Patrick Cotter was a Lyft driver for roughly four months, during which time he gave 173 rides, covering a total of 410 miles. He arranged his driving schedule so that it would not conflict with his other work at the time, for Facebook. Cotter was terminated after giving rides in a vehicle that had not been approved by Lyft. He and other drivers sued Iyft, arguing that because the company misclassifies its drivers as independent contractors, they had been deprived of protections that California law provides employees, including the state minimum wage and reimbursement for work-related expenses. The judge decides that the question of whether those working for Lyft are "employees" or "independent contractors" is one that must be determined at trial by a jury. PATRICK COTTER v. LYFT, INC. U.S. District Ct., N.D. CA., 2015 60 F Supp. 3d 1067 OPINION: Vince Chhabria, U.S. District Judge The question in this case is whether Lyft drivers are "employees" or "independent contractors" under California law. The answer is of great consequence for the drivers, because the California Legislature has conferred many protections on employees, while independent contractors receive virtually none. The answer is also of great import to Lyft, because its business model assumes the drivers are independent contractors. At first glance, Lyft drivers don't seem much like employees. We generally understand an employee to be someone who works under the direction of a supervisor, for an extended or indefinite period of time, with fairly regular hours, receiving most or all his income from that one employer lor perhaps two employers). Lyft drivers can work as little or as much as they want, and can schedule their driving around their other activities. A person might treat driving for Lyft as a side activity, to be fit into his schedule when time permits and when he needs a little extra income. But Lyft drivers don't seem much like independent contractors either. We generally understand an independent contractor to be someone with a special skill (and with the bargaining power to negotiate a rate for the use of that skill), who serves multiple clients, performing discrete tasks for limited periods, while exercising great discretion over the way the work is actually done. Traditionally, an independent contractor is someone a principal might have found in the Yellow Pages to perform a task that the principal or the principal's own employees were unable to perform-often something tangential to the day-to-day operations of the principal's business. ... Lyft drivers use no special skill when they give rides. Their work is central, not tangential, to Lyft's business. Lyft might not control when the drivers work, but it has a great deal of power over how they actually do their work, including the power to fire them if they don't meet Lyft's specifications about how to give rides. And some Lyft drivers no doubt treat their work as a fulltime job-their livelihood may depend solely or primarily on weekly payments from Lyft, even while they lack any power to negotiate their rate of pay. Indeed, this type of Lyft driver-the driver who gives "Lyits" 50 hours a week and relies on the income to feed his family-looks very much like the kind of worker the California Legislature has always intended to protect as an "employee .... ." Lyft operates a smartphone application, or "app," through which passengers are matched with nearby drivers who are available to transport people in their personal automobiles. Lyft markets itself as "Your friend with a car." [cite] Cars that transport passengers for Lyft are easily recognizable, because Lyft gives each driver a "Carstache" (a big fuzzy pink mustache) to attach to the front of his car when using it to give "Lyfts." To be a Lyft driver, a person must download the app, submit his car for inspection, undergo some form of background check, and submit to an in-person interview with a Lyft representative ... . The rider uses the app to hail a ride. Lyft's system forwards the request to the nearest driver who is logged in to the app. That driver may then accept, decline, or ignore the ride request. If the driver declines the request or ignores it for a specified period, Lyft's system sends the request to the next closest driver who is logged on. If that driver accepts the ride, he is "matched" with the rider and generally proceeds to pick her up and drive her to her destination. However, the driver may cancel his acceptance hefore picking up the rider, of upon meeting the rider but before commencing the ride. Lyft's relationship with its drivers is governed in part by its Terms of Service, which drivers must accept if they wish to give "Lyfts." The Terms of Service apply to both drivers and riders. Under a section titled "Driver Representations and Warranties," each driver agrees that: - he is at least 23 years oid - he has a valid driver's ficense - he owns or has the legal right to operate the vehicie and is named on the insurance policy covering the vehicie - he wil only use the vehicie that has been registered with Lyft - his vehicle is in good operating condition - he will not "offer or provide trassportation services for profit, as a public carrier or taxi service, charge for rides or otherwise seek non-voluntary compensation from Riders, or engage in any other activity in a manner that is inconsistent with such Driver's obligations under this Agreement N - he will not offer rides exceeding 60 miles Elsewhere in the Terms of Service, Lyft disclaims its "control over the quality or safety of the transportation that occurs as a result of the Service. Similarly, in the "Limitation of Liability" section, the Agreement states that "LYFT HAS NO RESPONSIBILITY WHATSONER FORTHE ACTIONS OR CONDUCT OF DRIVERS OR RIDERS... ." But the Terms of Service tell drivers that Lyft "reserve[s] the right ... to investigate and terminate Your participation in the Lyft Platform if You ... behaved in a way which could be regarded as inappropriate[.]" In addition, the Terms of Service state that "Either You or We may terminate Your participation in the Lyft Platform ... at any time, for any or no reason, without explanation, effective upon sending written or email notice to the other party .... ." Between December 2012 and July 2013, Lyft also gave drivers a guide. This included a section called "Lyft Rules of the Road," which gave drivers a list of "rules to live by," including: - "Phone should always be mounted and plugged into charger" - "No talking on the phone (uniess it's the passenger)" - "Only pick up Lyft passengers, don't