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Employees or Independent Contractors? An Ongoing Issue. . .

| Jun 9, 2016 | Uncategorized |

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According to Work Comp Central, in recent meetings, the Teamsters Union is demanding that Los Angeles Board of Harbor Commissioners “ban companies who are breaking the law and have been found guilty by the state of California of classifying drivers as contractors when they are in fact employees.” The Teamsters believe these companies are making blatant violations of labor laws operating out of the port.

The debate over employee versus independent contractor status is not a new one and crosses multiple industries. That said, the issue does seem to come up more frequently when it comes to drivers. By way of example, the issue was previously addressed with regard to FedEx drivers. And presently, there are pending settlements in class actions between Uber/Lyft drivers and their respective companies that would leave drivers classified as independent contractors. In these latter instances, the companies argue, in part, that drivers want the flexibility of being independent contractors. However, to others, such classifications are just overt attempts to avoid paying workers’ compensation premiums and payroll taxes and along with avoiding liability to third parties for accidents caused by the drivers.

When, workers are misclassified as independent contractors, the rest of society pays the price. Independent contractors often don’t carry enough liability insurance to cover liability suits brought by injury victims. Costs then get shifted (1) to private health care providers or state insurance providers (e.g., Medi-Cal) for medical treatment, (2) to the state for state disability benefits or (3) to the federal government for Social Security Disability benefits. There is similar cost-shifting when the drivers themselves get hurt, and there is no applicable workers’ compensation insurance to cover medical treatment or disability payments.

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