California Court of Appeal, Gregg v. Uber Technologies, Inc., Docket No. B302925

Labor Law

 

Arbitration

 

Independent Contractor v. Employee

 

Uber

 

Private Attorneys General Act of 2004 (PAGA)

 

Non-Individual PAGA Claims And Individual PAGA Claims

 

PAGA Waiver

 

California Law

 

 

 

Johnathon Gregg sued Uber Technologies, Inc., and Rasier-CA, LLC (collectively, “Uber”), under the Private Attorneys General Act of 2004 (PAGA), Labor Code section 2698 et seq. He alleged Uber willfully misclassified him as an independent contractor rather than an employee, which led to numerous other Labor Code violations. In response, Uber moved to compel arbitration under the “Arbitration Provision” in the “Technology Services Agreement” (“TSA”), which Gregg accepted to use Uber’s smartphone application and become an Uber driver.

 

 

The trial court denied Uber’s motion and, in April 2021, this court affirmed. The United States Supreme Court vacated the affirmance in June 2022, when it granted Uber’s petition for writ of certiorari and remanded the case for further consideration in light of Viking River Cruises, Inc. v. Moriana (2022) ___U.S. ___ [142 S.Ct. 1906, 213 L.Ed.2d 179] (Viking River). In light of Viking River, we first determine the TSA’s PAGA Waiver is invalid and must be severed from the Arbitration Provision. We then conclude that under the Arbitration Provision’s remaining terms, Gregg must resolve his claim for civil penalties based on Labor Code violations he allegedly suffered (i.e., his individual PAGA claim) in arbitration, and that his claims for penalties based on violations allegedly suffered by other current and former employees (i.e., his non-individual PAGA claims) must be litigated in court. Lastly, we conclude that under California law, Gregg is not stripped of standing to pursue his non-individual claims in court simply because his individual claim must be arbitrated. Consequently, his non-individual claims are not subject to dismissal at this time. Instead, under the Arbitration Provision, they must be stayed pending completion of arbitration. Accordingly, we affirm in part and reverse in part the order denying Uber’s motion to compel arbitration. We remand the case to the trial court with directions to: (1) enter an order compelling Gregg to arbitrate his individual PAGA claim; and (2) stay his non-individual claims pending completion of arbitration.

 

 

PAGA authorizes an “aggrieved employee” to initiate a civil action “on behalf of himself or herself and other current or former employees” to recover civil penalties for violations of the Labor Code ordinarily “assessed and collected by the Labor and Workforce Development Agency.” (§ 2699, subd. (a).)

 

 

(…) Under Viking River, employers may enforce an agreement mandating arbitration of a plaintiff’s individual PAGA claim, even if the agreement does not require arbitration of the plaintiff’s non-individual claims. (See id. at p. 1925.)

 

 

(…) We begin our analysis by addressing whether the PAGA Waiver is enforceable under Viking River. We conclude it is not.

 

 

(…) We decline to follow Olabi for a few reasons. As an initial matter, the opinion was filed before Viking River was decided. (See Olabi, supra, 50 Cal.App.5th 1017; Viking River, supra, 142 S.Ct. 1906.) Therefore, the Olabi court did not interpret the agreement before it in the context of current law, which, as discussed above, now permits a PAGA lawsuit to be split into arbitrable and non-arbitrable components, and does not require it to be treated as an indivisible unit for purposes of arbitration.

 

 

(…) We hold that under California law, an alleged “aggrieved employee” (§ 2699, subd. (c)) is not stripped of standing to assert non-individual PAGA claims in court simply because he or she has been compelled to arbitrate his or her individual PAGA claim. (See Kim, supra, 9 Cal.5th at pp. 83-85; see also Johnson, supra, 66 Cal.App.5th at p. 930; Rocha v. U-Haul Co. of California (2023) 88Cal.App.5th 65, 77(Rocha).

