Introduction. There is an employee that works for a delivery company and got injured while at work. The employee wants the employer to be responsible. The employer has said that because the worker is an independent contractor, the employer is not responsible.
Issue Presented. Is an employer responsible for a delivery driver that is injured at work?
Short Answer. Yes, unless the employer can show that the worker is an independent contractor under Business and Professions Code sections 7451 and 7463 that the Company is a "Delivery Network Company" and four conditions are met. There is always a presumption that the worker is an employee unless shown otherwise.
Employers are not Liable for Injuries Sustained by Independent Contractors. California workers' compensation law requires employers to compensate employees who are injured in the course of employment. Lab C §3600(a). However, businesses do not have to maintain workers' compensation insurance coverage for independent contractors or for the contractor's employees, and are generally not liable for injuries to those individuals. Privette v Superior Court (1993) 5 C4th 689, 692; Alvarez v Seaside Transp. Servs. LLC (2017) 13 CA5th 635. This is the reason why employers want to make workers independent contractors.
California Labor Code 2750.5 - Presumption of Employee not Independent Contractor. In general, California Labor Code § 2750.5 states a worker is an employee, and not an independent contractor.
The law states in relevant part:
There is a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors:
(a) That the individual has the right to control and discretion as to the manner of performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.
(b) That the individual is customarily engaged in an independently established business.
(c) That the individual’s independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principal’s work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract.
In addition to the factors contained in subdivisions (a), (b), and (c), any person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors’ license as a condition of having independent contractor status.
For purposes of workers’ compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5.
What this means is that every attorney starts with this Labor Code, 2750.5, in mind, for all workers. The analysis does change because of the specific facts of your case.
California App-Based Driver and Proposition 22. Proposition 22 occurred in November of 2020. And the voters agreed 58.63% or 9,958,425 of the people that voted agreed that app-based on drivers should have the option to be independent contractors. This is the analysis that is needed to determine if the worker stated in the introduction is an independent contractor or employee.
Proposition 22 changed the law for app-based drivers such that new laws were written to agree with the voting public. There are two requirements that a company needs to meet if they want their app-based drivers to be an independent contractor.
A. First Requirement. The Company Needs to Show That the Worker is an "App-Based Driver" Through a "Delivery Network Company" if the Company Seeks to Prove That the Worker is an Independent Contractor. Business and Professions Code 7463 states that an "App-Based Driver" is one that is a "DNC courier, TNC driver, or TCP driver or permit holder; and for whom the conditions set forth in subdivisions (a) to (d), inclusive, of Section 7451 are satisfied."
A “Delivery network company courier” (DNC courier) means an individual who provides delivery services through a DNC’s online-enabled application or platform." See Business and Professions Code 7463(g).
Under Business and Professions Code 7463(f): “Delivery network company” (DNC) means a business entity that maintains an online-enabled application or platform used to facilitate delivery services within the State of California on an on-demand basis, and maintains a record of the amount of engaged time and engaged miles accumulated by DNC couriers. Deliveries are facilitated on an on-demand basis if DNC couriers are provided with the option to accept or decline each delivery request and the DNC does not require the DNC courier to accept any specific delivery request as a condition of maintaining access to the DNC’s online-enabled application or platform.
Here, the employer would have to show that under Business and Professions Code 7463(g) that there is an online-enabled application or platform and that the worker provides delivery services through it. *
* Based on the facts, a TNC driver and a TCP driver are not applicable.
B. Second Requirement. The Company Needs to Show That the Worker Fulfills Business and Professions Code 7451 - 4 Conditions Must be Met. Bus. & Prof. Code section 7451 states that app-based drivers are independent contractors if the worker meets the following conditions:
(1) The network company does unilaterally prescribe specific dates, times of day, or minimum number of hours during which the driver must be logged into the network company’s online-enabled platform;
(2) The network company does not require the driver to accept any delivery service request as a condition of maintaining access to the network company's online-enabled platform;
(3) The network company does not restrict the driver from performing delivery services through other network companies except during engaged time; and
(4) The network company does not restrict the driver from working in any other lawful occupation or business.
Conclusion. More information is obviously needed to answer the question. However, the burden is on the employer to prove that an app-based driver is an independent contractor. All workers are presumed to be employees and not independent contractors. If the company seeks to prove that their worker is an independent contractor they must show: (1) That the worker is an app-based independent contractor because the company is a delivery network company; and (2) They are able to show that the worker meets all four conditions stated in Business and Professions Code 7451.