No Free Ride

The question is not "Are you on the premises?," but rather, it's "Are you benefitting your employer?"

Earlier this month a California court used that analysis to grant benefits to Craig Schultz, who was a technical drafter for a military contractor, and who suffered severe injuries when his car crashed into a ditch after he passed through the entrance to Edwards Air Force Base.

California's 2nd District Court of Appeal ruled that the accident was compensable, finding Schultz's commute had ended once he passed through the secured entrance gate for the base because he otherwise would not have been there but for his employment even though the actual building where he would perform his labor was still 5 miles or so from the base entrance.

The Arkansas Court of Appeals made a similar ruling earlier this week finding that an iron worker who slipped and fell on ice while heading to the time clock to punch in for the day was entitled to compensation for his injuries.

Ronnie Nabors was within the course of his employment by the time of his accident since he had already engaged "in employment activity" – by donning his personal protective equipment and swiping an access card to obtain entry to the job site, the court found.

Even though many states recognize the "premises line rule" exception to the "going and coming rule" the litigable point is where that line is; i.e. at what stage is there sufficient employer control over the worker to deem the employee's presence beneficial to the employer.

Arkansas had also recognized the premises exception up until 1993, when the state's comp act was amended to include a requirement that a worker be performing employment services at the time of the injury for the injury to be compensable.

The Arkansas Court of Appeals has construed this statutory change as having eliminated the premises exception to the going-and-coming rule.

But, when the worker engages in actions that are required by his or her employment, where those actions occur is not necessarily dispositive of employment status - essentially reverting back to the premises line rule, albeit without the "line."

Nabors worked for the Continental Construction Co., which was a subcontractor on a project at a power plant near Blytheville, Arkansas.

Zachary and Dynegy Construction was the general contractor on the project, and it had erected a fence surrounding the job site. There was only one gate to provide the way in and out of the site.

Before workers could pass through the gate, Zacahry required that they put on their personal protective equipment and swipe an access card.

What I call a "free ride" - Yahoo!!

Since Nabors had done these things and had to do so in order to clock in and start working, and his work was what allowed Continental to satisfy its obligations to Zachary, the court concluded that Continental was benefitting from his actions at the time he fell and sustained injuries.

A related issue is brewing in California over ride share service providers Uber and Lyft - both companies are being sued by drivers who claim they are employees, not independent contractors.

Uber, Lyft and other “transportation network companies,” as the Public Utilities Commission has dubbed them, offer a free app for smartphones through which users can request a ride from a driver nearby. Like a taxi service, the driver will bring the customer to a destination, the customer will pay and the company will take a percentage of the fare. Drivers typically use their own vehicles, though certain Uber drivers lease cars through a third party, and typically choose when to work.

Both companies classify their drivers as independent contractors and do not provide workers’ compensation coverage for them. Last year the California Public Utilities Commission adopted regulations stipulating that it wouldn’t force the companies to classify its workers as employees or independent contractors. It called for the companies to insure the drivers for liability purposes, but not for workers’ compensation.

Lyft and Uber characterize themselves as mere providers of technology and not real employers of the drivers, labeling them as independent contractors.

“Uber is a software technology company that provides lead generation services for transportation companies and drivers,” the company’s lawyers wrote in answer to a plaintiff’s complaint.

But class action lawsuits filed by drivers claim employee status because both companies ask drivers to display branding, both companies will take user ratings on drivers and sometimes dismiss or “deactivate” them based on those ratings.

Uber tracks the rate at which drivers accept ride requests and may dismiss drivers with low acceptance rates, essentially controlling the driver’s ability to decide whether to turn down passengers. The company has also told its drivers to play jazz or National Public Radio while passengers are in the car, according to the suits.

Plaintiffs argue that what these companies do is nothing new in the transportation industry, which has taken many losses in court fighting employment status lawsuits; FedEx Ground has lost major battles in the U.S. 9th Circuit Court and Kansas Supreme Court this year when judges ruled that thousands of the company’s delivery drivers were employees.

Of course employment status goes beyond workers' compensation as there are taxes, and other labor laws, that affect the labor costs of any business - and likely this is an issue that will continue on regardless of technology and business model because, as we all know, there is no free lunch.

Or in the cases of Uber and Lyft, there is no free ride.

The California cases are Cotter v. Lyft Inc. and O'Connor v. Uber Technologies, both in the U.S. District Court, Northern District of California.

To read the Arkansas Court of Appeals' decision in Nabors, click here.