting to remain independent contractors. Both labor unions and businesses have been aggressively lobbying on the issue after the California Supreme Court’s decision last year.

For more information, check out our resources page on misclassification and compliance, or contractor engagement best practices. If you have any questions about engagement, classification, or management of your independent workforce, we’re always here to help.

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