Tag Archives: judy bamberger

New Questions on Uber and Lyft

One of the more interesting and challenging issues to surface is the status of drivers at transportation network companies (TNCs) such as Uber and Lyft. Are some or all of them employees? A federal court in California just ruled that this issue may be resolved in a class action (although this is subject to appeal).

That, alone, is a difficult call. Here are two web sites discussing the issue.

http://www.newyorker.com/magazine/2015/07/06/gigs-with-benefits

http://www.thelegalintelligencer.com/latest-news/id=1202730474534/Avoiding-Penalties-When-Classifying-Independent-Contractors?slreturn=20150602053546

Commentary addressing this issue has focused primarily on the added expense created by employee status. “For an employer, the main difference between contractors and W-2 employees is that employers have to ‘withhold income taxes, withhold and pay Social Security and Medicare taxes and pay unemployment tax on wages paid to an employee,'” according to the Internal Revenue Service.

Apart from these added expenses, status as an employee creates some difficult insurance challenges. Here a few:

–If you write a workers’ compensation policy for the TNC’s employees, how many employees are you insuring? Only those who work in the office, or the hundreds or thousands of drivers on the road?

–Most statutes or regulations covering TNCs such as Uber and Lyft require them to carry insurance on their drivers in various amounts — e.g., $1 million from from the time of agreeing on a ride to after the dropoff. Usually, there is a lower amount required for the time the driver is cruising with the app on looking to connect with a fare ($50,000 primary and $200,000 “excess” in California).

If the driver is an employee, these limits become largely irrelevant because the TNC, as the employer, is liable without limit for any injuries caused by an employee driving within the scope of employment. Put another way, the injuries are backed by all of the TNC’s assets, including any insurance it may carry.

–But the issue is more complex than that. What if the driver has a collision on the way to the city, but before turning on the app? Usually, when one is going to or coming from work, the commute is not considered to be in the scope of employment – i.e., no liability on the part of the employer. This “going and coming” rule changes, however, when the employee must use her car in the work. Obviously, TNC drivers must use their cars.

Take the case of Judy Bamberger. She used her car during work to visit clients and carry out other work-related chores. On her way home, she decided to stop for yoga and yogurt. As she made a left turn, she collided with a motorcyclist. Is the employer responsible? “Yes,” said the California Court of Appeal. In Moradi v. Marsh USA, Inc., 210 Cal. App.4th 886 (2013), the court held that her driving fell within the scope of her employment because, since she used her car in her work, going to and from work conferred an “incidental benefit” on the employer.

Thus, the TNCs’ liability may extend well beyond the “app on-app off” brackets.

–If this is not complex enough, consider this. Many drivers keep several apps on as they cruise. If a driver keeps three apps on and has a collision, is the driver an employee of all three TNCs? Does that change once the driver accepts a fare? What about the going and coming rule? If the app is not yet turned on, is the driver an employee of each company for whom the driver has an arrangement to drive?

One may imagine other “shared economy” scenarios where status as an employee will affect not only expenses line benefits, but also liability and related insurance issues.

California Law on Uber et Al.: Model for All States?

On Sept. 17, California Gov. Jerry Brown signed into law AB 2293 (Bonilla) regulating insurance coverage for  transportation network companies (“TNCs,” such as Uber, Lyft and Sidecar). Two purposes of the bill were: (1) to fill a possible gap in coverage caused by an exclusion in personal automobile policies and (2) to allocate responsibility between TNCs and personal automobile insurers for insurance coverage issues. The statute attempts to achieve its purposes by creating a “firewall.” When a driver is logged on to the TNC network, the insuring responsibility is on the TNC policy.  When a driver is logged off, responsibility is on the personal automobile insurer. Think of “Log On” and “Log Off” as bookends.

One might expect this statute to become a model for other states struggling with similar issues. Unfortunately, some infelicitous language in the statute may undermine the desired clarity. The mischievous phrase is “in connection with.”

Once a driver logs on, but before being matched with a fare (referred to as Period One), the statute requires a TNC policy of 50/100/30 (in other words, $50,000 of coverage for bodily injury per person, $100,000 for bodily injury per accident and $30,000 for property damage). The statute also requires an additional policy of $200,000 to cover any liability arising from a participating driver “using a vehicle in connection with a transportation network company’s online-enabled application or platform within the time periods specified in this subdivision . . . .”  [Emphasis added in all cases].

Assume a driver, while logged on, decides to drive over the river and through the woods to his grandmother’s house. A TNC could legitimately argue that this driving is no longer “in connection with a transportation network company’s online-enabled application or platform.” By taking a detour, the driver has abandoned the TNC work.

If so, does the personal automobile insurance cover an injury caused on the way to grandma’s? Apparently not. Section 5434(b) of the new statute says the TNC policy covers the period from Log On until Log Off, or until the passenger exits the vehicle, whichever is later. For ease, think of this as the bookends again. Subdivision (b)(1) then provides that the personal auto policy “shall not provide any coverage” unless the policy expressly provides for that coverage “during the period of time to which this subdivision is applicable.” So, personal auto cannot provide “any coverage” within the bookends. These provisions may have created a gap within the bookends large enough to drive an SUV through.

What about driving outside the bookends? Is that clearly covered only by the driver’s personal auto policy?

The statute requires the TNC to advise the driver “that the driver’s personal automobile insurance policy will not provide coverage because the driver uses a vehicle in connection with a transportation network company’s online-enabled application or platform.” Thus, the statute permits (and perhaps mandates) personal automobile policies to exclude coverage for driving “in connection with . . . .”

When is driving “in connection with?” The “Case of the Yoga and Yoghurt” provides a good analogy. The basic rule is that collisions that occur while “coming and going” to and from work are not the responsibility of one’s employer. Simple commuting is not within the “scope of employment.” When, however, a person uses her automobile for work purposes, the rule completely changes. Judy Bamberger, an employee of an insurance company, used her car during work to visit clients and carry out other work-related chores. On her way home, she decided to stop for yoga and yoghurt. As she made a left turn, she collided with a motorcyclist. Is the employer responsible? “Yes.”

In Moradi v. Marsh USA, Inc., 210 Cal. App.4th 886 (2013), the court of appeal held that her driving fell within the scope of her employment because, since she used her car in her work, going to and from work conferred an “incidental benefit” on the employer. Put another way (although the court did not use these words), it was in connection with her employment.

It would seem to follow that if one must use a car in an activity (such as TNC driving), then going to or from that activity is “in connection with” the activity. Because Period One (Log On) is part of a TNC’s “online-enabled application or platform,” driving to a surge zone with the intention of logging onto the app upon arrival is driving “in connection with” driving during Period One. If this analysis is correct, it again undermines the clarity of the App On/App Off bookends.

It seems clear what the drafters had in mind, so this ambiguity could be remedied by clearly defining the meaning of “in connection with” – perhaps next legislative session. In the meantime, those considering using California’s law as a model may want to avoid importing this ambiguity.