As housing costs soar and workers try to bring in more income, Californians who have been working as independent contractors may have to be re-categorized as employees thanks to a recent California Supreme Court ruling. The court's decision applies a standard used in a few other states, and could have a significant effect on "gig workers" such as Uber, Lyft, and Amazon delivery drivers.
Gig Workers as Independent Contractors
Many companies have opted to use independent contractors to fill their employment needs because it generally costs less. They don't have to provide all of the same benefits and protections that they do for actual employees, and they can avoid payroll taxes.
The case at hand began when drivers for Dynamex filed suit against the company after they were reclassified as independent contractors. They had to wear Dynamex shirts and badges, and sometimes even certain decals on their cars. And yet they had to provide their own vehicles, gas, insurance, tolls, etc. They carried all of the liability with no real guarantee of work.
The court characterized this type of dynamic as unilateral, unfair, and an attempt at evading an employer's responsibilities to their employees. That's not to say all independent contractor situations are erroneous. In the past, the main test for determining if someone was an independent contractor or an employee was whether the employer controlled how the work was done.
In this case, the court has adopted additional steps to this test, so that a worker can be considered an independent contractor only if he or she:
Experts say the court's ruling could make more gig workers eligible for minimum wage, rest breaks, and other benefits common to employees.
If you think your employer is skirting its responsibilities to employees, or you're an employer unsure how to classify your workers, contact an attorney with experience in employment law.