A Government Agenda Not To Be Denied

Steve Holden   August 29, 2017

Employers in California should be concerned about our government. Government officials want to control how employers do business. That’s not new. What may be new is the depth to which the officials will go to control things. A glimpse of that depth can be seen in a lawsuit filed this week by the Employment Development Department (EDD) in the Sacramento County Superior Court. EDD is essentially suing itself in order to make sure that a business is not permitted to use independent contractors. Here are the facts:

EDD audited a company called RedTie Transportation, LLC. RedTie operates as a charter-party carrier providing prearranged passenger transportation (a limousine service). To do so, RedTie maintains a license from the Public Utilities Commission. Some of the drivers are employees of RedTie and others are independent contractors who merely lease RedTie’s vehicles to provide services using software created by Uber Technologies. Following the audit, EDD determined that the independent contractor drivers were misclassified and should have been classified as employees. EDD hit RedTie with a tax assessment, penalties and interest.

RedTie appealed the assessment to the Unemployment Insurance Appeals Board (UIAB). The UIAB is a subdivision of EDD with the statutory responsibility of interpreting the California Unemployment Insurance Code and hearing and adjudicating appeals of EDD assessments. RedTie’s appeal was heard by an Administrative Law Judge. The judge ruled in favor of RedTie. The judge disagreed with EDD’s conclusion that the drivers were employees. Determined to get its way, EDD appealed the judge’s decision to the full Board for review and reversal. The full Board affirmed the judge’s decision. Still determined to get its way, EDD filed a petition for writ of mandate this week. Essentially, the enforcement arm of EDD is suing the judicial arm of EDD because the enforcement arm does not like the decision of the judicial arm.

So, while government bureaucrats spend taxpayer money to satisfy their egos and set agenda, a California employer gets dragged along for years of litigation and the privilege of paying attorneys to protect itself from an over-reaching government. No consequence to the government officials; significant consequences to the employer.