By Levi Sumagaysay And Ethan Baron
The Mercury News
WWR Article Summary (tl;dr) The ruling could eventually require ride-hailing companies and others to provide benefits and a minimum wage for so-called gig workers.
The Mercury News
A sweeping California Supreme Court ruling that redefines when employers can classify workers as independent contractors could blow up the business models of Uber, Lyft and dozens of other companies that rely on gig workers.
The decision, handed down Monday in a case involving delivery drivers for a Southern California company, may lead to many more California workers being classified as employees, with the higher pay and legal protections that classification entails.
“This is an earthquake, a seismic shift” in the long-running question of employees-vs.-contractors, Beth Ross, an Oakland-based employment attorney for law firm Leonard Carder, said Tuesday. “If I were a gig-economy employer, I’d be taking a deep breath today and I’d be on the phone to my lawyers to discuss risk assessments.”
The state’s highest court in its 85-page ruling rejected the multi-part existing standard for determining when a worker is an employee in favor of a simpler “ABC” standard, used in New Jersey and Massachusetts.
Under the new test, a worker can be considered an independent contractor only when a company can show the worker controls his or her work, that the duties go beyond what the business normally does, and when the worker “is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.”
The ruling could eventually require ride-hailing companies and others to provide benefits, and a minimum wage, for so-called gig workers, experts said.
These companies have long argued that because of the flexibility their workers have about when they can choose to accept work, they should be classified as contractors. But it will be difficult for these companies to make the new argument the court ruling requires to classify an employee as a contractor: that the duties of their drivers go beyond what the business normally does, experts say. Driving paying customers from one place to another is the essence of a ride-hailing business.