If you are an employer in Texas who hires independent contractors with any frequency, or even on a temporary basis, you should be paying attention to the rideshare lawsuit in California. As outlined in a recent article in The New York Times, California sued Uber and Lyft, two prominent rideshare companies, alleging that they have misclassified their workers and that they have failed to comply with a new California law regarding gig workers.
In the gig economy, many rideshare drivers, including Uber and Lyft drivers, operate as independent contractors, a classification that theoretically relieves Uber and Lyft and any other similar rideshare companies from certain responsibilities to those workers. Independent contractors are treated much differently under the law than employees. If the California Attorney General prevails and rideshare drivers are reclassified as employees, that victory could have ramifications in Texas and across the country.
The California Attorney General and several city attorneys allege that classifying Uber and Lyft employees as independent contractors is in violation of an existing California state law that makes them employees. While the lawsuit revolves around a specific California law, the effects eventually could trickle into other states and cities and Dallas employers ultimately could be impacted.
As the article underscores, “California’s move is a significant threat to the gig companies and could influence other states with similar laws to take action against them.” Any Texas employer who has questions about their obligations when it comes to employees and independent contractors should seek advice from an employment lawyer in Dallas.
What is the Difference Between an Employee and an Independent Contractor?
If you are an employer who regularly hires both employees and independent contractors, it is essential to understand the distinction between these two classifications and to work with a Dallas employment lawyer to ensure that you have properly classified your workers. Failing to properly classify a worker could result in liability and other legal issues at a later date. The Texas Workforce Commission emphasizes that employers have the responsibility of classifying workers correctly, and states that misclassifying a worker can result in the employer owing employment taxes and interest, fines, and other costs.
While there is no single test for determining whether a worker is an employee or an independent contractor, courts consider a variety of factors to determine the amount of control an employer has over a worker, how wages are paid, and the type of services the worker provides. In general, the more control an employer has over the worker (such as deciding when the worker performs tasks), and the more control the employer has over the services and wages, the more likely it is that the worker is an employee and not an independent contractor. A Dallas employment lawyer at our firm can make sure that you are in compliance with Texas and federal law when it comes to worker classifications.
Contact a Dallas Employment Lawyer for Assistance