Employment Update: An “Uber” Problem – Independent Contracting and Moonlighting
From the desk of John M. Kreutzer: Technology is not only changing how we work, but also where and when we work. This shift has highlighted changing attitudes on how workers view their relationship with their employers, and vice versa. The “on demand” economy appears to dovetail workers’ request for more flexible schedules with employers’ request for skilled labor when they need it most. Recent legal challenges, however, shine a light on potential conflicts between this new economy and the current legal framework.
1. Independent Contractor or Employee?
The “on demand” economy highlights an ongoing issue –what constitutes an independent contractor vs an employee. Misclassifying workers can result in significant costs to a business, including government audits, class action lawsuits, back wage and overtime awards, fines and possible public relations nightmares. If workers are found to be employees, they may also be entitled to employee benefits (i.e. the new Portland Sick Leave Law), unemployment, workers compensation, and social security contributions. Since the federal government and each state government use different tests to classify workers, it is important to know how employers in Oregon and Washington make employee vs. independent contractor determinations.
The Bureau of Labor and Industries (BOLI), like the U.S. Department of Labor, uses the “economic realities test” to determine whether there is an employment relationship for wage and hour issues. The “economic realities test” looks at:
- The degree of control exercised by the alleged employer;
- The extent of the relative investments of the worker and alleged employer;
- The degree to which the worker’s opportunity for profit and loss is determined by the alleged employer;
- The skill and initiative required in performing the job; and
- The permanency of the relationship.