Independent Contractor Misclassification Continues Despite California’s Legal Changes

Many of the fundamental employment rights we expect in this country—protection against discrimination, minimum wage and overtime rights—are actually limited to individuals who qualify as employees, and exclude thousands or workers who are labeled “independent contractors.” Employers also don’t provide benefits, pay payroll taxes, or contribute to unemployment for independent contractors. This creates a strong incentive for unscrupulous employers to misclassify their workers as independent contractors instead of employees. Independent contractor misclassification can happen in all kinds of employment settings. Our attorneys have represented truck drivers, delivery drivers, oil field workers, even exotic dancers, seeking and recovering millions of dollars in unpaid overtime or minimum wages.

In California, the law recently changed to make it harder for employers to label their workers as independent contractors. There are some exceptions, but in most cases, the employer has to show that the worker performs work are outside the usual course of the company’s business, that it doesn’t control how the workers do their jobs, and that the worker is customarily engaged in an independent business. This standard was explained by the California Supreme Court in a case called Dynamex, then codified by the legislature in a law known as AB-5.

While some companies are trying to come into compliance by reclassifying workers as employees, other companies, most notably from the gig economy like Uber and Lyft, have decided to continue business as usual and even fight against the legal changes. Uber, Lyft, and DoorDash have pledged $30 million each to finance a ballot initiative to reverse the new law. Uber and Postmates have also filed a lawsuit to block the application of the new law. At the same time it is trying to stop the new law, Uber has announced some changes that it thinks will help justify treating drivers as independent contractors, such as letting drivers see where passengers are going before accepting a ride, see more clearly how much they will earn from a ride, and even allowing them some leeway to change the price of a ride.

These companies routinely claim that treating their workers as employees would force them to fundamentally change what they do. This is not true. What the companies really mean is that treating drivers as employees would mean paying them more. The flexibility and freedom that drivers and companies value can stay the same.

We stand with workers seeking to be paid fairly for their work. We hope these companies will change their tune and follow the law. Until then, we will continue to represent workers who are incorrectly labeled as independent contractors to help level the playing field for workers.