Gig Economy Jobs More Likely Seen as Employees After California Supreme Court Ruling

The California Supreme Court has addressed the classification of gig economy jobs, unanimously providing new direction to differentiate the classification choices of “independent contractors” or “employees.”

Gig economy jobs are positions for app-driven services including Uber, Lyft, Postmates, GrubHub and many others. The new interpretation of what defines an independent contractor could have even farther-reaching effects.

Previous definitions of employee versus independent contractor have focused on how much control the company exerts over the worker. The new California Supreme Court ruling indicates an independent contractor is someone whose work does not align with the hiring company’s own business. For example, a window washer hired to wash the windows of a dry cleaning business would qualify as an independent contractor.

The ruling goes on to say that an independent contractor works in “an independently established trade, occupation or business.”

Chief Justice Tani Cantil-Sakauye wrote, “When a worker has not independently decided to engage in an independently established business but instead is simply designated an independent contractor … there is a substantial risk that the hiring business is attempting to evade the demands of an applicable wage order through misclassification.”

The court ruling said a worker must be designated an employee unless the person works in a job “such as an independent plumber or electrician – who would not reasonably have been viewed as working in the hiring business.”

The court presented examples of independent contractors and employees. A plumber who is hired by a retailer to fix a leak in the bathroom sink is an independent contractor. A seamstress who receives cloth, patterns, and orders from a clothing company and creates the clothing in her home is more likely an employee.

Gig Economy Jobs Evade Definition

For years, gig economy jobs have evaded definition of either employee or independent contractor. Businesses prefer to hire independent contractors because the companies are not obligated to pay minimum wage, overtime, benefits, workers’ compensation or employee taxes.

The California Labor Commissioner reports the state loses nearly $7 billion in payroll taxes annually due to the misclassification of employees as independent contractors.

Harvard and Princeton universities conducted a study in 2016 that indicated more than 12 million Americans were classified as independent contractors, equal to more than 8 percent of all workers.

The California ruling could see Uber, Lyft and other app-based companies forced to change the classification of their workforce from independent contractors to employees. In the case of Uber and Lyft, the main focus of the business is to provide rides to customers. Uber and Lyft drivers provide these rides, which means drivers possibly could qualify as employees who deserve employee rights.

If you have worked as an independent contractor in a gig economy job in California and believe you were misclassified, you could qualify to participate in this 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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