This article explains the complexities of holding ride-service platforms like Uber and Lyft vicariously liable for accidents caused by their drivers in California. While state law mandates $1 million in insurance coverage during passenger transport, liability for damages exceeding this amount hinges on whether the driver is classified as an employee or agent. Factors indicating the platform’s “right to control” the driver’s work are crucial in determining potential platform responsibility.
A great deal of litigation, in California and elsewhere, has surrounded the issue of whether ride-service drivers should be construed as employees (or agents) of their “platform,” thereby rendering the platform or service vicariously liable for a driver’s negligently caused vehicular accidents.
Effective July 1, 2015, AB 2993 became law in California, adding Sections 5430 et seq. to the Public Utilities Code. Under these statutes, the ride-sharing platform (called a “transportation network company”) must insure the driver while he or she is carrying a passenger for hire. In addition, the platform’s statutorily required one million dollar limit insurance coverage for such a loss is primary: “Transportation network company insurance shall be primary and in the amount of one million dollars ($1,000,000) for death, personal injury, and property damage.” Pub. Util. Code § 5433. Thus, in cases where an injured plaintiff’s likely damages recovery is one million dollars or less, this statutory insurance requirement negates the need to resolve the issue of the driver’s legal status. There is enough insurance coverage to cover the loss.
However, in California, in personal injury cases where a plaintiff’s potential damages recovery exceeds that million-dollar insurance threshold, legal issues concerning the ride-sharing platform’s potential vicarious liability may still arise. In such instances, the first thing to note is that the party seeking to avoid an employment relationship has the burden of proving that persons whose services they retain are not employees. S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 349.
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The “right to control” test is the primary determining factor: “California decisions applying such statutes uniformly declare that ‘[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired…’” Id. at 350 (internal citation omitted). Beyond this “right to control” analysis, courts also look at a number of other factors in order to determine whether one is an employee of another. These factors include “(a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee.” S. G. Borello & Sons, Inc., 48 Cal.3d at 351.
While no appellate court, to date, has issued a dispositive ruling as to a platform’s vicarious liability for acts of its driver in California, the California Labor Commissioner has considered the issue of a driver’s employee status after analysis of the factors listed above, as to a driver for the largest platform (Uber) in a wage and hour case. See other orders included in the file in Uber v. Berwick. Note particularly on page 8 of the Labor Commissioner’s Order, the conclusion finding that there was indeed a right to control on the part of the ride-sharing platform over its driver because: “By obtaining the clients in need of the service and providing the workers to conduct it, Defendants retained all necessary control over the operation as a whole.”
Additionally, counsel should not overlook the fact that a plaintiff need not necessarily prevail on the issue of a ride-sharing driver’s employment status to obtain a finding of vicarious liability; a service can also be legally responsible for its driver’s conduct if he or she was its agent. The difference in taking the approach of “agency” rather than “employment” is that a driver’s status as an independent contractor is acknowledged in the agency query rather than contested when employment is at issue.
“An agent represents another, called the principal, in dealing with third persons.” Civ. Code § 2295. Agency may be implied from the circumstances and conduct of the parties. Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 157. Where an agency relationship exists: “[A] principal is responsible to third persons for the negligence of his agent in the transaction of the agency’s business…” Civ. Code § 2338. The California Supreme Court has summarized: “Civil Code section 2338, which has been termed a codification of the respondeat superior doctrine [citation omitted]…makes the principal liable for negligent and ‘wrongful’ acts committed by the agent ‘in and as part of the transaction of such [agency] business.’” Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291, fn. 2 (brackets in original).
An independent contractor (such as a ride-sharing company’s driver) might thus be the agent of the person or entity he or she contracts with. See City of Los Angeles v. Meyers Bros. Parking System, Inc. (1975) 54 Cal.App.3d 135, 138 (emphasis in original): “Agency and independent contractor are not necessarily mutually exclusive legal categories… In other words, an agent may also be an independent contractor. [Citation omitted.]”
What factors drive the analysis of whether or not there is agency when that issue is contested? As CACI 3704 notes, the relevant factors analytically are the same as those that dictate the result of employee/contractor analysis of vicarious liability. CACI 3704 further states that the: “most important factor is whether [the ride-sharing company] had the right to control how [the driver] performed the work…” Where the platform at issue has extensive requirements for its drivers, controlling almost every aspect of the performance of the driver’s work, a finding of agency is more likely.
Relevant facts in a particular case might include any or all of the following. Before drivers are permitted on some platforms, must they undergo a professional third-party background check and/or a DMV check? Will drivers be disqualified if the background checks reveal a history of criminal convictions? Such investigations, it can be argued, indicate the right to control.
Most platforms require that drivers have a smartphone capable of running their software.
