UPDATE: Oregon Supreme Court rules against Broadway Cab in 'independent contractor' case

In a case that could have implications for companies that rely on contracted drivers, the Oregon Supreme Court on Thursday ruled that Broadway Cab LLC is liable for unemployment insurance taxes on the wages of certain drivers who drove for the taxi company.

Under state law, an employer must pay unemployment insurance taxes "on all sums paid for services performed for the employer for remuneration" unless the employer can establish that an individual is an independent contractor, the court said.

In a unanimous opinion, the court held that the drivers in question "performed services for Broadway for remuneration" and therefore the company owes taxes on their wages during 2008 and 2009.

By performing driving services for Broadway during those two years, and not solely for their passengers, the drivers enabled Broadway to fulfill its obligations to the city of Portland and other entities with which Broadway had contracts, the court said.

The court further held that the drivers were not independent contractors because the drivers were not "customarily engaged in an independently established business," as required by Oregon law.

The drivers did not meet that statutory requirement because they did not maintain a business location separate from Broadway's location; they did not "[provide] contracted services for two or more different persons within a 12-month period" or "routinely [engage] in business advertising"; and they did not have the authority to hire and fire "other persons to provide or to assist in providing the [driving] services."

Thursday's opinion, written by Justice Martha L. Walters, affirmed a Court of Appeals ruling in a case that Broadway Cab brought against the state Employment Department after an administrative law judge for the agency ruled against the company.

The relationship between employer and worker goes to the heart of a dispute that flared recently between Uber and Oregon Labor Commissioner Brad Avakian.

Uber officials dispute Avakian's advisory opinion, issued in October, asserting that Uber drivers are employees because they work for the company's benefit and are economically dependent on the ride-hailing company. Uber argues that its drivers are independent contractors who use their own vehicles and set their own hours in providing on-demand rides.

The conflict carries implications for employers using similar business models in other sectors of the economy. Lyft and Amazon are among other companies that rely on contracted drivers for providing rides or delivering consumer goods, respectively.

Legal experts say trouble comes when a company retains control and direction over the employee's job duties and working conditions, regardless of what a contract says.

This post will be updated later today.

-- George Rede

grede@oregonian.com

503-294-4004

@georgerede