The new administration’s efforts to reverse course on many of the gains that gig economy businesses achieved under previous White House leadership took another step today as the Department of Labor (DOL) withdrew a guidance letter that indicated typical gig workers are independent contractors. By scrapping the April 29, 2019 letter, the Biden DOL sent yet another signal to businesses that they will have an uphill battle in classifying workers as contractors for at least the next four years. What do businesses need to know about today’s activity?
As we predicted, the Biden administration signed an order immediately after taking charge of the White House halting the advancement of the Department of Labor’s new independent contractor rule. Now for the next step: the Assistant to the President and Chief of Staff just published a memorandum titled, “Regulatory Freeze Pending Review,” proposing to postpone the rule by 60 days to allow the new administration to review it. The effective date of the proposed rule, which would make it far easier to classify workers as independent contractors if it ever takes effect, should now be pushed from March 8, 2021 to May 7, 2021 – and the new Department of Labor would solicit public comments through February 24. What do gig economy companies and other businesses using contractor labor need to know about the February 3 action?
The California Supreme Court just declined to take up the petition filed by a group of app-based rideshare and delivery drivers to hold as unconstitutional the voter-approved ballot measure that ensured that app-based rideshare and delivery drivers could be classified as independent contractors rather than employees. On February 3, the California Supreme Court denied the petition filed by the Service Employees International Union (SEIU) and a group of rideshare drivers seeking to strike down Proposition 22. The SEIU and the group of drivers argued the ballot measure was unconstitutional by putting illegal constraints on the ability of state lawmakers to empower drivers to organize, in violation of the California Constitution. About a month after the petition was filed, the state Supreme Court rejected their challenge in a short docket entry and without much explanation.
A federal appeals court just resurrected a pivotal gig economy battle that at one time seemed to be the center of the legal universe – but for a variety of reasons seems much less important these days. The 9th Circuit Court of Appeals issued a brief administrative order on January 28 that took the landmark Lawson v. Grubhub case out of suspended animation and placed it back on its active docket, ready to be argued and eventually decided. But thanks to a recent California Supreme Court decision and a critical ballot measure outcome, the outcome seems fairly predictable while the overall stakes seem much lower. What do gig economy employers need to know about this recent activity?