A THIRD CATEGORY FOR RIDESHARE DRIVERS: UNTYING EMPLOYMENT STATUTES FROM AGENCY LAW.

• Author: Reyes, Nathaniel

INTRODUCTION

Over the last several years, so-called "gig economies" have been gaining prevalence in the national economy, changing the ways many go about daily activities and creating new types of jobs. (1) The public transportation industry has been particularly impacted by rideshare companies. A study found that, from the moment when Uber or Lyft starts doing business in a given city, bus ridership decreases by an average of 1.7% per year. (2) Over one-third of Americans report having used a rideshare app at least once, and Uber and Lyft account for 6% of vehicle miles travelled in the United States. (3)

One issue that courts have increasingly had to confront is whether drivers for rideshare companies are "employees" under federal and state employment statutes. For the most part, federal employment statutes characterize all workers covered by the statute as "employees," and those not so covered as "independent contractors." (4) Thus, much hinges on the question--if rideshare drivers are "employees," they are entitled to a range of protections under various employment statutes, such as minimum wage and overtime provisions, protection from dis-criminadon, and collective bargaining rights. (5) But if they are "independent contractors," they lack these rights. For various reasons, rideshare companies explicitly state in their driver service agreements that the drivers are independent contractors. (6) This has led to several employee misclassification suits against companies such as Uber and Lyft, and various courts have resolved these suits in different and conflicting ways. (7)

Another place where the rideshare-driver classification question arises is in third-party tort liability cases. The common-law doctrine of respondeat superior permits injured plaintiffs to sue an employer for the torts of an employee. The doctrine is only operative if the tortfeasor was an employee of the defendant--an independent contractor relationship does not impute liability. Thus, the success of claims by injured rideshare passengers and bystanders against rideshare companies hinges in large part on the court's holding that a certain rideshare driver was an employee, rather than an independent contractor. Thus, the same distinction between "employee" and "independent contractor" is used in two very different contexts: employment statutes and vicarious liability.

This Note does not take a stance on the issue of whether rideshare drivers should be classified as "employees" under either employment statutes or the doctrine of respondeat superior. It argues, rather, that if the protection of employment statutes is to be extended to rideshare drivers, this should be done by Congress's creation of new worker categories in the statutes, rather than by squeezing rideshare drivers into the existing "employee" category. The use of the same binary distinction between employee and independent contractor in both employment statutes and respondeat-superior cases is a practice which should ultimately be abandoned, and recognizing a new statutory category is a commendable first step toward this aim. The creation of a third category is not a new proposal. Others have argued in favor of this, (8) highlighting the difficulties courts face in applying outmoded multi-factor tests for "employee" status to novel types of work (such as driving for rideshare companies). (9) Concerned about the lack of protections currently available to economically vulnerable rideshare drivers, these scholars argue that the existing binary division between employees and independent contractors doesn't account for the realities of the modern workforce--that it is a "vestige of the early law of 'masters' and 'servants' that is as archaic as the words suggest." (10) Rideshare companies are able to take economic advantage of their drivers, and therefore the law should be amended to prevent this.

Avoiding the economic question, this Note identifies a different danger posed by use of the same binary distinction in both contexts. Because the terms used to define the coverage of employment statutes are the same as those used to delineate the applicability of respondeat superior, courts regularly view caselaw interpreting employment statutes as being directly on point in respondeat-superior cases, and vice versa. But this practice overlooks a theoretical difficulty: even if justice demands that rideshare drivers receive certain statutory protections, this does not necessarily mean that justice also demands that third parties injured by such drivers should have a right of recovery against the rideshare company. The word "employee" means very different things in the employment-statute and respondeat-superior contexts. In the former case, "employee" is the label ascribed to a category of workers who, for various policy reasons, are deemed to possess certain statutory rights. In the latter case, however, saying that a worker is an "employee" means that, in the interest of justice, the employer should be held liable to the injured third party, notwithstanding the fact that the employer did not directly cause the injury. Rather than defining the rights of the worker, this latter use of the term defines the rights of a third party. Thus, although distinct policy considerations are in play in each of the two contexts, the current practice of drawing from a single body of precedent for both types of cases obscures these policy differences.

The advent of the rideshare industry gives the law an opportunity to begin to separate questions of employment-statute coverage from those of vicarious liability. By creating a new category of worker which can encompass rideshare drivers, Congress would put the courts in a position where they would be able to begin to separate employment-statute caselaw from respondeat-superior caselaw--this would allow the respective policy considerations to be viewed in isolation. Part I traces the history of employment statutes in the common-law tradition, highlighting the fact that earlier employment statutes recognized a range of worker categories broader than the binary distinction between employee and independent contractor which is common today. Part I also traces how the distinction between employee and independent contractor eventually migrated from agency law to twentieth-century American-employment statutes. Part II illustrates the danger posed by failing to create a third statutory category to account for rideshare drivers. Finally, Part III shows how creating a third category can obviate this danger.

1. THE MIGRATION OF "EMPLOYEE"

   Some have criticized the binary distinction between "employee" and "independent contractor" in employment statutes as an outmoded "vesdge of the early law of 'masters' and 'servants.'" (11) These scholars are correct to ascribe this distinction to the law of masters and servants, which long predates modern U.S. employment statutes. However, this criticism obscures the fact that use of the term "employee" to delineate the coverage of modern-employment statutes is a relatively new phenomenon. Although pre-twentieth-century English and American labor laws referred to "servants" as one of the classes of workers to whom the law applied, that term was not used in the same sense as "employee" is used today--as a label applied to every worker who is covered by a given employment statute. The terms "employee" and "independent contractor" come principally from the doctrine of respondeat superior, and the view (in employment statutes) that these terms account for all possible work relationships is characteristic of the twentieth century and later.

   Section I.A gives a brief overview of the doctrine of respondeat superior, as well as the right-of-control test, which is the traditional test for distinguishing employees from independent contractors. Section LB gives a brief history of employment statutes in the common-law tradition, showing that the earlier laws acknowledged a collection of worker categories that was broader and more nuanced than the modern binary divide between employee and independent contractor. Finally, Section I.C gives an account of the early development of modern U.S. employment law and the adoption of the binary distinction.

   1. The Doctrine of Respondeat Superior

      Prior to the enactment of most twentieth-century employment statutes, third-party tort claims formed the "largest single category of cases in which the question whether the person employed to perform the stipulated work was an independent contractor [was] a determinant factor." (12) Although variously formulated by different courts, the test to determine whether a worker was an employee asked whether the worker was "free from the control of the employer as respects the manner in which the details of the work are to be executed." (13) If an employer held the right to control how a worker did his work, as well as the final result of the work, that worker was an employee. However, if the employer could only control the final result, the worker was an independent contractor.

      This right-of-control test formed the basis of the common-law doctrine of respondeat superior, which permits an employer to be held vicariously liable for negligent acts committed by his employees (but not independent contractors). (14) Originating in the common law of masters and servants, (15) respondeat superior traditionally has been justified by notions of fairness to third parties:

      No one has a right to evade a responsibility which justly devolves upon him. If a man employs another to do an act for him, and the act in itself, or the results of that act, are detrimental to the interests of third persons, the proprietor has no right to shirk the responsibility. He must be held liable. (16) At the most basic level, respondeat superior simply states that, as between a "servant" and his "master," a particular kind of relationship existed whereby the servant had "placed himself...