 

 

(…) Uber appears to assume that even if Gregg’s non-individual claims are stayed pending completion of arbitration on his individual claim, he will be allowed to relitigate whether he is an “aggrieved employee” in court because the doctrine of issue preclusion will not apply to the arbitrator’s finding on the issue. This assumption is premature at best, and incorrect at worst. A split in authority has recently developed on this issue (compare Rocha, supra, 88Cal.App.5 that pp. 78-82 with Gavriiloglou v. Prime Healthcare Management, Inc. (2022) 83 Cal.App.5th 595, 602-607), and the parties have not asked to brief it. In any event, we express no opinion on the matter and need not address it. As discussed above, Kim and Johnson establish that regardless of its resolution, Gregg has not lost standing to assert his non-individual claims in court merely because he has agreed to arbitrate his individual claim.

 

 

Having concluded Gregg’s non-individual claims are not subject to dismissal at this time, we agree with the parties that under the Arbitration Provision, they should be stayed pending completion of arbitration on his individual claim. On this point, the Arbitration Provision states: “To the extent that there are any claims to be litigated in a civil court of competent jurisdiction because a civil court of competent jurisdiction determines that the PAGA Waiver is unenforceable with respect to those claims, the parties agree that litigation of those claims shall be stayed pending the outcome of any individual claims in arbitration.”

 

 

 

(California Court of Appeal, March 24, 2023, Gregg v. Uber Technologies, Inc., Docket No. B302925, Certified for Publication)

Gig Economy Workers - Tax Tip (IRS) - FTC Policy Re: Unfair, Deceptive, and Anticompetitive Practices

Gig Economy Workers

Tax Tip

FTC Policy Statement Outlines Areas Where FTC Will Act to Protect Gig Workers from Unfair, Deceptive, and Anticompetitive Practices (See Below)

 

 

IRS Tax Tip 2022-97, June 27, 2022

Republication

https://www.irs.gov/newsroom/here-are-some-things-gig-economy-workers-should-know-about-their-tax-responsibilities

 

Here are some things gig economy workers should know about their tax responsibilities

 

Many people take up gig work on a part-time or full-time basis, often through a digital platform like an app or website. Gig work, such driving a car for booked rides, selling goods online, renting out property, or providing other on-demand work, is taxable and must be reported as income on the worker’s tax return. 

Here are some things gig workers should know to stay on top of their tax responsibilities:

Gig work is taxable:

• Earnings from gig economy work is taxable, regardless of whether an individual receives information returns. The reporting requirement for issuance of Form 1099-K changed for payments received in 2022 to totals exceeding $600, regardless of the total number of transactions. This means some gig workers will now receive an information return. This is true even if the work is full-time or part-time.
• Gig workers may be required to make quarterly estimated tax payments.
• If they are self-employed, gig workers must pay all their Social Security and Medicare taxes on their income from the gig activity

Proper worker classification:

While providing gig economy services, it is important that the taxpayer is correctly classified.

• This means the business, or the platform, must determine whether the individual providing the services is an employee or independent contractor.
• Taxpayers can use the worker classification page on IRS.gov to see how they should be classified.
• Independent contractors may be able to deduct business expenses, depending on tax limits and rules. It is important for taxpayers to keep records of their business expenses.

Paying the right amount of taxes throughout the year:

• An employer typically withholds income taxes from their employees' pay to help cover income taxes their employees owe.
• Gig economy workers who aren’t considered employees have two ways to cover their income taxes:
• Submit a new Form W-4 to their employer to have more income taxes withheld from their paycheck if they have another job as an employee.
• Make quarterly estimated tax payments to help pay their income taxes throughout the year, including self-employment tax.

The Gig Economy Tax Center on IRS.gov answers questions and helps gig economy taxpayers understand their tax responsibilities.

More information:
Publication 5369, Gig Economy and your taxes: things to know
Publication 1779, Independent Contractor or Employee
Is My Residential Rental Income Taxable and/or Are My Expenses Deductible?

