Can Vicarious Liability extend to what your employees do after hours? Employers do not generally concern themselves with what their employees do after they punch out at the end of the day. But a recent $1.5 million jury verdict may cause California employers to pay close attention to what their employees do if they choose to remain on the premises after the ends of their shifts – particularly if they run establishments that serve alcohol.

The case in question involves an employee of the restaurant chain On the Border. Vincent Quintanilla worked at the On the Border located in Mission Valley, San Diego. On the evening of December 8, 2012, some of his fellow employees held a birthday celebration for him. After he finished his shift, he had drinks with his coworkers at the restaurant for several hours, and then drove away.

Later that night, Quintanilla’s vehicle collided with a skateboarder named Kai-Yen Cheng. Cheng suffered a broken leg, as well as other injuries. After the incident, Quintanilla fled the scene. Authorities later determined that Quintanilla was responsible. He was arrested, and eventually pleaded guilty to felony hit-and-run driving.

Cheng sued On the Border for his injuries, arguing that Quintanilla was acting within the scope of his employment when the accident took place. The attorneys representing On the Border argued that Quintanilla was a customer at the time, and that the restaurant would therefore not be liable for his actions. The jury sided with Cheng, and awarded him $1.5 million.

“Respondeat Superior” and Vicarious Liability in California

The concept of an employer being held responsible for the tortious actions of its employees when they are acting within the scope of their employment is called “respondeat superior.” California’s policy on respondeat superior is laid out in the case of Kephart v. Genuity, in which a family sued an internet services company after a “road rage” incident caused by one of its employees.

The employee forced the Kephart family’s vehicle off the road before heading to an airport for a business trip. Genuity argued that the employee was far removed from his employment at the time of the accident, and so the company should not be held responsible for its employee’s actions. A jury agreed and found that Genuity was not liable.

In upholding the jury’s decision, a California Superior Court ruled that employers may be considered vicariously liable for the tortious actions of their employees, if the actions result or arise from pursuing their employers’ interests. The Court also states that the relevant issue was whether the employee was acting within the course and scope of his employment. (The opinion holds that the jury was reasonable in determining that the employee’s misconduct did not occur within the course and scope of his employment with Genuity.)

In the case involving On the Border, the plaintiff’s attorneys argued that Quintanilla became intoxicated in the course and scope of his employment because his employer regularly allowed its employees to consume alcohol on its premises and received a monetary benefit for doing so. If the case is not overturned on appeal, it could have serious consequences for California businesses. [Read more…]

A “Gig Economy” is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements. Legislation proposed by California Assembly Member Loretta Gonzalez (D – San Diego) would make it easier for some workers currently classified as independent contractors to be regarded as employees. The bill, known as the California 1099 Self-Organizing Act, would create a rebuttable presumption that a worker is an employee if the worker performs services that require a license under the Contractors’ State License Law (or if the worker performs the services for someone who is required to obtain such a license.)

If the bill is passed, the burden of proof will be shifted, so that workers participating in the “gig economy” (that is, who work through hosting platforms such as Uber or Lyft) will be regarded as employees unless their employers are able to prove that the workers are actually independent contractors. It does not, however, grant the workers official employee status, or lay out any rights that the workers must receive.

How the Gig Economy Burden Can Be Overcome

The bill specifies how an employer would go about demonstrating that a worker is an independent contractor. To overcome the presumption that a worker is an employee, the employer would have to show that the following factors have all been met:

• That the worker has the right to control the performance of the contract, and discretion as to how the contract is performed, and that the primary factor being bargained for is the result of the work (rather than the means by which the work is done),
• That the worker is “customarily engaged in an independently established business,” and
• That the worker is genuinely an independent contractor, and that the employer is not just trying to avoid giving the worker employee status.

If you are wondering how an employer could meet the third requirement, and show that the worker is genuinely an independent contractor, the proposed bill includes a list of factors that could be seen as evidence of independent contractor status. This list includes the following factors:

• Whether the worker has control over when and where the work is performed
• Whether the worker holds a license pursuant to California’s Business and Professions Code
• Whether the worker has a substantial investment in the business other than personal services
• Whether the worker is held out as being in business for himself or herself.

Before introducing the legislation, Gonzalez stated in an editorial in the Sacramento Bee that the legislation is intended to give workers in the gig economy the right to collectively bargain, and the right to form associations. The editorial includes an estimate that 2 million Californians are part of the gig economy. [Read more…]