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The Uber-Complex Law of Vicarious Liability

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About The Author

Keir Baker (Former Editor in Chief)

Keir is a Trainee Solicitor currently in the fourth and final seat of his training contract at a major US law firm. He is a law graduate from Selwyn College, University of Cambridge. Outside the law, Keir is an accomplished goalkeeper in both football and hockey, as well as a keen actor and pianist. He is a long-suffering supporter of Middlesbrough FC.

If you’re an employer, you want to hire an employee who’ll do their job, not do your bidding.

Jeffrey Jones

Vicarious liability is an old concept, and an example of strict liability, where a person is made responsible for a tort for which they were not at fault. In this instance, employers can be vicariously liable for the torts of employees, even when the employer did not expressly authorise, did not cause, or was not even aware of the negligence of his employee.

As Lord Toulson set out in Mohamud v Morrison Supermarkets [2016], in order for an employer to be vicariously liable, the current law stipulates (a) that there must be a relationship between the defendant and the wrongdoer, and that (b) a connection between that relationship and the wrongdoer’s act or default, such as to make it just that the defendant should be held legally responsible to the claimant for the consequences of the wrongdoer’s conduct. This connection was held to mean ‘the course of ordinary employment’ by Lord Phillips in CCWS v Various Claimants [2012].

Unfortunately, English law on vicarious liability is difficult to analyse. As Lord Pearce described in Imperial Chemical Industries Ltd v Shatwell [1964], the law of vicarious liability:

[H]as not grown from any clear logical or legal principle, but from social convenience and rough justice.

As a result, there is much confusion over how this area of law works. For example, while Lord Phillips in CCWS [2012] articulated five factors to help courts decide whether there is a sufficient enough relationship between the wrongdoer and the defendant, it did not account for cases where the wrongdoer is the defendant’s independent contractor (IC). So, although Slesser LJ affirmed in Honeywill and Stein Ltd v Larkin Brothers Ltd [1934] 1 KB 191 that the relationship an employer and between an IC – a person who an employer has hired under specific terms outlined in a contract – is such that an employer cannot be liable for their torts, there remains no one authoritative test for determining when that is the case.

Furthermore, the phrase ‘the course of ordinary employment’ is difficult to interpret, and the test developed for its application has been subject to rapid expansion in the recent years and has been left with uncertain parameters.

The law of vicarious liability can be placed into an interesting context by examining the taxi company Uber. For example, in 2013, an on-duty Uber driver killed a six-year old in San Francisco as he drove dangerously. This raised the question as to whether her relatives could sue the driver, or Uber. In other words, was the driver an employee of Uber making them vicariously liable, or an IC thereby restricting the liability to himself?

Who are Uber?

Uber is a relatively new company growing at an impressive rate, and is distinct from traditional taxi companies. Regular companies are contracted by local authorities to work in specific areas. Customers call up, request a taxi for a specific time and place, or flag one down in the street. Drivers active under the terms of their employment with the company take passengers on their journeys. Upon the journey’s conclusion, customers pay the contracted drivers directly, meaning the drivers owe a proportion of their daily earnings to the company who employs them.

In contrast, Uber drivers are like ‘volunteers’ who apply to work for Uber. After being accepted, Uber drivers inform the company when and where they are available for work. The company then matches passengers with drivers via an app. Upon arrival, passengers pay Uber directly, with a cut transferred back to the drivers.

In California, it was held in the case of Uber v Berwick [2015] that Uber drivers are employees, rather than ICs. However, the law in the US can differ from English law. Given the rise of companies such as Uber back in the UK, this article will examine whether the English law of vicarious liability would mirror that of the Golden State, by scrutinising the two ambiguous elements of the English law.

Issue 1 - Employer or Independent Contractor (IC)?

Unhelpfully, there are three mutually exclusive tests that emerge from the case law, none of which have sufficient supremacy to render the others obsolete: an issue the courts ought to resolve. Indeed, analysis of two of those tests illustrates how the law of vicarious liability needs to be dragged out the past and updated for the modern age.

