Determining Employee Rights Versus Independent Contractor Rights

A recent California Supreme Court ruling may force companies to reclassify its independent contractors as employees. This may drastically affect some major gig economy companies.

California is home to a number of gig economy companies including Uber, Lyft, Postmates, and many more, which run primarily on the work of independent contractors. Although many of these companies have become incredibly well-known over the years, used by consumers all across the country, the people that work for them may not be receiving all the benefits they should be. In some cases, independent contractor rights may have been violated.

Some workers that are considered independent contractors by these gig economy companies may have been improperly classified, and should instead be considered employees, thus giving them independent contractor rights like those enjoyed by employees.

Indeed, misclassifying workers and only granting them independent contractor rights can allow companies to avoid paying major expenses like payroll taxes, unemployment insurance, workers’ compensation insurance, and more. They can also avoid offering their workers employee benefits like health insurance, retirement plans, paid time off, proper meal and rest breaks, minimum wage, and overtime.

California Supreme Court Ruling

The California Supreme Court recently issued a ruling making it more difficult for companies, including gig economy companies like Uber, Lyft, and Postmates, to give their workers independent contractor rights rather than employee rights and benefits. For companies whose business models rely heavily on the use of independent contractors (and the much less expensive nature of the costs associated with independent contractor rights), this change could seriously increase their costs.

There was a previously-established test for deciding a worker’s employee status—determining whether they qualified for employee benefits or independent contractor rights—which included such factors as whether or not a worker could be fired without cause and how much supervision they were under.

Under the new California Supreme Court ruling, workers are considered employees partly on this basis: if their job is considered to be the “usual course” of the company’s business operations. This ruling follows a decision from the New Jersey Supreme Court that offers this more worker-friendly test. California’s ruling may now affect similar decisions across the country.

Indeed, companies must now prove that they do not direct or control their workers’ performance in order to classify them as independent contractors.

Employee classification can cost between 20 and 30 percent more than offering just independent contractor rights, according to The New York Times.

Filing a California Independent Contractor Rights Lawsuit

If you are an independent contractor in California and work for a gig economy company like Uber, Lyft, or other one, you may be actually be entitled to classification as an employee and the rights and benefits that go along with that classification, including minimum wage, overtime pay, reimbursement for expenses, meal and rest breaks, and more.

Join a Free California Independent Contractor Class Action Lawsuit Investigation

If you work as an independent contractor in California for a gig economy company, you may be entitled to employee rights.

Learn More