California Supreme Court Ruling Expected To Have Major Impact On Gig Economy

A recent decision by the Supreme Court of the state of California is expected to make it much more difficult for companies to designate employees as independent contractors in class actions regarding wages. It is expected that heavyweights in the gig economy like Amazon, Uber, and Lyft are expected to be greatly impacted by the Court’s unanimous decision.

Members of the law firm Clark Hill which is based in Los Angeles, Beth Kahn and Bradford Hughes, opine that opinion by the court is certain to greatly impact the industry of transportation and trucking which has seen an inordinate number of class actions filed in response to what workers say is a misclassification of their work status.

The gig economy depends on independent contractors to function, explains the National Employment Law Project, and workers can be greatly affected by any misclassifications of their work statuses. A 2016 report performed by the organization details how these misclassifications lower the income of certain workers and deny them the workplace protections that may be rightfully theirs. Some of these workplace protections include minimum wages, payments for overtime, and insurance to cover unemployment.

Same day courier services provided by Dynamix Operations West Inc. is the focus of the lawsuit that was filed in California. The company is based in Washington State and classifies drivers as independent contractors and not as company employees. The lawsuit’s plaintiffs contend that Dynamix was able to avoid wage requirements in the transportation industry as outlined by labor laws in the state.

The company has answered these allegations by stating their practices are legal under a supreme court ruling that took place in 1989 as part of the ‘Borello Test.’

The California Supreme Court disagreed with Dynamix in their ruling and gave the opinion that Borello was not the standard that could be used to classify workers as an independent contractor. Instead, the court ruled, this issue was ruled by a definition known as a “suffer or permit to work.”