Test 1 - The Control Test

The antiquity of some of this area of the law is exemplified by the traditional criterion – the degree of right of control - for distinguishing employees from ICs being still applicable today, despite originating from the early 1900s. Concisely expressed by Lord Thankerton in Short v J & W Henderson Ltd [1946] 174 LT 471, the factors used for this test are:

  1. The master’s power of selection of his servant;
  2. The payment of wages or other remuneration;
  3. The master’s right to control the method of doing his work; and
  4. The master’s right of suspension or dismissal.

The contents of this test are as anachronistic as that description’s language. It is inapplicable to today’s economy, where the tertiary and quarternary sectors have superseded the primary and secondary industries: employees often possess skills and techniques that employers cannot understand, meaning that employers cannot always control employees’ methods of work. As Otto Kahn-Freud suggests, this test is suited to a society:

[I]n which knowledge and skills are… not being… systematically imparted in institutions of learning.

This test’s unsuitably for today’s society is exemplified by the inconclusive results produced when it is applied to the Uber driver context. The requisite contents of the test seem to be only partially fulfilled. Uber does have the power of selection over their drivers, prescribing certain qualifications its drivers must possess. The company also carries out interviews and pre-employment checks. Uber can also suspend, dismiss or - at least - disassociate themselves from the driver in question. Wages are paid by Uber too.

However, Uber cannot control the manner in which drivers complete their work. Obviously, it is required that drivers use a car, but – unlike traditional taxi companies – Uber has no control over drivers’ choice of when and where they work, or their choice of route, speed or customer. These factors are critical – as was emphasised in Performing Rights Society v Mitchell & Booker Ltd [1924] 1 KB 762– for the essence of the test is the ‘degree of detailed control’.

Overall, the factors outlined above demonstrate the loss of the requisite ‘degree of detailed control’, meaning this test should conclude that Uber drivers are ICs. Still, this test should be set aside because of the ambiguity and confusion, or at least it should function solely as a residual test, to be used only when the Economic Reality Test, discussed below, cannot provide a sufficient answer.

Test 2 - Integration Test

The second potential test – the ‘Integration Test’ – was proposed by Denning LJ. In Stevenson, Jordan and Harrison Ltd v McDonald and Evans [1952] 1 TLR 101, he suggested that:

Under a contract of service, a man is employed as part of the business and his work done as an integral part of the business, whereas under a contract for services, his work, although done for the business… is only accessory to it.

At first sight, this test appears more straightforward than the others, for it does not require the analysis of a variety of factors. However, it does not allow for more decisive conclusions, because the concept of being an integral part of - or an accessory to - a business is open to heavy interpretation. The raw form of this test leads to some questionable decisions, making it inapplicable to the modern workplace.

Furthermore, precedents attempting to supplement the original test just add to the confusion, exemplified by the somewhat contradictory conclusions created when applying the test to the Uber context. The case of Whittaker v Minister for Social Security and Pensions [1967] 1 QB 156 - in which it was concluded a trapeze artist was an integral part of a circus - suggested a person’s status as an accessory could be determined by the proportion of their time spent devoted to the task and duties - including preparation and practice - demanded of them by their employer. The case of WHPT Housing Association Ltd v Secretary of State for Social Services [1981] 1 ICR 737 saw Nourse J draw a distinction by saying:

In a contract of service… the principal obligation undertaken by the employee is to provide himself to serve; whereas in a contract for services the principal obligation is... to provide... his services. (emphasis added)

The Whittaker [1967] factor would suggest that Uber drivers are accessories because, unlike traditional taxi drivers, Uber drivers can choose when and where they work. And it is difficult for Nourse J’s test to suggest that drivers provide themselves to Uber; rather, they drive around taking passengers where they wish to go. This fits more comfortably with the idea of providing a service, both to passengers and the company. Both these tests would conclude that Uber drivers are ICs.

However, this conclusion undermines the very essence of the Integration Test: integrality. It is difficult to argue against the fact that Uber drivers are integral to the company’s business. No drivers mean no fares, no income and no profit for Uber. Ultimately, this narrow test offers very little room to argue anything other than Uber drivers being employees of the company, with all this contradiction and confusion it causes illustrating why it needs to be overruled.

