The recent court decisions in O’Connor v. Uber Techs., 2015 U.S. Dist. LEXIS 30684 (N.D. Cal. Mar. 11, 2015), and Cotter v. Lyft, Inc., 2015 U.S. Dist. LEXIS 30026 (N.D. Cal. Mar. 11, 2015), have attracted significant attention due to, among other things, each court raising the question as to whether California’s multi-factor common-law test remains an appropriate test for the new type of business model at issue in these cases, or whether this business model justifies the creation of a new third category of worker – in addition to employee and independent contractor. While both court decisions characterize the business model operated by Uber or Lyft as new, that characterization is debatable.
This business model was the focus of a recent Wall Street Journal article, calling it the “New Infrastructure.” The article explains that this business model brings together customers who seek a certain type of service and individuals who have excess time in their lives (to provide services) or excess capacity in their vehicles (to make deliveries) or homes (to rent a room) and are willing to sell their excess time or capacity to others who are willing to purchase it.
A form of this business model, commonly referred to as a registry or services referral agency, has existed for decades. What has changed is the technology used to power the business. For decades, firms have existed that create a virtual marketplace matching buyers and sellers of a specific type of service. These businesses operated initially by telephone, where buyers would call the business and describe a service request, and the business would then call sellers of the service and offer them the opportunity. A more recent iteration of the business model is for the business to post the buyers’ opportunities on a website where sellers of the service can accept the opportunities without any human involvement. The Uber and Lyft cases present a newer iteration of this business model that enables buyers to connect with sellers of a service through smartphone technology. Fundamentally, however, the business model these firms operate does not appear to be new.
Worker-classification cases fall along a continuum of certainty. Some cases involve work relationships that are clearly independent-contractor, others that are clearly employment and still others that are somewhere in the middle. The fact that the Uber and Lyft cases were determined to fall in the middle is not a compelling justification for a new test – or a new third category of worker.
