When California’s AB 5 was signed into law last month, a chorus of voices decried the fact that it could radically change the gig economy as we know it. Many contended that the average app-based driver enjoyed being an independent contractor and didn’t want to see changes to the law that would make it harder for them to be classified as such. This time next year, California voters may have a chance to give voice to those critics and scrap the ABC test when it comes to gig economy drivers.
Lawmakers have begun to hold a series of hearings to discuss the “future of work,” and it may be no surprise that the two political parties have differing ideas about how that should impact the gig economy. The House Education and Labor Committee held the first of three such meetings on October 23, aiming to ensure that the law keeps up with modern developments such as automation, artificial intelligence, and the gig economy. While Democratic lawmakers seem to want to increase restrictions on the industry, their Republican counterparts are looking toward more flexible options. According to an article by Jaclyn Diaz of Bloomberg Law, the working subcommittees will recommend specific legislation early next year. What might such legislation look like, and what chances of success might it have?
Gig economy businesses across the country looked to what happened in California this year and cringed. Other states looked there and were intrigued. After California passed the most aggressive independent contract statute in the nation in 2019 and made it extremely difficult for gig economy businesses to classify their workers as independent contractors, a string of states are considering their own equivalent statutes. 2020 could be the year that the ABC test spreads far and wide across the country.
A Massachusetts federal court just ruled that gig workers cannot escape arbitration provisions by claiming they are exempt transportation workers. The September 30 decision in Austin v. DoorDash marks the second win for gig businesses following a troubling Supreme Court ruling in January 2019 that opened the door to a possible arbitration exemption. However, there remain other federal courts that have ruled for workers on this issue, and the Massachusetts court even indicated there could have been worker victory had the fact pattern been slightly different, so companies are not out of the woods on this issue by a long shot.
As the evolution of the gig economy continues, highly skilled workers who operate on a project-by-project basis are leveraging the gig economy to find new clients and to align their workload according to their personal preferences. Likewise, companies are increasingly able to work with highly skilled freelancers to scale up their workforce in an efficient and cost-effective manner. Companies are also able to manage fluctuations of the demand for their services by hiring skilled freelancers on a project basis.
You’ve been waiting quite a long time for a critical ruling from the 9th Circuit Court of Appeals on the very fabric of the gig economy model – and you’re going to have wait even longer. The appeals court just announced late last week that the Lawson v. Grubhub case has been put on hold while it waits to hear from the California Supreme Court on whether the new ABC test should be applied retroactively to the case, or whether the appeal would apply the older flexible misclassification test that had been in place at the time the trial took place.