My Uber driver caused my injuries: Who pays?

The California Supreme Court will soon decide the fate of Proposition 22, which carved many gig workers out of the AB 5 worker classification scheme. (Castellanos v. State of California (2023) 89 Cal.App.5th 131.) The current betting line is that the voter-approved measure will remain in place, sealing the fate of thousands of app-based drivers who will remain independent contractors as they transport passengers, food, and other items on roads and highways throughout the state.

Bizarrely, some are arguing that Proposition 22 would insulate Uber and Lyft - otherwise known as app-based companies - from vicarious liability for the actions of drivers who are now classified as independent contractors for workers compensation purposes. This argument is a non-starter.

Proposition 22, as well as Business and Professions Code Section 7451, specify that it only relates to workers compensation, and "an app-based driver is an independent contractor and not an employee or agent with respect to the app-based driver's relationship with a network company" if certain conditions are met. Neither Proposition 22 nor the statute address the tort liability of app-based companies for the actions of their drivers, and neither have been modified to encompass this issue. (People v. Superior Court (Pearson) (2010) 48 Cal.4th 564, 571)

Moreover, the concept of vicarious liability is not strictly tied to employee status. It can also arise through the legal principle of agency, where an independent contractor, such as an app-based driver, acts as an agent for the company.

Practically, as contractors, these drivers operate without the traditional employment safety net. They receive no meal and rest breaks, no unemployment benefits, no waiting-time compensation. They pay for their own fuel, and they bear the risk of any price increases. They are solely and exclusively responsible for maintenance, upkeep and insurance on their vehicles. But what happens when they are involved in accidents? Are they required to cover vehicle repair costs while figuring out how to pay their own medical costs? If they're out of service for an extended period of time, an accident could be a very costly proposition for any driver whose bad luck or bad driving resulted in a collision.

And if their passengers suffer injuries while being transported, who bears the costs? Will drivers who are barely eking out a living suddenly be on the hook for potentially catastrophic injury damages? Many are making just enough to put food on their families' tables; how can they be expected to bear the costs of third-party injuries? Yes, they have insurance, but will their coverage be enough to get them through such a scenario?

Proposition 22

Proposition 22 may have classified gig drivers as independent contractors, but it did little to change the liability calculus. In fact, the new law solidly places upon the Ubers and Lyfts of the world financial responsibility for their drivers' mishaps.

Despite the hullabaloo over how their workers are classified, the app-based companies now have greater insurance obligations to their drivers. When those drivers suffer injuries while performing services for these app-based companies, they and their loved ones are now provided with a financial safety net.

Specifically, pursuant to Business and Professions Code Section 7455, the app-based companies are now obligated to have in place all of the following:

● occupational accident insurance to cover medical expenses and lost income resulting from injuries suffered while the driver is online, with a network for medical expenses incurred up to at least one million dollars;

● disability payments equal to 66% of the driver's average weekly earnings from all app-based companies as of the date of injury; and

● accidental death benefits for spouses, children, or other dependents of a driver's insurance for injuries that result in death while the driver is on the app-based company's online application or platform.

Transportation Network Carriers

When passengers in the cars of app-based drivers suffer injuries, the companies who built those apps should be the ones paying the bills. If ever there was a situation that called for vicarious liability, it is the one in which businesses are substantially enriched by services performed by workers who are beholden to company-provided apps while navigating a high wire without a safety net.

The drivers may be independent contractors responsible for their own hours, equipment and working conditions, but the app-based companies for whom they drive are officially Transportation Network Carriers (TNCs), regulated by the California Public Utilities Commission.

A TNC, according to the CPUC, is "an organization whether a corporation, partnership, sole proprietor, or other form, operating in California that provides prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles." (Decision 13-09-045, issued in Rulemaking 12-12-011, Sept. 19, 2013).

Under California Civil Code Section 2100, "A carrier of persons for reward must use the utmost care and diligence for their safe carriage, must provide everything necessary for that purpose, and must exercise to that end a reasonable degree of skill." App-based carriers should therefore be held to the highest standards, with an obligation to provide adequate insurance coverage for injuries sustained during the provision of services.

Coverage requirements

But it isn't that simple. The extent of an app-based company's liability for the injuries of passengers is ultimately determined on the basis of what the driver was doing at the time of the accident.

Pursuant to PUC Section 5433, once a participating driver accepts a ride request on the TNC's app until the transaction or the ride is complete, TNC insurance in the amount of at least one million dollars for death, personal injury, and property damage is primary. When a driver has logged onto the app, but before a ride has been accepted or after it has been completed, the TNC's primary coverage must be in the amount of at least $50,000 for death and personal injury per person, $100,000 for death and personal injury per incident, and $30,000 for property damage. The policies may be maintained by the TNC, by the driver, or by both.

If a driver's policy has lapsed or been canceled, the TNC must maintain coverage in its place. The TNC must also maintain excess coverage of at least $200,000 per occurrence. Coverage under the TNC's policy does not depend on the driver's insurer first denying the claim.

If a passenger suffers an injury but the driver is not logged into the app, only the driver's personal auto insurance coverage will be applicable. If the driver is logged on but waiting for a ride request, the app-based company's liability is limited to $50,000 per person, $100,000 per incident and $30,000 for property damage. Only in the situation where the driver has gotten a ride request, is driving to pick up the passenger, or actually has a rider in the car will the TNC's $1 million coverage obligation kick in.

Conclusion

This is a lot of "ifs" and "whens," providing little comfort to those of us who routinely travel via Uber and Lyft. We expect that if something unexpected happens, we will be taken care of. We don't expect to be rudely informed that our sole recourse is to go after our poor driver and hope that his insurance is sufficient to make us whole.

Proposition 22 may have upended the state's worker classification scheme, but it did not change the liability landscape. Vicarious liability is a common-law doctrine, and "[u]nless expressly provided, statutes should not be interpreted to alter the common law and should be construed to avoid conflict with common law rules." (California Assn. of Health Facilities v. Department of Health Services (1997) 16 Cal.4th 284, 297) Therefore, it is presumptuous of the app-based carriers to assert that their Proposition 22 baby removed the monkey of vicarious liability from their backs.

The CPUC has, over the years, issued a number of decisions and regulations holding TNCs vicariously liable for injuries occurring on their watch. Even if the California Supreme Court upholds Proposition 22, it would not change the liability rubric. Given well-settled common law, the history of state regulation, and the oversight of common carriers, the decision should be an easy one. "Uber by its name alone is selling a type of car service. Because Uber is profiting from this service it should also be held responsible if the driver is negligent or not applying Uber safe practices." (CPUC Decision 13-09-045 at pp. 16-17.)