California is currently in the process of hashing out the often-blurred lines that define gig worker from actual employee, and the ramifications for how this plays out in the courts can be enormous. As of now, gig workers—drivers for Lyft, insurance agents, lawyers, architects and even some ER doctors—are often viewed by the law as being independent contractors, or gig workers.
The current debate stems from an April ruling by the California Supreme Court that makes it more difficult for businesses to classify workers as independent contractors. The suit was brought to the court by delivery drivers for Dynamex. In the court’s ruling, it called for a formula known as the ABC test to determine if workers are employees or independent contractors. Under this test, an individual is an employee if the company controls what the worker does, if the worker’s tasks are central to the core business of the company, and the worker does not run an independent business doing the work that he/she is doing for the company.
What will happen next is under negotiation. Companies don’t like the Dynamex ruling; unions do, and they want it to be enshrined in state law. The case has already been cited as a precedent in some legal cases. State assemblywoman Lorena Gonzalez, D-San Diego says that “We’re trying to codify what the Supreme Court said. We want to ensure that workers aren’t left behind in this new gig economy, doing one side hustle after another.”
Even though the Dynamex ruling dealt strictly with pay and found that workers who pass the so-called ABC test are entitled to collect minimum wage and overtime pay, Gonzalez wants to take it a step further by including benefits like unemployment insurance, worker’s comp, sick days, paid family leave and health insurance for gig workers who meet the classification under the ABC test. These things, say Gonzalez, are important not just to workers, but also to the state to make sure companies contribute to a “social safety net.”
Companies feel threatened by efforts to reclassify gig workers as employees, since it costs around 30 percent more for them to provide the benefits associated with the employee-employer relationship. Companies that offer on-demand services cite fears that they will lose the ability to turn labor on and off in real time to meet demands as an obstacle in this reclassification. A competing bill known as AB71 has been sponsored by Assemblywoman Melissa Melendez, seeking to roll back the provisions laid out in the Dynamex decision. In a statement, Melendez says that nearly 2 million Californians who work flexible jobs as independent contractors and the business community in the state face “chilling and potentially harmful impacts” from the Supreme Court’s ruling.
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