California Supreme Court Case Rules Gig Economy Workers Could Gain Employee Status

Last week, the California Supreme Court ruled that in order for gig economy companies like Dynamex Operations West, Lyft, and Uber to classify their workers as contractors, they must prove that their workers are, in fact, running their own businesses.

The distinction between classifying workers as employees as opposed to contractors affects the wage and benefit laws required by the state. Specifically, while employees are entitled to wage and hour protections, including minimum wage and overtime, contractors are generally limited to the terms defined in their contract. Previous tests for determining whether a worker is an employee or a contractor depend on the concept of control. The more control an employer has over how another person performs the work, the more likely it is that the worker is an employee.

In Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, the California Supreme Court ruled unanimously that in order for Dynamex to justify contractor status for its workers, it must prove:

1. The worker is free, in everyday tasks, from the company’s “control and direction”;
2. The work is “outside the usual course of the hiring entity’s business”; and
3. The worker is regularly engaged in an independent occupation or business of the same type that he/she’s performing for the company.

Consequently, this ruling places the burden on the employer to prove contractor status, rather than on the worker to prove employee status.

See Dynamex Operations West, Inc. v. Superior Court of Los Angeles County on Justia Dockets.

Additional Reading

Gig workers could gain employee status with California Supreme Court ruling, San Francisco Chronicle April 30, 2018

Photo credit: Mr.Exen / Shutterstock.com