Last week was a bad week for gig economy companies in Oregon. It wasn’t just the post-holiday malaise that so many suffer from after having to return to work following a long, relaxing weekend that probably included eating too much turkey.
Airbnb Inc. recently announced it would no longer force its employees who filed sexual harassment lawsuits to settle their claims in private arbitration. The notice came only days after Google and Facebook made similar announcements concerning policy changes about sexual harassment, including ending forced arbitration for such claims. Google’s announcement followed a 20,000 employee walkout protesting the company’s handling of sexual misconduct allegations. As previously discussed on the blog, in May of this year, Uber and Lyft became two of the first gig companies to waive mandatory arbitration and remove the confidentiality requirement for sexual assault and harassment victims (for passenger, driver and employee claims).
Sure, the monetary portion of the settlement—$10 million to a class of approximately 400 Uber software engineers and over $2.6M in attorneys’ fees—is pretty eye-opening. But perhaps the more significant part of the settlement agreement that was just agreed to by a federal court judge on Wednesday were all of the non-monetary terms.
The first-ever trial on the gig economy misclassification to reach a judicial merits determination has now turned into the first-ever appeal on gig economy misclassification. And late Friday evening, the plaintiff seeking to overturn the ruling filed his opening appeals brief with the 9th Circuit Court of Appeals. We’ve covered the Lawson v. Grubhub decision in detail over the past year; if you want to refresh your memory, feel free to catch up by reading any of our posts. In sum, a federal trial court ruled in February 2018 that Grubhub correctly classified plaintiff Raef Lawson as an independent contractor and rejected his misclassification claim, but then the California Supreme Court changed the game a few months later by adopting the strict ABC test for misclassification in the now infamous Dynamex case. How will the Dynamex decision impact the Gurbhub appeal? We’re not sure, but we know how the plaintiff feels about it. We digested the 61-page appeals brief and can give you the three most important takeaways from the filing.
It was just a matter of time. After the Supreme Court cleared the way for businesses to use class waivers with their employees and contractors with the Epic Systems ruling this past May, many observers expected that the decision would come back to haunt a class of Uber drivers who wanted to litigate a class action misclassification case against the ride-sharing company in court. Earlier today, sure enough, the other shoe dropped.
When the Supreme Court decided this May that businesses were permitted to enter into class waiver agreements with employees and contractors, forcing them into individual arbitration proceedings over workplace disputes rather than having to be subjected to bloated and costly class action litigation, we called it a “monumental” decision that “saved employment arbitration as we know it.” For businesses in the gig world, we now have a definitive example of just how valuable the SCOTUS’s new standard can be when it comes to misclassification cases.
While businesses, chambers of commerce, local leaders, and others have put the full-court press on the California legislature to take action to somehow lessen the impact of the new ABC Test for determining misclassification in light of the state Supreme Court’s recent Dynamex decision, it appears there is no relief in sight. For the foreseeable future, California employers need to adjust to the new reality and assume things aren’t going to be changing.
You remember the game-changing, earth-shattering, monumental decision from the California Supreme Court a few months ago that fundamentally changes the test to determine whether your workers are independent contractors or employees, don’t you? For those who had put it out of their minds hoping it was all just a nightmare, here’s the quick summary: rather than applying a balancing test that took into a number of factors, the California Supreme Court said that hiring entities need to prove that all of their workers satisfy the “ABC test” in order to properly classify them as employees.
Sure, there have been some high-profile legal setbacks for gig economy businesses in the area of misclassification lately; the Dynamex case was a punch in the gut for California businesses, and the Pimlico Plumbers case is a massive headaches for our brothers and sisters across the Atlantic. But by and large, when courts in the States are called upon to apply the standard “right to control” test in misclassification cases involving the gig economy, businesses have come out on top. And that’s exactly what happened late last week in New York as a state appellate court ruled in favor of independent contractor status for a former Postmates driver.
When are gig workers not independent contractors? A case decided earlier this month by Britain’s highest court may help to answer that question.