Hot Issue: Independent Contractor Misclassifications

Independent contractors may wish to have an employment lawyer examine the appropriateness of their company’s claim that they are not an employee in light of two recent events in California.

The California Labor Commission has ruled that a San Francisco driver for the popular on demand taxi-alternative app Uber is an employee and not an independent contractor. The company now owes the individual unpaid expenses during her two months as a driver. A state agency in Florida has previously ruled that Uber drivers are employees as well. There are lawsuits (as well as protests) over on this issue in other states.

FedEx has also settled a longstanding California lawsuit brought by its Ground and Home Delivery drivers about their misclassification as independent contractors for $228 million. The court must still approve the settlement. The settlement only deals with drivers in California, and it is still too early to say whether FedEx will settle or continue to defend that lawsuits in other states on this issue.

By labeling their work force as independent contractors, companies can shift expenses such as Social Security and tax withholding on to their workforce. This has proven especially popular among early technology startups, such as Uber, as they try to create a marketplace of on-demand service fulfillment.

This area could also be one for whistleblowers to report to the federal government as well, since misclassification can result in unpaid taxes to the Internal Revenue Service.

Photo Ground.