Who’s an employee & who’s an independent contractor? Email
Tuesday, July 14, 2015 08:58 AM

Sometimes it’s not so easy to tell. 

Earlier this year, an unsuccessful bill came before the Colorado Legislature that would have simplified the test to determine whether a person was an independent contractor or employee. Senate bill S.B. 15-269 would have repealed current standards related to the determination of independent contractor status under the Employment Security Act (unemployment insurance, or UI) and established a multifactor test to determine whether an individual is an employee or an independent contractor for the purposes of UI.

At the time, many business groupspredicted that there was good chance this issue would come up again because of the crucial distinction between the two types of workers and the implications for businesses of treating a person as one type of worker versus another (for unemployment insurance purposes, tax purposes, health care coverage purposes, and application of various state and federal laws).

The issue is back and prominently in the news recently, thanks to a ruling issued by the California Labor Commissioner's Office that a driver for the ride sharing service, Uber, should be classified as an employee, not an independent contractor. (Uber Technologies Inc. v. Berwick, 15-546378, Superior Court of California, County of San Francisco).1 While the ruling is limited to the plaintiff and is being appealed by Uber, the California ruling is important because the Commission extensively laid out its legal arguments for why an Uber driver should be classified as an employee.  

The decision concerning this issue is not the first. Earlier in May, the state of Florida determined that an Uber driver was an employee of Uber while driving for the company. It seems that this issue is far from being settled.   

Colorado has already passed specific legislation aimed at regulating companies such as Uber. C.R.S. § 40-10.1-601 et seq. (formerly S.B. 14-125), called the Transportation Network Company Act ("The Act"), defines a driver as "an individual who uses his or her personal vehicle to provide services for rides matched through a transportation network company's digital network." The driver's status is not crystal clear however. The Act says "a driver need not be an employee of a transportation network company," C.R.S. § 40-10.1-602(4), ensuring a driver is subject to the statute, but leaving the door open to further analysis as to whether a specific worker is an employee or independent contractor. While Colorado law is governed by a patchwork of tests2 to analyze workers’ status, the worker classification debate will continue, and we expect the State of Colorado to hold stakeholder meetings on the issue in the coming months. Stay tuned.     

[1] There are two other cases pending in California on the same topic.  They are Cotter v. Lyft Inc., 13-cv-04065, and O'Connor v. Uber Technologies Inc., 13-cv-03826, U.S. District Court, Northern District of California (San Francisco).

[2] Colorado cases are analyzed under factors derived from: 26 U.S.C.A. § 3121, C.R.S. § 8-70-115 et seq., and case law (See e.g. Baker v. Flint Eng'g & Const. Co., 137 F.3d 1436, 1441 (10th Cir. 1998) and Industrial Claim Appeals Office v. Softrock Geological Services, Inc., 2014 CO 30; and Western Logistics, Inc. d/b/a Diligent Delivery Systems v. Industrial Claim Appeals Office, 2014 CO 31). 

Excerpted from an article authored by Heather E. Joyce, Jackson Kelly PLLC