New York lawmakers just introduced the “Dependent Worker Act” into the Assembly and Senate this past week, which proposes to provide workers in the gig economy with certain rights that previously were only available to “employees.” However, just as quickly as the bill was introduced, the bill’s sponsor delayed consideration of the bill until the next legislative session amid criticism that the bill was rushed, poorly drafted, and did not go far enough in protecting gig economy workers.
In a development many wouldn’t find surprising, a collation of forces announced this week that they would like to see ride-sharing drivers for Uber and Lyft receive a guaranteed base wage, flexible benefits, and a new drivers’ association to lend a united voice to represent their interests. What is surprising? The two forces that joined to make this call were the leaders of Uber and Lyft themselves.
Earlier this week, the California Assembly overwhelmingly passed AB5 – a measure that would codify the ABC test introduced to the state in last year’s Dynamex decision, and make life even more challenging for the average gig economy business. The best hope now is that the legislature will take business considerations into account during necessary compromise negotiations with the state Senate, and the bill will be modified from its present form to address some key issues…and perhaps exempt typical gig economy companies.
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.
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.