Test 3 - Economic Reality Test

The third and final test is the most modern. Despite being the one currently most used by the courts and considered authoritative by the Privy Council – as decided in Lee Ting Sang v Chung Chi-Keung [1990] IRLR 236 – it has not yet to overruled the other two. Proposed by Mackenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions [1968] 2 QB 497, the test is a more effective and fairer analysis of a situation, for it takes into account a much greater range of factors, in an attempt to answer three questions:

  • Has the employee agreed to provide a skill in return for a wage?
  • Does the employer exercise a degree of control?
  • Are other terms of the contract are consistent with its being a contract of service?

In Market Investigations Ltd v Minister for Social Security [1969] 2 QB 173, Cooke J articulated a further question:

  • Is the employee in business on her own account and taking risks regarding loss and chance or profit, or as an employee working for an agreed wage whose employer is taking those risks?

The non-exhaustive list, encompassing a wide range of factors that can be evaluated, allows this test to stand up better to scrutiny from a modern viewpoint. For example, the case law has accommodated modern concepts, including:

  • Hot-desking;
  • Flexi-time;
  • Potential for ‘working from home’;
  • Ownership of tools;
  • Liability for tax;
  • Liability for National Insurance payments; and
  • The method and frequency of wage payments.

Most importantly, when examining the issue in the Uber driver context, this test reaches a nice, concrete conclusion, albeit with the answer to Cooke J's question overlooked: the company challenges orders on behalf of its drivers from local authorities attempting to limit its hold over transport markets, thereby taking the risk of loss of profit.

However, this is outweighed by examination of other factors, leading to the conclusion that Uber drivers are ICs. For example, as discussed above in relation to the Control Test, Uber cannot control drivers to a detailed extent. Furthermore, Uber drivers own their own cars, have complete control of their working hours and location, and are liable for tax and National Insurance payments.

Issue 1 - Conclusion

Ultimately, the status of Uber drivers as employees or Independent Contractors depends on which test the courts employ. The Control Test should be ignored for it is increasingly out-of-date and also encompassed within the Economic Reality Test, whilst the Integration Test is too narrow to offer comprehensive evaluation of today’s complex employer-employee relationships. Instead, it is the Economic Reality Test that should be employed by the courts, for it is best suited to the modern workplace. This would mean that English law would consider Uber drivers to be ICs, and Uber would not be liable for the torts which their drivers commit, subject to the caveat of authorisation discussed below.

Issue 2 - Authorisation

As mentioned above, an employer is generally not liable for the torts of an IC. However, if an employer such as Uber authorised the commission of a tort, it could become jointly liable with the IC, which is governed by the ‘course of ordinary employment’ test. Inevitably, this criterion is also a difficult one to decipher, with Comyn J in Harrison v Michelin Tyre Co [1985] 1 All ER 919 describing how:

[T]he large body of case law… is notable for one thing, its inconsistency.

Furthermore, the notion is subject to frequent expansions for a variety of policy reasons: whether that be the prevention of discrimination – as transpired in the case of Tower Boot Company Ltd v Jones [1997] – or to incentivise employers to not take certain risks, as occurred in Dubai Aluminium Co Ltd v Salaam [2002]. Indeed, as famously stated by Lord Phillips in CCWS v Various Claimants [2012]the law of vicarious liability is on the move,’ as it has started to encompass scenarios ‘akin to employment’, such as sexual abuse cases involving religious figures, workplace harassment and road traffic incidents.

Implied Authority and the ‘Close Connection’ Test

It is clear that when employers expressly ask or give permission for the commission a tort, they can be liable for it. But in other cases, it can be more ambiguous. In those instances, it is important to discern whether the employer gave implicit authorisation for the tort’s commission. If the tort could be regarded as something the employee or IC had the discretion to do, then the employer can be held liable for wrongful exercise of such discretion. English law has long accepted that it is unrealistic to suppose that employers have to give authorisation for every act. Bankes LJ described in Poland v Johns Parr & Sons [1927] 1 KB 236 how:

A servant has implied authority upon an emergency to endeavour to protect his master’s property if he sees it in danger or has reasonable grounds for thinking he sees it in danger.

