Independent Contractors

Subscribe to Independent Contractors

As reported here and here, California recently enacted new legislation – Assembly Bill 5 – that expanded the scope of an “employee” under state law.  Beginning January 1, 2020, the answer to whether a person providing services in California is an independent contractor (as opposed to an employee) under the California Labor Code, the Industrial Welfare Commission (“IWC”) Wage Orders, and the California Unemployment Insurance Code, will generally depend on whether they satisfy all three prongs of the so-called ABC Test:

  1. The worker must be free from the control and direction of the hirer in connection with the performance of the work.
  2. The worker must perform work outside the “usual course” of the hirer’s business.
  3. The worker must be customarily engaged in an independent established trade, occupation, or business of the same nature as the work performed.

There are a myriad of occupational and industry exemptions to the application of the ABC Test, many of which are highlighted here.

Having tightened independent contractor classification standards, the next big target for the state legislature may be joint employer liability.…

Continue Reading Back to the Joint Employer: Having Changed the Classification Test for Independent Contractors, Will the California Legislature Target the Joint Employer Test Next?

On November 7th a bill was introduced in the New Jersey legislature that would, like California’s AB 5 (see our previous blog here), codify a stricter version of the ABC test for determining independent contractor classification. The bill, S4204 (text available here), also affirms New Jersey courts’ use of the ABC test under the state’s unemployment law, Wage and Hour Law, Wage Payment Law, and other contexts.
Continue Reading New Jersey Bill Would Codify a Stricter Version of ABC Test for Determining Independent Contractor Status

As previously reported, Governor Gavin Newsom recently signed into law AB 5. The controversial law narrowing the classification of independent contractors was aimed at companies like Uber and Lyft. But what does it mean for the entertainment industry?
Continue Reading California AB 5 in Entertainment, Media and Advertising

On September 18 2019, Governor Gavin Newsom signed into law AB-5, which codified the California Supreme Court’s Dynamex v. Superior Court decision.  In Dynamex, the California Supreme Court adopted the so-called “ABC” test to determine coverage under the Industrial Welfare Commission (“IWC”) Wage Orders.  AB-5 expands the application of the ABC test to the entire California Labor Code and will take effect on January 1, 2020.
Continue Reading It’s Official: Newsom Expands The Definition of “Employee” Under California Law

Following the launch of the so-called “MeToo” movement, the California Legislature (controlled by a Democratic supermajority) has aggressively churned out new bills that further strengthen the ability for workers to sue their employers and increase the already-significant regulatory burden on these companies. This fall, the California Legislature is geared to send three significant bills to Governor Gavin Newsom that all California employers should carefully follow.
Continue Reading Three Major Workplace Bills to Land on Gov. Gavin Newsom’s Desk

This article originally appeared in Healthcare News on August 6, 2019.

The California Supreme Court’s 2018 landmark decision, Dynamex Operations West, Inc. v. Superior Court (Dynamex), redefines the employment relationship between entities and workers in California and creates one of the most stringent standards in the United States for classifying workers as independent contractors.

Applying the changes introduced by Dynamex can present significant complications in many industries. This is especially true for the health care industry due to California’s prohibition of corporate practice of medicine (CPOM) and its associated rules. For example, the state requires hospitals to have physicians available during all hours of hospital operation, while, at the same time, generally prohibiting hospitals from hiring physicians directly.

Due to these complexities, many California health care entities may benefit from examining the potentially sweeping impacts of this new interpretation of the law and determining near- and long-term methods for making necessary changes to their hiring and retention policies. Following is an in-depth overview of the potential implications for health care employers and how those in the health care industry will likely need to respond.
Continue Reading Unintended Consequences: Dynamex and California Health Care Employers

UberX and UberBLACK Drivers Are Not Employees for Purposes of the NLRA

According to the NLRB General Counsel’s Division of Advice (GC), Uber’s UberX and UberBLACK drivers are independent contractors exempt from the rights and protections of the National Labor Relations Act (NLRA), including the right to form and join unions.  Advice Memo, dated April 16 2019, Uber Technologies, Inc., Case Nos. 13-CA-163062, 14-CA-158833 and 29-CA-177483. Applying the National Labor Relations Board’s (Board or NLRB) traditional multi-factored common law agency test used to determine whether workers are employees or independent contractors and after considering all of the common law factors through the “prism of entrepreneurial opportunity” as mandated by the Board’s recent decision in Supershuttle DFW, Inc., 367 NLRB No. 75 (January 25, 2019), the GC has found that the drivers were independent contractors and not employees within the meaning of the NLRA.

