Your Independent Contractors Can Get You in Trouble

While most California employers are aware of the risks of misclassifying employees as “independent contractors”, a new California appellate decision named “SECCI v. United Independent Taxi Drivers, Cal.Rptr.3d ___ 2017, W.L. 605487, creates new concern for companies that use independent contractors.   This concern is that even properly classified independent contractors may be deemed to be an agent of the employer which subjects the employer to vicarious liability for the acts of those contractors.

The employer in SECCI was a taxicab cooperative.  The plaintiff, a motorcycle driver, sued the taxicab driver and cooperative after he was injured during a car accident with the taxicab.  The plaintiff claimed that the taxicab driver was both employee of the cooperative, and its agent.  The jury found that the driver was the agent of the cooperative and held the cooperative liable for the acts of the driver.

The trial court had granted the taxicab cooperative’s motion for judgment notwithstanding the verdict issue.  The Court of Appeal reversed the decision of the trial judge.  It determined that there was sufficient evidence of control to find an agency relationship, even though the jury found that there was insufficient evidence of control by the employer to satisfy the requirements for an employee/employer relationship.  In so ruling, the court considered evidence of control that the company placed upon its lease drivers that was mandated by the taxicab industry.

The Court of Appeals for the Second district reversed the trial judge’s decision even though there are cases out there that stand for the proposition that any regulators that a company requires its workers which are mandated by local and other governmental regulations are not the kind of control that satisfies the requirements for an employer/employee relationship.  The takeaway from this case is that California employers can no longer think of their independent contractors as truly independent and beyond the potential scope employer liability.  Employers should contemplate the possibility that they may be held vicariously liable for the negligent or other wrongful actions of their independent contractors and should weigh that potential when they obtain liability insurance and otherwise in evaluating other means to limit liability.

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