There’s a great story in today’s Bloomberg Law by Genevieve Douglas highlighting the recent trend of states permitting self-employed workers – such as gig economy contractors – to enjoy the fruits of a paid family leave program on a portable basis. This can only be good news for gig economy businesses and the gig economy as a whole. After all, as gig workers are afforded greater opportunities to enjoy the kinds of benefits (with flexibility), the number of well-qualified and higher skilled workers to join the labor pool will only grow.
According to Bloomberg Law’s weekly “Punching In” column (an absolute must-read each week) that published today, some congressional leaders are not too pleased with the Labor Department after it published an opinion letter a few weeks ago confirming that certain workers for an unnamed gig economy company were properly classified as independent contractors. As we wrote about back on April 29 when the opinion letter was released, that letter offered up the federal government’s official interpretation on whether a certain business model or practice complies with the law, providing us with a solid understanding of how the current USDOL views the misclassification question and will approach it from an enforcement perspective. And the news was very good for gig businesses: “while not a magic bullet that will cure all that ails the modern gig economy industry, [the] development is a welcome one—and a preview as to how today’s USDOL will treat misclassification concerns that fall into their laps from gig economy (and other) businesses,” we said at the time.
It’s been a roller coaster two weeks for gig economy companies. On April 29, the U.S. Department of Labor handed gig economy companies a nice outcome by issuing an opinion letter confirming that typical gig workers are, indeed, independent contractors. Just days later, the 9th Circuit spoiled the party by saying that the California ABC test should be applied retroactively, opening the door for massive potential exposure against companies with a California presence. And on May 9, gig companies felt the second hit from a one-two punch when California’s Division of Labor Standards Enforcement issued an opinion letter extending the reach of the ABC test. Today, however, gig companies are feeling the good kind of whiplash after the National Labor Relations Board’s General Counsel released an advice memo concluding that a group of Uber drivers are properly classified as independent contractors and shouldn’t be permitted to proceed with their labor claims. The advice memo means it is much less likely that a traditional gig economy company, structured in a typical fashion when it comes to workforce operations, will face a valid unionization effort or could be found liable for an unfair labor practice charge.
It’s been a busy week on the Dynamex front, and the news for businesses continues to get worse. As we recently discussed, the 9th Circuit held just last week that Dynamex and the ABC test should be applied retroactively. The very next day, California’s Division of Labor Standards Enforcement (DLSE) released an opinion letter concluding that the ABC test applies to both IWC Wage Order Claims and certain Labor Code provisions that enforce Wage Order requirements.
The gig economy has become so prevalent in today’s society that it is not likely many people will still wonder “what IS the gig economy?” However, if someone does still have that question, they are in luck. Merriam-Webster recently announced that it has officially added “gig economy” to its dictionary. The phrase is now formerly defined as “economic activity that involves the use of temporary or freelance workers to perform jobs typically in the service sector.”
There’s no way to sugarcoat this one. Today the 9th Circuit handed a big loss to gig economy companies by concluding that last year’s Dynamex decision from the California Supreme Court and its wide-reaching ABC test should be applied retroactively. That means that the ABC test – which makes it very difficult for gig economy businesses to properly classify their workers as independent contractors rather than employees – will be applied to federal cases when evaluating relationships that businesses thought were to be adjudged under a much more flexible standard.
In a major positive development for gig economy businesses, the U.S. Department of Labor today issued an opinion letter today confirming that certain workers providing workers for a virtual marketplace company are, indeed, independent contractors.
The confusion surrounding worker classification is not a new topic for any gig economy employer. Whether gig workers are classified as employees or independent contractors is a constant battle businesses face both in the legislature and the judiciary. But independent contractor classification may have just gotten a little simpler in Texas thanks to the Texas Workforce Commission. The agency responsible for determining whether workers are properly classified and assessing unemployment taxes just adopted a rule on April 9 classifying workers hired for jobs through a digital app as independent contractors for unemployment insurance purposes. The TWC reasoned that its adoption of the rule provides employers with more stability in this growing sector of the economy.
Great news for gig economy businesses from an Illinois federal court: a judge recently ruled that Grubhub’s delivery drivers were not operating in “interstate commerce,” and therefore were not excluded from the company’s mandatory arbitration agreement. The March 28 ruling is one of the first decisions on this subject following January’s Supreme Court ruling casting this issue into doubt. While the fight is not over, round one goes to gig economy companies.
If you have been keeping an eye on growing trends in the gig economy, you know that around a third of workers reportedly use contract or freelance gigs as their primary source of income, and that this number is only expected to grow in 2019 and beyond. You may even be managing one of these workers as you read this. If not, odds are that you will be soon. So what are the rules in this context? And more importantly, how can you most effectively manage and lead a workforce blended with both full-time workers and freelancers?