The GC also considered and then discounted certain factors often relied upon to establish a worker’s employee status, finding them not dispositive indicators of employee status.  For instance, in the GC’s view, the fact that Uber received a percentage of a driver’s fare instead of charging a driver a flat fee for their use of the Company’s ride sharing platform did not support a finding of employee status because the fundamental features of the Uber system including Uber’s reliance on customer reviews to maintain quality and insure repeat business without the need for company control overcame any inference of employer control or the diminution of a driver’s entrepreneurial opportunity.  Likewise, the fact that no special skills or experience were required to qualify a driver to use the Uber platform and that the driver’s work was integral to Uber’s business did not mandate a finding of employee status, citing prior Board decisions in which individuals were held to be independent contractors, even though their services were integral to the business of the company that engaged them, given the entrepreneurial opportunity afforded them. …
Continue Reading Which Are They? Independent Contractors Or Employees? Navigating The Conflicts Between State And Federal Law

Last year, the California Supreme Court decided Dynamex Operations West, Inc. v. Superior Court of Los Angeles, a landmark decision that dramatically increased the risk of misclassifying individuals as independent contractors. As previously reported, although Dynamex replaced the longstanding Borello standard with the “ABC” test, it also left two critical questions unaddressed. First, Dynamex did not address whether the ABC test applies retroactively. Second, Dynamex did not decide whether its scope was limited to coverage under the Industrial Wage Commission’s (“IWC”) Wage Orders or if its holding generally applied to the Labor Code as a whole. In the last five days, both questions have been answered.

On May 2, 2019, the Ninth Circuit found that Dynamex applies retroactively under California law in Vazquez v. Jan-Pro Franchising International, Inc., the most notable decision to date regarding Dynamex’s retroactivity. Shortly thereafter, on May 3, 2019, the Division of Labor Standards Enforcement (“DLSE”), California’s wage and hour enforcement agency, issued a letter opining the ABC test applies to both the IWC Wage Orders and any Labor Code provisions that enforce requirements set forth in the Wage Orders. Although neither the Ninth Circuit nor the DLSE can authoritatively interpret California law, these developments indicate that Dynamex’s scope—which governs hundreds of thousands of independent contractor relationships throughout the state—has continued to expand its already extensive reach.
Continue Reading The Future of Independent Contractors: Ninth Circuit Applies Dynamex Retroactively and the DLSE Issues Opinion Letter Expanding Its Scope

In a business-friendly decision issued on January 25, 2019, the National Labor Relations Board (“NLRB” or “Board”) revised its test for determining whether putative independent contractors are exempt from coverage under the National Labor Relations Act (“NLRA”). See SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019) (“SuperShuttle”). The Board’s SuperShuttle decision affirmed a 2010 Acting Regional Director’s decision that a group of franchisee airport shuttle operators were independent contractors. In the process, the Board overturned FedEx Home Delivery, 361 NLRB 610 (2014) (“FedEx”), an Obama-era decision that, according to the SuperShuttle Board, “significantly limited the importance of entrepreneurial opportunity” to the NLRB’s independent contractor test. Given this new development, employers should expect that, at least under the NLRA, it will be easier than before to show that a worker should be classified as an independent contractor (instead of an employee).
Continue Reading National Labor Relations Board Issues Decision Overruling Obama-Era Independent Contractor Test: What This Means For (Putative) Employers

On January 15, 2019, the Supreme Court issued its decision in New Prime Inc. v. Oliveira, where it decided independent contractor truck drivers cannot be forced into arbitration.  The Court’s decision is based on Federal Arbitration Act § 1, which excepts from coverage disputes involving “contracts of employment” with “workers engaged in foreign or interstate commerce.” …
Continue Reading SCOTUS Holds Independent Contractor Truck Drivers Exempt from Arbitration Under FAA