California Court Ruling Explains Contractor vs Employee Distinction

A recent court ruling in California will help determine policy for gig economy workers, helping employers understand the difference between contractor vs employee status.

The court ruling stated that businesses in California must adhere to strict regulations when comparing contractor vs employee, and that some gig economy workers may now be eligible to receive the same legal protections as employees.

The court ruling was unanimous, with the case primarily involving delivery drivers and other gig economy workers whose employment status as an employee or an independent contractor is often confused.

The court ruling states that businesses in California must prove that the worker matches the eligibility requirements to be classified as an independent contractor, rather than an employee.

In order to do this, the court applies a three part test called the ABC standard that primarily revolves around how much control the employer has over the employee’s work. More specifically, the evaluation examines:

• Whether or not the employee is free of control and direction of the work
• Whether or not the employee works outside the company’s main line of business
• Whether or not the employee is engaged in an independent trade or occupation

These new criteria that help determine the difference between contractor vs employee, and will help many Californians looking to challenge the employment status given by their employer.

This decision is described as an enormous change by spectating legal experts, and is similar to employment laws in Massachusetts and New Jersey.

Overview of California Gig Economy Workers

A gig economy is described as an employment environment in which employees typically work in temporary positions, typically in independent contractor positions. Independent contract positions have grown steadily more popular over the years with the recent economic recession, and still remain a significant statistic in the workforce despite the steady recovery.

According to a study by economists Lawrence Katz and Alan Krueger, the number of employees that have “alternative work arrangements” increased to 15.8 percent from its previous 10.1 percent during the previous decade.

People who work in the gig economy environment include temporary help, independent contractors, freelancers, and people who work on economy sharing websites like Etsy. While many employees enjoy the flexibility of gig economy work, most of them are not eligible to receive minimum wage benefits like health insurance or overtime.

Under current California employment laws, non exempt employees can earn 1.5 times their hourly rate if they work over 40 hours in a single workweek or eight hours in a single workday. In addition, employees may be eligible for an extra hour of pay if they are not provided a 30 minute meal break or are forced to work during it.

Employees must receive this meal break every five hours, and a 10 minute rest period every four hours worked. Before this legislation, gig employees were not previously given these guarantees. With these new state policies in place, California businesses must examine the contractor vs employee classification differences.

California gig employees who may be owed money from their employer could potentially join a new class action investigation.

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.

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