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The gig economy may never be the same after the California Supreme Court expanded the definition of employee to include workers who had been treated as independent contractors.
In Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, the state supreme court resolved an issue that has been at the heart of litigation against companies like Uber and Lyft. Although every case is different, there is a new standard in California.
Independent contractors are workers who perform work that is "outside the usual course of the hiring entity's business," the high court said. That ruling is a gig economy game-changer.
The California Supreme Court adopted the "ABC test," which is "a broad means of determining a worker's status as either an employee or a contractor." It qualifies drivers, who had been paid as independent contractors in the case, for certain employee benefits.
Experts say the ruling will increase the number of workers eligible for minimum wage, rest breaks and other benefits under state wage standards. Michael Rubin, who represented labor unions on behalf of the Dynamex drivers, said the decision is the "most worker protective standard available."
"It makes it far more likely than before that in California, the Ubers and Lyfts will have to begin treating the workers as employees," Rubin said.
However, he cautioned, courts will decide on a case-by-case basis.
Used in several states, the ABC test guides decisions based on the following criteria:
Before Dynamex, California courts decided whether workers were employees or independent contractors based primarily on the employer's control of the work performed.