December 3 was the first day of the new legislative session in California, the first day that members could introduce bills for the 2019-2020 legislative session. If the first day is any indication, there is one issue that will dominate employment policy discussion in 2019: Dynamex, Dynamex and Dynamex.
One of our firm’s most prolific writers and most astute analysts of all things related to workplace law in California, Ben Ebbink (Sacramento) wrote a recent post-election entry for the firm’s California Employers Blog entitled “What Will A Governor Newsom Mean For California Employers?” The entire post is worthy of your review, but two portions of his blog entry particular focus on the gig economy. Here are those two excerpts:
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.
We’ve been waiting for something like this since the gig economy was established: a set of rules and regulations, adapted for the modern era and with the gig economy in mind, addressing the issue of independent contractor classification. And yesterday’s news may mean we may actually have our wish granted.
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.
It’s impossible to ignore the reverberations that continue to shake the business landscape after the landmark April 30 Dynamex ruling introduced the notorious ABC test to the California gig economy industry. For those living under a rock the past few months, the ABC test adopted by the California Supreme Court now forces businesses to prove that each and every worker satisfies all three elements of the ABC test in order to properly classify them as independent contractors: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. Given the significant difficulty a gig economy business would have in meeting this test for each and every of its workers, it has caused a seismic shift in the way gig companies structure the relationship with their workers.
Now that sports betting has been legalized by the Supreme Court, I might want to consider laying some action on an upcoming game, because I am on fire with my recent predictions. In a blog post from last week, I correctly predicted the two arguments that Grubhub would be making in response to the plaintiff’s argument that the trial victory should be wiped off the books and returned to the lower court for further proceedings. Late last night, the gig economy company filed a brief with the 9th Circuit Court of Appeals in an attempt to preserve its momentous trial victory.
As if gig businesses haven’t had enough bad news to digest in the past few weeks... fresh off the heels of the California Supreme Court’s decision in the Dynamex Operations case, members of Congress are now focusing on increasing workplace rights for gig economy workers while handing them the ability to bargain collectively.
The ink on the Dynamex court decision is barely dry, but plaintiffs’ attorneys are not wasting any time in taking advantage of the new misclassification standard established for California businesses. In a pair of lawsuits filed on May 8 in a San Francisco state court, workers for both Lyft and Postmates filed claims alleging they were improperly classified as contractors. The lawsuits each use specific language aimed at conforming to the new ABC test established by the California Supreme Court. Specifically: