“Gig” Companies Plead With California Lawmakers to Alter Worker Status

Earlier this year, the California Supreme Court issued a ruling with far-reaching impact to so-called “gig” employers, like Uber and Lyft. These and others with similar employment structures had argued that their drivers were NOT employees, but rather independent contractors. This ruling was a blow to these companies because when workers are classified as employees, they are entitled to receive benefits like minimum wage, regular breaks, overtime pay, protection from sexual harassment and workers’ compensation for injuries. Of course, all this cost the companies money, something they’d been desperately hoping to avoid.employment attorney

Now, according to Bloomberg, these companies are quietly lobbying Democrats in California, seeking a legislative means of overriding the state supreme court’s ruling in April. They’ve been pleading their case to members of the current governor’s cabinet, as well as with his presumed successor and members of the state legislature. They are hoping to either dull the impact of the court’s ruling (with executive action or through passage of a new law) or else scrap it entirely.

Our employee misclassification attorneys in Orange County recognize that such a move could have serious legal implications not only here in California, but potentially echoing throughout the country, as this is an issue with which many states are grappling.  The whole idea of the “gig economy,” which thrives on newer technology such as smartphone apps and constant internet connectivity, is one in which the laws are only now catching up and adapting to these newer features. 

Nine companies, in signing a single letter to Bloomberg earlier this summer, warned that the livelihoods of millions of workers were threatened with the California high court’s ruling. They say that without political intervention, businesses will be decimated. It will be interesting to see where lawmakers allow the chips to fall on this because while Democrats have largely been on the forefront of technology development, they’ve also generally been on the side of workers’ rights. A move that might undercut the court’s ruling could be viewed as something that whittles away at the rights of California workers, but others say that because both the governor and his presumed predecessor are both pro-tech AND pro-worker, they may be uniquely positioned to strike a workable compromise. If such a move is successful, it’s likely it could be duplicated by other states. Business owners say such an important decision shouldn’t be left solely to the courts, which are making their determinations of legality on older laws based on outdated business models.

Among those companies seeking a divergence from the court’s order:

  • Postmates
  • Instacart
  • DoorDash
  • TaskRabbit
  • Square
  • Total System Services
  • Handy Technologies

A spokeswoman for the California Chamber of Commerce stated that for those companies with business models that do not lend themselves to the strict employee-employer relationship structure, they’re placed in a situation where it is nearly impossible to continue with their business model as structured.

Meanwhile, though, the California Labor Federation argued that income inequality is a serious issue at an all-time high, with many millions of families in California struggling to make ends meet in an economy that is inherently unfair. State leader intervention, they argued, would effectively protect big corporations from being required to pay the basic wages owed their workers. If they cannot do that, the CLF argued, then perhaps they shouldn’t be in business.

As our Orange County employment attorneys can explain, the differentiation between independent contractor and employee can be fuzzy, and it’s likely to be especially hotly contested in the gig economy. If you believe as a worker you have been misclassified by your employer, contact our offices to determine your legal options.