The platform supplies the software, or “app,” that runs its vehicle-for-hire program, often including a special, proprietary GPS function. Most require drivers to use their map function to ensure the platform knows where its drivers are at any time while en route to drop-off locations. Generally, customers must also use a designated app to request a platform’s driver. Once a customer requests a ride, the app, and GPS system connect the driver’s and customer’s locations, so each knows where the other is in real-time. Once a driver picks up a customer, the platform can track and monitor the location of the driver and customer. The app allows drivers to pick up another customer as soon as a customer is dropped off. Such control by the ride service of the process by which the customer is obtained and tracked can further be argued as indicia of control.
A ride-sharing service might also define the suitability of driver’s vehicles and what they look like, such as the number of doors, designated age, good running conditions, and a minimum number of seats. Consider whether those applying to be a driver must obtain mechanical inspection of their vehicles by the platform or its designee. Some platforms supply drivers with distinctive trade dress (decals or emblems) recognizable by users; when “in driver mode,” drivers may be required to display one emblem on the front windshield and one on the rear windshield and to display these emblems in a certain manner. All of these facts might be argued to show a right to control.
The ride service may also provide drivers with IDs, allowing them to wait in a designated location near airport terminals, where taxis and limos also wait. Drivers may further be instructed on a myriad of other details that might potentially point to the platform’s right to control, including how often drivers must wash and vacuum their cars, whether drivers must maintain available trunk space and a prohibition on having friends join them while they are driving on the platform. Such factual ties between the driver’s day-to-day vehicle operation and the ride-sharing platform may help to establish agency or employment.
The most compelling indicia of the right to control, or the absence of it, may be outlined in the contractual relationship in force between the driver and the platform, which should be obtained in discovery. For example, such a document may provide that the platform has the right to “terminate” a driver at any time, for any or no reason, without explanation, effective upon sending written or email notice. Such agreement terms are important because: “The right to terminate the service at any time is a strong circumstance tending to show the right to control.” Villanazul v. City of Los Angeles (1951) 37 Cal.2d 718, 721. See also, Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 531 (internal citation omitted): “Perhaps the strongest evidence of the right to control is whether the hirer can discharge the worker without cause, because ‘[t]he power of the principal to terminate the services of the agent gives him the means of controlling the agent’s activities.’”
It might further be argued that the statutory scheme recognizing the primary responsibility of the “transportation network company” for third-party damages and losses incurred during the business enterprise itself points to a finding of agency or employment. Cf., Phelps v. 3PD, Inc. (D. Or. 2009) 261 F.R.D. 548, 556 (certifying a class of truck drivers and noting purchase of insurance coverage as showing right of control: “Several provisions in the driver agreements, which are common to all drivers…are relevant to the right to control issue. These provisions include standards of service…purchase of insurance coverage…placement of marks or logos on trucks…and termination.”).
Finally, a ride-sharing platform’s business model, obtaining passengers in need of transportation and providing drivers to meet that need, might be deemed to show “pervasive control” over the operation as a whole. See, as illustrative, Yellow Cab Cooperative, Inc. v. Workers’ Comp. Appeals Bd. (1991) 226 Cal.App.3d 1288, 1295, citing to Borello, supra.
In larger California personal injury cases, where a driver’s potential status as an employee or agent of a ride-service platform remains at issue, all of these factual queries, and many others, will be important to the court’s determination of the outcome.
In conclusion, the question of vicarious liability for ride-service platforms in California remains a nuanced and evolving area of law. While the state’s statutory insurance requirements offer a degree of protection for those injured by ride-share drivers carrying passengers, the potential for significant damages exceeding these limits necessitates a thorough understanding of the legal principles surrounding employment and agency. The “right to control” test and the various factors considered by California courts highlight the intricate analysis required to determine whether a platform can be held responsible for the negligent acts of its drivers.
For individuals injured in California by a ride-share driver, especially in cases involving substantial damages, navigating these legal complexities without experienced counsel can be daunting. Understanding the potential arguments for establishing an employment or agency relationship with the ride-service platform is crucial in pursuing full and fair compensation. The detailed operational control often exerted by these platforms over their drivers presents compelling arguments for vicarious liability, and a skilled attorney can meticulously gather evidence and construct a strong case based on these legal precedents and factual circumstances.
As the “gig economy” continues to shape transportation and labor practices, California appellate courts’ definitive resolution of ride-service platform liability will have significant implications for personal injury law. Until such clarity emerges, injured parties must rely on the expertise of attorneys who understand the intricacies of these cases and are prepared to explore all avenues of potential recovery, including holding the ride-share platforms accountable for the actions of their drivers when warranted by the facts and the law.
Only time will tell how the appellate courts will resolve this issue, a critical one in the application of tort law to this “gig economy. “