State’s gig economy workers merit basic protections
A recent landmark court ruling that gives workers who are unfairly classified as “independent contractors” a right to basic protections, including the minimum wage and overtime pay, has the California business community in an uproar.
The California Supreme Court’s decision in Dynamex v. Lee holds that businesses can no longer misclassify their workers as “independent contractors” in order to avoid meeting basic labor standards. Dynamex is a trucking company, butmany tech companies rely heavily on this misclassification strategy as well, and they have unleashed their lobbyists to try to reverse the decision.
Dynamex adopts a standard similar to the one used by more than 20 states. In those states, workers are presumed to be employees, entitled to the protection of labor laws, unless an em- ployer can prove the worker is actually an independent contractor. Under Dynamex, workers are independent contractors only if their job is not controlled by the employer, is outside the usual course of the employer’s business and is an independent trade or business.
When a company classifies workers as “independent contractors” rather than employees, it avoids providing essentials such as Social Security contributions, minimum wages, overtime and health care, as well as pushing expenses, such as maintaining a vehicle, onto workers. Companies such as Lyft, Handy and Uber pad their bottom lines by designating workers as independent contractors and shifting these costs onto them and onto the public. The result is poverty for many gig workers. The Economic Policy Institute found Uber drivers make less than the minimum wage in most major urban markets, after accounting for expenses.
Not surprisingly, the tech in- dustry said that giving workers protections would “decimate” their industry and stop companies from offering flexible working hours. For months now, tech companies have been lobbying legislators and Gov. Jerry Brown to block the decision.
The tech industry has spent many years and millions upon millions of dollars on advertising and lobbying to create the myth that gig work is the answer to traditional employment’s inflexible scheduling. They claim these jobs are the “future of work” and allow workers to be their own boss. If this is the case, the tech industry’s future of work is jobs with no long-term security, poverty wages, no health care insurance, no 401(k), no paid over- time, no bargaining power and no workers’ compensation.
The harmful myth of the independent contractor giving up basic protections in order to gain greater freedom and flexibility is by no means new. For decades, port and construction workers, delivery drivers and child care providers have suffered by being misclassified as independent contractors, ineligible for the minimum wage and basic benefits, while taking on more of the risk and costs of doing business.
The truth is that a wide variety of workers, who are classified as employees — including telemarketers, restaurant workers, couriers and nurses — have control over when and where they work. Even gig economy compa- nies, including the cleaning service Managed by Q, choose to classify their workers as employees to encourage a more productive workforce.
Misclassification is not a solution to workplace inflexibility. If lawmakers want to support workplace flexibility, they should institute paid sick and family leave, predictable scheduling laws and access-to-hours laws like San Jose’s Opportunity to Work ordinance.
The Dynamex decision will improve the lives of countless workers. We hope Gov. Brown and the state Legislature will resist the tech industry’s profitdriven arguments and uphold the Dynamex decision. The alternative is an economy defined by greater uncertainty, lower wages and fewer benefits for working families.
When a company classifies workers as ‘independent contractors’ rather than employees, it avoids providing essentials such as Social Security contributions, minimumwages, overtime and health care.