Lyft Drivers Settle Lawsuit – Remain Independent Contractors

In late January, Lyft, the ride-sharing service similar to Uber, agreed to pay $12.25 million in a settlement with drivers as well as making some changes in its “terms of service.” Lyft was the subject of a proposed class action lawsuit over the misclassification of drivers as contractors as opposed to employees. (Uber continues to face a similar action by its drivers). The settlement enables Lyft to continue to operate with independent contractors as drivers.

According to the San Francisco Chronicle, this settlement, because of its nature, does not create a precedent and leaves open the possibility of a different result with the outstanding Uber case.

“We are pleased to have resolved this matter on terms that preserve the flexibility of drivers to control when, where, and for how long they drive on the platform and enable consumers to continue benefiting from safe, affordable, transportation,” stated Kristin Sverchek, General Counsel at Lyft. While the settlement is positive news for the “sharing economy,” experts say the settlement did little to resolve the spirited debate about whether the growing number of on-demand workers are entitled to employment status or can continue as independent contractors.

Changed Policies

Lyft agreed to change its policies, including clearly specifying factors that could lead to the termination of driver contracts, and behavior such as harassing passengers. The policy was also modified to include, (like most arm’s length agreements) that Lyft must now provide drivers an opportunity to “cure” any alleged inappropriate behavior. The new policies also require Lyft to pay for arbitration fees, should disputes fail to be resolved internally.

The attorney for the drivers, Shannon Liss-Riordan, expressed satisfaction with the settlement and acknowledged there were risks in going forward with the litigation, foremost of which was the arbitration provision, signed by all drivers, which prohibited class action cases. (It is important to note that Uber had similar arbitration language in its agreements, but the Judge in the Uber case ruled the arbitration clause unenforceable – which has led to the continued litigation for Uber).

 

Shannon Liss-Riordan also represents drivers in the Uber case as well as similarly situated workers at DoorDash, GrubHub, Try Caviar, Postmates, Washio, Handy and others.

Significance

The flexibility of independent contractors’ relationships are the foundation of the new “sharing” economy. Some argue that these start-up organizations have simply used software as a new way to take advantage of workers, avoid typical employment expenses, and gain an unfair competitive advantage. Others, such as Steven Davidoff Solomon, a Law Professor at UC Berkeley, commented: “These cases highlight the issue that the U.S. has an outdated benefits system trying to adapt to the modern age.”

Many drivers vehemently argue that the current independent contractor structure provides great flexibility and opens the door for them to earn money on an on-demand basis, on their terms.

Clearly Lyft dodged a bullet in this situation and the final chapter of this story has yet to be written. If you are concerned about becoming a lead case in this struggle, please contact us about our “Contractor Relationship Assessment.”

By: Paul Finkle, CMC, SPHR – President & CEO/Principal

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services

Hiring for Small Businesses in 2016 Expected to Remain a Top Issue

According to a recent survey published by Indeed, a majority (68%) of small businesses (1-500 employees) expect to hire in the New Year due to their own business growth. In addition, the same survey showed that 50% of the respondents expect to be forced to hire due to voluntary employee attrition.

“Small businesses should anticipate higher attrition levels because an improved economy means more confident job seekers,” said Tara Sinclair, chief economist at Indeed. “Small businesses have always competed for talent, but that will be more pronounced this year as companies of all sizes increase hiring.”

While unplanned turnover is an issue, small businesses say sudden growth is boosting hiring. Seventy-one percent cite growth as the reason for hiring additional staff in the next 6 to 12 months, and 54% say they need workers with new skills.

For growing companies, good help can be hard to find. According to the National Federation of Independent Business’ (NFIB) January 2016 economic trends report, 45% reported “few to no qualified applicants” for positions they were trying to fill. This should come as no surprise as the national unemployment rate in January was 4.9%, the lowest it has been since January 2008.

The five most difficult roles for businesses to fill according to Indeed are electronic equipment installers, followed closely by chiropractors, painters, brick masons, and machine tool operators. The percentage of each of these job types still open after 90 days ranged from 33% to 27%, and much of the demand seems connected to rising housing starts.

The tight market for skilled workers appears to be causing small business owners to rethink what it takes to attract necessary talent. The NFIB report states that 17% of managers plan to increase pay, the highest percentage recorded since 2007. Employers should expect to continue to face wage and benefit cost pressure to attract and retain good employees.

By: Malcolm Whyte, SPHR – Executive Vice President/Principal

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services

A Proactive Approach to ADA Accommodation

When it comes to the Americans with Disabilities Act (ADA), make sure the leaders and managers in your organization are trained on the requirements placed on employers by this law. In addition, keeping an open mind and taking a proactive, collaborative approach may help ensure compliance and avoid costly and time-consuming claims. Recent cases have demonstrated the importance of going the extra mile when it comes to the ADA.

A former employee of the U.S. Department of Housing and Urban Development (HUD) was awarded a $900,000 settlement in late January 2016, after alleging that her employer had denied multiple requests for accommodations related to her breathing trouble, broken foot, and arthritis from 2009 to 2011. After being denied a number of accommodation requests, which included telecommuting, a closer parking space and relocation to another office, the employee finally stopped working and her employment was later terminated. According to the claimant’s attorney, supervisors “just sent her to HR” rather than engaging in the interactive process as required by the ADA. At one point, the complaint alleged, even HUD’s reasonable accommodation department failed to get back to her about an accommodation request. Throughout the years, her attorney stated, her manager “did not engage with her to improve her productivity.” HUD might have been able to avoid such an award if it had adopted an approach that required such matters to be handled in a proactive and collaborative way.

In another recent case, a call center employee was a top performer with excellent performance reviews until she unfortunately had a car accident which led to spine, hip, leg, shoulder and knee injuries. Unable to sit at her desk for long periods of time, her performance began to suffer and her employment was terminated. During the case, the company testified that they could have given her walking breaks, a different chair and a standing desk, but they had not received a doctor’s note or a specific request from the employee regarding her need for accommodation. In this circumstance, where the employee was recuperating from a car accident, the business should have proactively engaged in an interactive process to determine accommodation options and assess whether they were reasonable. Demonstrating care for the employee in this way could have had a positive impact on the team and enabled an excellent performer to stay employed and engaged in the business. Instead, the case was allowed to proceed to a jury.

Significance

These cases illustrate the importance of following and documenting a collaborative, proactive and thoughtful process when it comes to requests for accommodation under the Americans with Disabilities Act (ADA). To learn more about important cases related to the ADA, we recommend reading the “20 Significant Cases” article that was compiled by the EEOC in recognition of the law’s 20th anniversary, which can be found here: http://www.eeoc.gov/eeoc/history/45th/ada20/ada_cases.cfm.

By: Amy Kelemen, SPHR – Director of Professional Services/Senior HR Consultant

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services