Therefore, the modern approach for discerning implied authority – to work out whether a tort was committed in the course of employment – is heavily nuanced, and requires careful evaluation.

The Sufficiently Close Connection Test

The Sufficiently Close Connection Test emerged from Lister v Hesley Hall Ltd [2001]; one of a number of high-profile sexual assault cases that created a perceived need for greater expansion of vicarious liability. Lord Steyn described how it aims ‘to concentrate on the relative closeness of the connection between the nature of the employment and the particular tort.’ The test encompasses a non-ending range of factors, with Lord Clyde in Lister [2001] outlining three important elements:

  1. A broad approach towards the construing of the employee’s duties – did the tort fall into a larger pattern of conduct?
  2. The time and place of the tort is a relevant, but not a conclusive, factor.
  3. It is insufficient that employers merely provide employees with an opportunity to commit the tort.

The case law provides further guidance on how the test is used to discern what should be considered a sufficiently-close connection. The sexual abuse case of JGE v The English Province of Our Lady of Charity [2011] – which involved a relationship between Catholic priests and the Church that was ‘akin to employment' – offers a good example. It was held that the Church's ‘empowerment of the priests materially increased the risk of sexual assault.’ This reinforced the decision in Maga v Trustees of the Birmingham Archdiocese of the Roman Catholic Church [2010], where the court held that the church was vicariously liable for sexual assaults committed by a priest on a child, because it had placed that priest in a position of trust and responsibility with access to children.

The test shifted away from its sexual assault origins in Lister [2001] to become widely applicable. For example, two cases involving policemen demonstrate the use of Lord Clyde's third factor. In Attorney General v Hartwell [2004] 1 WLR 1273, a policeman attacked someone against whom he had a personal vendetta, and in N v Chief Constable of Merseyside Police [2006], a policeman used the authority given to him by his uniform to rape a victim. In both cases, the courts emphasised how it was insufficient for an employee to take advantage of his employment to commit a tort.

An important test was revived from the Victorian case of Joel v Morison [1834], where it was held that an employee ‘going on a frolic of his own’ would not incur any liability for his employer. Indeed, in both Hartwell [2004] and N [2006], it was held that the policemen had been simply opportunistic, using their status as policemen to carry weapons and command authority respectively. They had gone on ‘frolics of their own’, meaning there was no sufficient connection.

However, Lord Toulson in Mohamud [2016] restricted the application of the doctrine of ‘frolic on his own’, thereby expanding the circumstances to which Lord Clyde’s first factor (the larger pattern of conduct) could apply. In that case, the wrongdoer worked at the defendant’s petrol station attending to customers and responding to their inquiries. The wrongdoer stepped out from behind the counter shouting abuse at the claimant, followed him back to his car, opened the front passenger door and hit him; the claimant claimed the defendant was vicariously liable for the injuries this caused.

Lord Toulson in Mohamud [2016] agreed, arguing that there was a sufficiently close connection for it was all ‘an unbroken sequence of events’. When the wrongdoer committed the tort, he had not metaphorically taken off his uniform and He was following up on what he had said to the claimant, thereby making it a seamless episode.  He also argued that when the wrongdoer followed the claimant back to his car and opened the front passenger door, he was giving the claimant an order to keep away from his employer’s premises, which he reinforced by violence. In giving such an order he was:

[P]urporting to act about his employer’s business... in a gross abuse of his position, but it was in connection with the business in which he was employed to serve customers.

Issue 2 - Conclusion

In the context of Uber, the Sufficiently Close Connection Test suggests that if Uber drivers simply committed a tort whilst driving, it would not be enough to create liability for the company. Lord Clyde’s suggestion regarding when and where the tort was committed means that a tort committed during a journey booked via the company would not be a fact enough to trigger vicarious liability; more is required than drivers simply taking advantage of the fact that they can pick up passengers.

Unfortunately, this test is one that places heavy emphasis on the individual fact pattern of each case – if an Uber driver raped a passenger, it is likely that the precedent of N [2006] would apply – and it is therefore difficult to suggest how anything more than past precedent and common sense can be used for determining the existence of sufficiently close connections.

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Tagged: Commercial Law, Employment Law, Uber, Vicarious Liability

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