Misclassified independent contractors are entitled to back pay and damages

Lime runs electric scooters, electric bikes, normal pedal bikes, electric mopeds and car sharing systems in metropolitan areas to customers through its mobile app. Lime hires persons known as “Juicers” to locate, recharge, and redistribute Lime’s scooters after being rented. Several “Juicers,” among them Jon Osuna, Yassin Olabi, and others, sued Lime claiming that the company misclassified them as independent contractors (ICs).

According to their complaint, the “Juicers” were required to comply with the company’s policies, practices, and procedures, including how to perform their tasks, which scooters to charge, and how to interact with customers. Lime closely monitored them to ensure that their tasks were done to Lime specifications. The Juicers had no say in negotiating the terms of their contract with Lime but were directed to sign Lime-prepared contracts. Their compensation is set by the company and they did not have the right to negotiate their rates. The Juicers claim that they also did not operate distinct businesses separate from the company.

Because they were treated like employees, the drivers claim they are owed compensation for overtime hours, meal and rest period premiums, reimbursement of business expenses, and compensation for non-productive time such as time waiting to retrieve or return scooters and planning their routes.

The status of a true independent contractor is determined by law and not by contracts. California created the ABC standard for properly classifying a worker as an independent contractor. If you are a worker being asked to sign an IC agreement, ask yourself the following questions:

(A)      Am I free from the control and direction of the company in how I do the work?

(B)       Am I doing work that is outside the usual course of the company’s business?

(C)       Do I have my own business or established trade or occupation that I normally do which is the same type of work performed for the company?

If your answer to any one of the questions above is a No, then you are more likely an employee than an IC. Specifically under test B, a worker is presumed to be an employee but may be classified as an independent contractor only if “the worker performs work that is outside the usual course of the hiring entity’s business.” The ABC test presumes a worker hired by a company is an employee and it is the company’s burden to prove that the worker is an independent contractor. If the company fails to show that the worker satisfies each of the three criteria, the worker must be classified as an employee, not an independent contractor.

Workers misclassified as ICs do not have employee rights. ICs do not have to be paid minimum wage, overtime, or missed breaks. ICs are not entitled to benefits such as health insurance, retirement or pension benefits. ICs are not entitled to reimbursements for business expenses. These expenses may include fuel, insurance, living, and other travel expenses; purchasing supplies, tools, materials, or equipment such as cell phones related to work.

ICs are also not entitled to workers’ compensation protection. When employees are injured at work, workers’ compensation benefits provide them medical treatments and disability payments. If ICs are harmed at work, the company that hired them are not liable for any of their injuries.

Even if workers signed a contract that says they are independent contractors, this does not make them ICs. The courts may disregard this IC label if the ABC standard is not met. Workers who are found to have been misclassified as ICs are entitled to back wages, interest, liquidated damages, and penalties, among others.

Rather then proceed to trial, the Juicers settled their claims, with Lime agreeing to pay them $8.5 million in damages.

The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com. [For more than 25 years, C. Joe Sayas, Jr., Esq. successfully recovered wages and other monetary damages for thousands of employees and consumers. He was named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is a past Presidential Awardee for Outstanding Filipino Overseas.]