Californians have a lot to brag about. Beaches, mountains, the Warriors, and avocados are just a few of their treasures. But the ridiculously expensive housing market and high cost of living leave many residents scrambling for extra income.
Enter the gig economy. Many Californians supplement their incomes by working side jobs for Uber, Lyft, Amazon delivery companies, and the like. And these jobs are usually considered independent contractor positions with fewer benefits and protections. However, a recent California Supreme Court ruling means workers like Uber and Lyft drivers could see their employment status change.
Independent Contractor vs. Employee
Many companies like to classify workers as independent contractors because it usually costs less, they can provide fewer benefits, and they can avoid payroll taxes. And prior to the new ruling, the test for proper classification of a worker was how much control the employer had over the worker’s performance. If there was a lot of control, you’re an employee. If there wasn’t, you could be considered an independent contractor.
Independent contractors generally don’t receive employment, unemployment, or worker’s compensation benefits. They can usually be let go for any reason, at any time, and are not generally protected by workplace safety law. On the other hand, these workers can usually set their own hours and work relatively independently.
New Ruling, Tougher Test
California’s new ruling recognizes the lopsided power dynamic occurring between companies like Uber and Lyft, and their drivers who are probably just trying to make ends meet. The court added additional steps to the test, so that a worker can be classified as an independent contractor if he or she:
- Is free from the employer’s control and direction with regard to performance of work;
- Performs work that’s outside the usual course of business for the employer; AND
- Is normally engaged in an independently established trade of the same nature of the work being performed
Experts agree that this ruling will make it more difficult for Uber, Lyft, and the like to classify so many of their workers as independent contractors. This means a lot of people in the gig economy could see their employment status change, accompanied by more benefits and employment protections. Of course, those companies will likely pass the cost onto the consumer, but that’s a discussion for another day.
If you think your employer isn’t providing all the benefits they should, speak with a local attorney well-versed in employment issues.