Law often lags behind reality. In Broadway Cab LLC v. Employment Department, the Oregon Supreme Court held that a taxi company’s drivers are “employees” and not “independent contractors”. Consequently, the company is obligated to pay unemployment insurance taxes on wages earned by its drivers in 2008 and 2009.
Broadway Cab argued that its drivers performed services only for the passengers who paid the drivers and not the cab company to which the drivers actually only paid for its dispatch and other services. Disregarding reality, the Supreme Court held that the drivers drove for remuneration from the company and not from their fares. That, of course, is untrue. It is the customers who pay the driver and it is the driver who decides how and when to work.
Of course this twisted reasoning has broad implications for the larger and developing “sharing economy” where Uber, Lyft and other entities challenge the straightjacket of longstanding legal rules. It is, no doubt, with an eye on such largely unstructured and loosely organized cooperative economic models that Oregon regulatory agencies and courts will next attempt to impose their heavy hand of tax and regulation to the detriment of both the service providers and the public at large.