Legal Question in Business Law in California

Whether they are employees or independent contractors is a more complicated question/answer than can be given here with these limited facts. There are also important tax and IRS consequences. Regardless of what you call them or hire them as the IRS and/or the legal system will use the facts and circumstances to determine which one they are. It's important for you to plan ahead and get some good legal advice as to how to employ/contract these drivers and what kind of protections you should put in place.

I know as a small business owner you would rather not spend money on legal fees but it's almost like a one time insurance policy to keep you out of legal and tax trouble later.

To answer your question as best I can with the very limited information, it's likely they could be independent contractors (since they are using their own cars) but could also be employees since they are being paid an hourly wage (this is usually evidence that the business is dictating their hours). Please let me know if you'd like to discuss further so I can be more precise with my answer.

I agree with the previous answer that the classification of a worker as an employee or independent contractor is complicated. I think the "driving their own cars" is less important than is the payment of hourly wages, and therefore agencies such as the tax collectors, Employment Development Department, courts and juries are more likely to think you are an employer and your drivers are employees.

As to insurance, you'll need (probably) worker's comp and some kind of commercial-use automobile PL&PD;coverage with high limits. The drivers' personal insurance very likely won't cover them when driving on business, whether they are employees or contractors. Even if it did, you would want higher limits.

Please note that delivery businesses are generally regulated by the California Public Utilities Commission, and you may need to apply to the CPUC for a permit.

They will be employees unless you set up company polices and contracts that clearly comply with the rules required of independent contractors. You may not be able to do so easily. Just saying they are does not cut it, and you would risk substantial penalties from various agencies for the violations. You really need to have an experienced attorney assist you in setting up proper policies and safeguards, including adequate insurance. If serious about doing this right, feel free to contact me.