Worker misclassification is one of the biggest issues facing businesses in the gig space and elsewhere. As the demand for gig workers increases, businesses are thinking of creative ways to hire and retain great talent. Independent contractors are increasingly becoming savvier, too, and are using their collective power to push employers for benefits traditionally reserved for W2 employees. So, what is a business to do? Well, one company is offering traditional benefits to untraditional gig workers.
Online digital marketplaces such as Uber, Handy, and PostMates are now firmly rooted in many American’s daily lives. With the seemingly overwhelming and growing presence, these companies continue to face uncertainty when classifying their workers which may result in longstanding financial, legal, and social implications. The business models of online digital marketplaces rely on their workers being classified as independent contractors, not employees, which are significantly less expensive to hire than employees and are not subject to most labor protections.
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:
The California Supreme Court issued its long-awaited decision in Dynamex Operations West, Inc. v. Superior Court last week. The weight of the court’s decision to apply a three-prong test to determine whether a worker is an employee is heavy, without a doubt. As my colleague Rich Meneghello says, the decision will “appear in the nightmares of gig economy executives.”
Late Friday afternoon, the attorneys for the worker who came out on the losing end of the Grubhub misclassification trial asked the appeals court to return the case to the lower court for a new hearing. Their reasoning? Last week’s momentous Dynamex ruling by the California Supreme Court changed the standard that courts should follow when making a classification determination between employee and independent contractor, and the plaintiff wants the court to take a fresh look at the case with this new standard in mind. This maneuver was all but inevitable, and gig companies around the country (but especially in California) should pay close attention to the proceedings to see how this development might impact them.
May the 4th has become known as Star Wars Day given the movie franchise’s most famous tag line. Today provides an opportunity for us to examine a recent employment law development of massive significance—a great disturbance in the Force, if you will—and how it would impact Star Wars characters if they were subject to modern misclassification principles.
My colleague Ashton Riley described it as the “contractor apocalypse.” Yesterday the California Supreme Court issued its long-awaited decision in Dynamex Operations West, Inc. v. Superior Court, and, unfortunately, the wait wasn’t worth it. The state Supreme Court scrapped the flexible legal test used since 1989 to determine whether a worker was an independent contractor or employee and installed a rigid three-pronged test that will appear in the nightmares of your average gig economy business executives for the foreseeable future.
A delivery driver for gig economy company DoorDash has been ordered by the 5th Circuit Court of Appeals to take his misclassification case to a private arbitrator instead of court pursuant to a valid arbitration agreement he entered into. The April 25 decision is a solid win for gig employers and could provide a template for how other similar businesses should structure their own arbitration agreements.