pick up passengers who hail from the street or who use other mobile apps." - "You should be the only non-passenger in the car. (no friends, chifdren, or pets can ride along with you)" - "Greet every passenger with a big smile and fist bump" - "Keep your car clean on the inside and outside" - "Keep your seats and trunk clear for use by your passengers" - "Do not request tips. If asked by the passenger, let them know that the app will suggest a price" - "Do not accept any cash" - "Go above and beyond with good service such as heiping passengers with luggage or holding an umbrella for passengers when it's raining" Another section of the guide instructed drivers to "Make sure your Carstache is on whenever you're driving for Lyft," "[o]ffer your passenger a phone charge, and ask what kind of music they would like to listen to," and "[flirst ask your passenger if there is a preferred route they would like to take. If not, use [a GPS navigation system], even if you think you know where you're going." ... [California has enacted several laws] designed to protect workers. For example, the minimum wage statute seeks to guarantee that the "weakest and most helpless class" of workers receive "a wage that insures for them the necessary shelter, wholesome food and sufficient clothing."The rule that employees be reimbursed for costs ensures that employers don't undercut wages by passing the cost of doing business on to their employees. And "[t]he purpose of the unemployment insurance program is to provide benefits for 'persons unemployed through no fault of their own, and to reduce involuntary unemployment and the suffering caused thereby to a minimum.'" The California Legislature has decided that employees need these protections as a check against the bargaining advantage employers have over employeesparticularly unskilled, lower-wage employees-and the corresponding ability employers would otherwise have to dictate the terms and conditions of the work .... Independent contractors do not receive these protections because they generally are in a far more advantageous position: IClontractors who are truly independent readily can sever the business relationship and take their services and equipment elsewhere when faced with unfair or arbitrary treatment, or unfavorable working conditions. They usually have contracts with more than one company, or contract with one company on a full-time basis for short durations, and consequentiy are not dependent on a single employer in the same all-or-nothing fashion as traditional employees who tend to work on a full-time basis for an indefinite term. Because of these characteristics of independence, a true contractor does not suffer the effects of unequal bargaining power to any degree comparable to that suffered by employees. Turning to the actual test, the "principal" question "is whether the person [or company] to whom service is rendered has the right to control the manner and means of accomplishing the result desired."... [This]does not require that the company retain the right to control every last detail .... California courts look to a number of "'secondary' indicia of the nature of a service relationship." These 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 locaiity, the work is usually done under the direction of the principal ar 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) whetfer or not the parlies believe they are creating the relationship of employer-employee. ... [Guiding precedents] also recognized, as "logically pertinent to the inherently difficult determination" of employee status, the six-factor test employed by other jurisdictions, whose factors include: "\1) the alleged employee's opportunity for profit or loss depending on his managerial skill; [and] {2 the alleged employee's investment in equipment or materials required for his task, or his employment of helpers[.]" These factors "[g]enerally ... cannot be applied mechanically as separate tests; they are intertwined. ... As should now be clear, the jury in this case will be handed a square peg and asked to choose hetween two round holes. The test the California courts have developed over the 20th Century for classifying workers isn't very helpful in addressing this 21 st Century problem. Some factors point in one direction, some point in the other, and some are ambiguous. Perhaps Lyft drivers who work more than a certain number of hours should be employees while the others should be independent contractors. Or perhaps Lyft drivers should be considered a new category of worker altogether, requiring a different set of protections. But absent legislative intervention, Califomia's outmoded test for classifying workers will apply in cases like this. And because the test provides nothing remotely close to a clear answer, it will often be for juries to decide. That is certainly true here. ... [cites omitted.] QUESTIONS 1. What difference does categorizing the drivers make? 2. What argument can you make that Lyft drivers are independent contractors? That they are employees? 3. Uber began in San Francisco in 2009; by 2015, its drivers were in 50 countries around the world. In some, like Germany and the Netherlands, Uber was officially banned. When drivers were caught violating the Uber ban, the company would pay their fines. Who are the stakeholders in this situation? Is Uber's practice of paying its drivers fines ethical? In 2016, Uber was assessed an $11.4 million fine for operating a transportation business in Pennsylvania without a license, and continued its operations. Who benefits, and who is hurt, by this attitude toward rules and regulations? 4. In many cities and states, taxicab companies are highly regulated. New York, for example, requires vehicles to meet certain specifications. Cab fares are set by law. Drivers go through criminal background checks, must pass English proficiency tests, and must prove their knowledge of the city's streets. Passengers can rely on the "gold medallion" to identify drivers and cabs that have met these qualifications. Medallions are required and expensive-costing close to $500,000so most cabs are owned by investment companies who lease them to the drivers. Considering the various stakeholders - the government, the cab owners, the drivers and the customers - is NewYork's taxicab system fair? 5. In 2016, twenty-four of Philadelphia's 3,370 cabbies were women, while some 35 percent of Uber'Lyft drivers are women. Overall, Uber claims some 19 percent of its drivers are women. Why do you think women are more likely to be participating as drivers in the gig economy