As the Internal Revenue Service is cracking down on misclassification of workers, a group of California airport shuttle bus drivers recently sued in federal court to be considered employees rather than independent contractors, BLR reports.
The drivers argued that their employers' control over driving areas, fares, appearance and behavior standards and other aspects of their work goes beyond the involvement of independent contractors, and sought the right to overtime pay, minimum wages and other rights guaranteed to employees under the state's Labor Code.
According to the source, a federal district judge ruled that he could not resolve the issue because the passenger services corporations are regulated by the Public Utilities Commission and his jurisdiction did not apply. An appellate court overturned that ruling, however, and the judicial system may resolve the question in the near future. If so, the ruling may affect how other workers and businesses deal with classification issues.
The issue of worker classification is currently being addressed by the IRS through its Voluntary Classification Settlement Program, meant to provide a way for employers who may have incorrectly classified employees in the past to remedy the error while reducing the tax burden of past compliance errors. While classification as full-time or even part-time employees may make workers eligible for employee benefits, increasing costs to a degree, this program provides an incentive for employers to prioritize compliance and avoid or minimize penalties for any past mistakes.
