In its April 30, 2018 opinion in Lee v. Dynamex, Inc. We recommend California companies utilizing independent contractors seek legal assistance to ensure contractors are properly classified in light of this decision.
To list workers as independent contractors, businesses have to show they do not control and direct the work, that the duties fall outside what the company normally does and the worker is "customarily engaged in an independently established trade, occupation or business", the California supreme court said.
This ruling is expected to have wide-ranging effects on worker protections in California. The Court of Appeals (in which Ruf also gave the oral argument) disagreed, concluding that the wage order definitions discussed in Martinez applied to determining whether the worker was an employee or independent contractor for purposes of qualification under the wage order.
According to the ruling, any worker who is involved in the daily course of business should be treated as a full-fledged employee.
Those wage orders, applicable only to employees - not independent contractors - impose obligations on employers related to minimum wages, maximum hours, and certain other basic working conditions (such as meal and rest breaks).More news: Anticipated $-0.05 EPS for Under Armour, Inc
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The decision does not affect people outside of California but if other states want to follow California's example the gig economy could be affected greatly.
In a big win for labor advocates, the California supreme court on Monday limited businesses from classifying workers as independent contractors who can not receive key employment protections.
Even if Uber and the like are eventually forced to change their business model, however, that moment could be far off. Uber drivers typically sign an arbitration agreement stating that any disputes must be brought individually and outside the court system.
Michael Rubin, who represented labor unions that argued on behalf of Dynamex drivers, said the court adopted "the most worker protective standard available".
Under the previously used "control-of-work-details" or "economic reality" test to determine independent contractor or employee status, courts (and hiring entities) looked to the nature of the work performed, the overall arrangement between the parties, and the objective of the applicable statutes, among other things. The Supreme Court's adoption of the "ABC" test is clearly meant to address this problem and should help even the playing field for California workers.