Gig Economy Workers Likely Employees, NOT Independent Contractors
Sometimes, there is a case that changes everything. The “gig economy“ has been on the rise for years. Companies like Uber, Lyft, DoorDash, TaskRabbit, Fiverr, Freelancer, Grubhub, PeoplePerHour, Postmates, Spare5, Takl, UpWork, Wingz, YourMechanic, and even Rover, all rely on classifying workers as independent contractors, rather than employees. By classifying workers as independent contractors (1099), rather than employees (W-2), companies save tons of money in insurance, taxes, and wages. Workers receive money for each “gig” completed. But, that money is typically far less than they would be making if they held a more “traditional” job. Ask any Uber driver what they make in an hour, and you’ll often hear tales of woe about how they only picked up three rides, at $3 each, which is less than California’s minimum wage.
The California Supreme Court took a major step to change that today, with its decision in Dynamex Operations West v. Superior Court. The Court embraced the “ABC” test where the employer must establish three factors to show a worker is an independent contractor:
1.That the worker is free from the control and direction of the hirer in connection with the performance of the work;
2.That The worker performance work that is outside the usual course of the hiring entities’ business; and
3.That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
CELA colleague, Michael Rubin, who represented the workers said the opinion, “provides needed clarity to worker and employers alike, slicing through decades of confusing and inconsistent case law to focus on the key practical inquiry: where the worker ‘would ordinarily be viewed as working in the hiring business.’” Ruben added, “the result will be sweeping reclassification of workers throughout the state, including the gig economy or much of the litigation has recently focused.”
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