Washington Supreme Court Decision Paves Way for Greater Uber and Lyft Accountability
Companies like Uber and Lyft have long avoided legal responsibilities like worker benefits and injury victim compensation by claiming their drivers are “independent contractors.” Last month, the Washington Supreme Court took a small but notable step toward recognizing that “on-demand” drivers are not “independent contractors,” but are in fact “employees.”
Whether or not someone is an “employee” carries with it many consequences, not just for the employee and employer, but for society as a whole. For instance, when a person is injured by someone who was acting “in the course and scope of their employment,” the employer is legally responsible for any damages caused by the employee’s negligence.
Consequently, companies frequently develop “creative” business models that classify people who work for them as “independent contractors” rather than employees. This has become quite common recently among providers of all sorts of “on-demand” services like passenger transportation (e.g. Uber and Lyft), package delivery, at so on.
Last month, the Washington State Court of Appeals, Division 1, decided Delivery Express Inc. v. Washington State Department of Labor and Industries, No. 78796-9-I (June 10, 2019). Although this case did not address the employee vs. independent contractor distinction directly, it did uphold an important and related decision by the Department of Labor and Industries – a finding that on-demand package deliverers qualify as “workers,” meaning the company that hired them was required to pay Workers’ Compensation premiums for those drivers.
Delivery Express Inc. (“DEI”) provides courier and freight delivery services. In 2000, DEI expanded its business by contracting with drivers who provided their own vehicles. Each driver was required to furnish and operate a vehicle and pay the cost of operating and maintaining the vehicle. DEI drivers were also required to abide by other terms of working including: maintaining certain appearance requirements, conducting themselves courteously, and refraining from competing with DEI for any customer whose freight the driver transported on behalf of DEI. DEI used a dispatcher “app” to notify drivers of available work, which drivers could accept or reject – though drivers rarely rejected a job. Drivers were paid a commission of each delivery invoice.
The Department of Labor and Industries found, and the Court of Appeals agreed, that DEI’s drivers were “workers” under Washington’s Workers’ Compensation laws, because “the essence” of their work was to provide DEI with “personal labor.” The drivers did not provide any “specialized equipment needed to perform the contracted work”—there was nothing “specialized” about a driver’s personal vehicle. Nor did the drivers either choose or need to employ others to do all or part of their work. DEI hired drivers to acquire their personal labor – picking up packages from one place and delivering them to another. As a result, DEI was required to pay Workers’ Compensation premiums for their “worker” drivers.
This case represents a notable step closer to Washington formally recognizing that on-demand contractors like these drivers – and like the Uber driver that struck and seriously injured two Canlis dishwashers on May 14, 2019 – are employees, not independent contractors, and that their employers should be held legally liable for the on-the-job injuries they cause.