Share this tip on social media -- #IRSTaxTip: Here are some things gig economy workers should know about their tax responsibilities. http://go.usa.gov/xJ7KX

 

 

 

 

 

FTC to Crack Down on Companies Taking Advantage of Gig Workers

 

FTC, September 15, 2022

Republication

 

https://www.ftc.gov/news-events/news/press-releases/2022/09/ftc-crack-down-companies-taking-advantage-gig-workers?utm_source=govdelivery

 

 

 

Agency Policy Statement Outlines Areas Where FTC Will Act to Protect Gig Workers from Unfair, Deceptive, and Anticompetitive Practices

The Federal Trade Commission has announced enforcement priorities to fight for consumers who work in jobs that are part of the gig economy. In a new policy statement adopted today, the Commission outlined a number of issues facing gig workers, including deception about pay and hours, unfair contract terms, and anticompetitive wage fixing and coordination between gig economy companies.

View Press Release

 

“No matter how gig companies choose to classify them, gig workers are consumers entitled to protection under the laws we enforce,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We are fully committed to coordinating our consumer protection and competition enforcement efforts within the FTC as well as working with other agencies across the government to ensure gig workers are treated fairly.” 

The statement highlights studies showing that gig work accounts for hundreds of billions of dollars in economic activity each year. According to a Federal Reserve report cited in the statement, 16 percent of Americans report earning money through a gig company, and another report shows that more than half of gig workers say the money they earn is essential or important for meeting their needs. Additionally, as noted in the Commission’s recent Serving Communities of Color report, many gig workers come from communities of color. The statement makes clear that, while gig companies may seem novel, traditional principles of consumer protection and competition still apply to them.  

In the statement, the Commission notes multiple areas where there is potential for harm to workers in the gig economy, including: 

• Misrepresentations about the nature of gig work: While gig companies promote independence to potential workers, in practice these firms may tightly prescribe and control their workers’ tasks in ways that run counter to the promise of independence and an alternative to traditional jobs.

• Diminished bargaining power: Workers have little leverage to demand transparency from gig companies, even in the face of unclear information about when work will be available, where they will have to perform it, or how they will be evaluated.

• Concentrated markets: Markets populated by gig companies are often concentrated, resulting in reduced choice for workers, customers, and businesses. These companies may be more likely to exert their market power in anticompetitive ways that harm workers’ wages, job quality, and other aspects of gig work.

The policy statement makes clear that the FTC’s authority to enforce both competition and consumer protection laws in the gig economy is not affected by how companies choose to classify the consumers who perform gig work. In the statement, the Commission names multiple areas where the Commission will aim to prevent harm to consumers:

• Holding companies accountable for claims and conduct about costs and benefits: Gig companies must not be deceptive in their claims to prospective gig workers about potential earnings, and they must be transparent and truthful about costs borne by workers.

• Combating unlawful practices and constraints imposed on workers: Gig companies using artificial intelligence or other advanced technologies to govern workers’ pay, performance, and work assignments are still required to keep promises they make to workers. Companies must also ensure that any restrictive contract terms, including those limiting workers from seeking other jobs, do not violate the FTC Act or other laws.
• Policing unfair methods of competition that harm gig workers: The FTC will investigate evidence of agreements between gig companies to illegally fix wages, benefits, or fees for gig workers that should be open to competition. The FTC will also investigate exclusionary or predatory conduct that could cause harm to customers or reduced compensation or poorer working conditions for gig workers.

The policy statement notes that companies that fail to follow the laws governing unfair, deceptive, or anticompetitive practices could be obligated to pay consumer redress and civil penalties and may be ordered to cease unlawful business practices. 

The Commission also notes in the statement that it will partner with other governmental agencies to protect gig workers.

The Commission voted 3-2 at an open meeting to adopt the policy statement, with Commissioners Noah Joshua Phillips and Christine S. Wilson voting in the negative.

Workers who believe that their labor rights have been violated can call 1-844-762-6572 for assistance filing an unfair labor practice charge. Or they can contact their closest National Labor Relations Board Field Office or submit a charge on the NLRB’s website.