It started with an effort to regulate Uber and Lyft drivers, and ended as an ordinance that could apply to courier services, small pizzerias, on-demand food delivery operators and more.
This morning, Clark County commissioners will consider adoption of an ordinance that requires an independent contractor “who transports goods, services and/or passengers within Clark County for any type of compensation” to pay an annual fee of $25 for a business license.
“We want to make sure a person driving a vehicle is either an employee or an independent contractor,” said Steve Sisolak, who chairs the commission. “This isn’t an attempt to raise revenue, because the fee is so low. It’s an attempt to find out who is driving for what company.”
Under the proposed ordinance, Uber and Lyft drivers who are classified by the companies as independent contractors would be required to apply for business licenses. The same would be true for other workers in the so-called on-demand economy, one in which consumers summon services or transportation through a mobile app. It would apply to drivers for companies like Postmates, which uses independent contractors to deliver take-out food across the valley.
Regulating independent contractors for specific commercial activities is not unprecedented for the county. Real estate agents working with a licensed real estate broker or developer must pay an annual license fee of $150. There are similar licensure requirements for insurance brokers.
But by encompassing all independent contractors who transport goods, services or passengers, the ordinance could have implications for more than one specific industry. The ordinance would not only apply to newcomers like Uber and Lyft but could also apply to a range of established businesses that use independent contractors for commercial transportation, such as deliveries.
Len Krick, chief operations officer for Sunbelt Business Brokers of Las Vegas, estimates that a majority of small businesses in the restaurant industry farm out delivery to independent contractors.
“Somebody’s going to pay (the fee), and chances are it’s going to be the business,” Krick said.
Search for keywords about independent contractors on Las Vegas Craigslist and several driving jobs, not only for Uber and Lyft, pop up. They’re not for corporate giants like Domino’s but for small operations — an ad to work as a courier, for instance, and one for delivery drivers with pickups.
County commissioners were originally considering a higher licensure fee of $100 annually. That number was eventually worked down to $25, a cost Krick concedes is unlikely to put companies out of business but could still be significant if they are reimbursing a team of 50 contracted drivers.
The county’s reasoning stems from a larger debate about employment. Rather than hire employees, many companies now use independent contractors, who are distinguished in part because they provide their own materials, create their schedules and are not supervisors. By classifying workers as contractors, companies can save on paying payroll taxes and benefits.
Yet in the past year, a number of workers have sued companies for misclassifying them. Uber is currently facing a class-action lawsuit in California that challenges whether the company should consider its drivers employees. Most recently, drivers for Amazon’s Prime Now service, which launched in Las Vegas this month, alleged misclassification and are seeking unpaid overtime.
The county wants to formalize the employment distinction, sending this message: Either you are an employee or a contractor who operates his or her own work on behalf of another business.
“You have to fall under one or the other,” Sisolak said.
In past meetings, commissioners have also said the ordinance was important because the county needed to know the identities of operators. In the ordinance, licenses can be revoked with a change in criminal history.
Sisolak said the $25 fee wouldn’t be an undue burden on drivers.
“You’re talking 7 cents a day,” he said. “That was the price of a phone call when I was 10.”
According to the county’s business impact statement, the estimated increase in annual revenue — $250,000 to $375,000 — would be offset by the costs of enforcement and administration.